Hotel bookings app RoomsTonite gets $1.5M in angel funding

RoomsTonite, a mobile app for last-minute hotel bookings, has raised $1.5 million (Rs 10 crore) in seed funding from a bunch of angel investors.

Lashit Sanghvi, co-founder of Alchemy Capital; Nikhil Vora, founder of Sixth Sense Ventures; Venkat Vardhan, promoter of DNA Networks; Mohammed Bin Abdul Rehman Al Khalifa, chairman of Caravan Group; and Ralph Berezan of Berezan Group of Canada invested in this round. 

Vissal Mathew and Balamurali Krishna of IDS Software also put money in RoomsTonite, said Suresh John, founder and CEO.

The company plans to use the funds to strengthen its technology infrastructure, improve customer service and sign up more hotels.

RoomsTonite, run by Bangalore-based RoomsTonite eBookings Pvt Ltd, offers last-minute hotel rooms at discounted rates for users.  Its app enables users to book hotels for the same day or up to three days and nights including the booking day. The company has tied up with nearly 4,000 hotels across 325 locations.

Previously, John founded IDS Next Business Solutions, a global player in enterprise resource planning and technology solutions for the hospitality and leisure industries, in 1987. IDS caters to the mid-to-luxury segment of hotels, restaurants, clubs, among other complimentary sectors. He also founded RezNext Global Solutions in 2012, a B2B rooms distribution company. John is on the board of both IDS Next and RezNext as group chairman.

RoomsTonite looks to benefit from the technological backing and connect that IDS Next and RezNext have with their hotel partners.

“The big pain point most hotels face is to sell their unsold rooms. The average occupancy rate across hotels in the country is somewhere between 50 per cent and 60 per cent,” John said. “We look to access and distribute the 40 per cent of unsold rooms to help hotels find an additional revenue source while offering customers a great deal in last-minute bookings.”

Although the company was founded in June 2014, the product went live in January this year on Google Play store while the iOS version was released in April. The company claims to have seen around 200,000 downloads so far. It takes a commission of about 15-18 per cent on every booking on the app.

The company lists budget, premium, comfort and luxury hotels in addition to home stays and vacation homes. It also houses hotel aggregators such as OYO Rooms, ZO Rooms, Treebo Hotels and Zip in addition to hotel chains such as Keys Hotel, Ginger, Park, Royal Orchid, and Pride on the platform.

Every online travel agency (OTA) is a potential competition for RoomsTonite, apart from similar last-minute hotel booking services such as NightStay, which recently raised around $500,000 in seed funding led by Vivek Bihani of Bedrock Venture Management Pvt Ltd.

RoomsTonite chief product officer Karthick Prabu said, however, that the OTAs have been active in the Indian market for a decade now but managed to book only 60 per cent of the rooms. He claimed that hotels offer nearly 30-40 per cent discount on average for last-minute bookings and the discounts go deeper towards the end of the day. “Unlike the air travel industry, here you get the best price the later you book as the room is a perishable commodity,” he said.

The company has expanded its services to the international market recently with vacation homes in Thailand and Indonesia. It plans to enter West Asian markets shortly. RoomsTonite is also in talks with a couple of institutional investors to raise $7 million to $10 million in Series A funding for expansion.