Corporate News

By Keith Richard D. Mariano,

How Zen Rooms is disrupting PHL hotel sector

Posted on February 13, 2017

ZEN ROOMS checked in the Philippine market with the view of disrupting and consequently setting a higher standard in the budget hotel sector. But in less than a year, it has become more than a game changer.

A view of the Cebu skyline is seen from this Zen Rooms property. -- ZEN ROOMS
The company, backed by Rocket Internet SE of Germany, has emerged among the five leading players in the country’s budget hotel sector in January or about six months following its launch, co-founder and managing director Nathan Boublil said in a Jan. 16 interview.

And the top position seems only two years away.

At present, Zen Rooms manages around 600 rooms across 100 properties in Manila, Boracay, Cebu City, Pampanga, Davao City and Palawan. It intends to enter other cities and double the inventory to 1,300 toward the yearend and zoom past those of Red Planet and eventually, the Gokongwei-led Go Hotel in 2018.

“In only six months of operations, we’ve already entered the Top 5 and we’re going into the Top 3 in 2017. At this pace, we’re becoming the number one player in the Philippines in 2018,” Mr. Boublil said, noting such a growth far exceeded internal projections.

Mr. Boublil founded Zen Rooms in the middle of 2015 along with Kiren Tanna, who built Rocket Internet-backed in 2012 and expanded it to become the biggest food delivery company in Asia.

A French national educated in the University of Cambridge, Mr. Boublil previously co-founded a data technology company in the United Kingdom and worked as investment banker with Deutsche Bank AG of Germany.

With the backing of Rocket Internet, Messrs. Boublil and Tanna brought Zen Rooms online in Indonesia at the end of 2015. It then expanded into Thailand, Singapore, Sri Lanka, the Philippines, Hong Kong and Malaysia.

The Philippines stands as the fastest growing market of Zen Rooms, which accordingly outpaced other Rocket Internet-backed concepts in the country, thanks to a business model that Mr. Boublil described as speed-driven.

“So, the whole company is very motivated on speed and to do that, it’s a mix of working with existing hotels. We see their problems, we fix their problems and then we make the prices better. And so that is inherently more scalable,” Mr. Boublil said.

“Then, if you have a team of young people that works extremely hard and is constantly incentivized on speed, then of course you are going to get more results.”

Instead of developing a property from scratch or managing a whole hotel, Zen Rooms takes over individual rooms in existing operations and prospective guests may book them online. It works just like the popular ride-hailing applications, Mr. Boublil noted.

“We come with an Internet culture, where speed is important, so we’re constantly thinking how we can disrupt things. We see something that isn’t working and basically we are applying the Duterte approach -- it’s a turnaround approach.”

Having worked as night receptionist in an independent hotel in London and living abroad, Mr. Boublil wanted to address the shortcomings of budget accommodation and, at the same time, do away with the excesses that only adds costs to hotel operators.

“The hotel market’s value for money is very poor in the Philippines. There are problems all around Southeast Asia -- that’s why we started the company -- but in the Philippines, it is very pronounced,” Mr. Boublil said.

“We specialize in improving the efficiency of hotels. We make hotels operate better; it is very customer satisfaction-driven. And then we push the prices so you get the value for money that is the best in the market.”

Zen Rooms offers accommodation for two people for as low as P860 a night. The room comes with what Mr. Boublil considers as the basic needs of travelers -- a private toilet and bath, Internet connection and air-conditioner.

The company further cited the importance of having an online platform that stands out in terms of user-friendliness. A good Web site attracts more traffic and subsequently bookings, Mr. Boublil said.

“So, our view is we’re really starting to disrupt the hotel market in the Philippines. And what that’s turning into is that -- if people can travel for cheaper, with a good option, then it means they’re going to travel more,” Mr. Boublil noted.

After the disruption, however, comes the competition.

In its way to capturing the market lead, Zen Rooms expects other budget hotel operators and more companies to enter the fray. While it remains wary, the company recognizes that tighter competition would only serve as testament to its success.

“Of course, the challenge is winning the competition. As an industry, it will do well,” Mr. Boublil said.