SINGAPORE -- Singapore-based budget hotel booking platform RedDoorz on Monday announced it has raised $45 million in a Series B round led by Qiming Venture Partners.
The announcement confirms an earlier report by DealStreetAsia about the Qiming-led round.
Other participating investors include new investor MNC Group and return backers Jungle Ventures, Hendale Capital, International Finance Corporation (IFC) and Susquehanna International Group (SIG).
According to RedDoorz CEO and founder Amit Saberwal, the capital will be invested in technology and brand building initiatives to scale the platform's growth in Southeast Asia. It will also be used to experiment with new products to better serve budget travellers in the region.
For the rest of 2019, RedDoorz will focus on ramping up its presence in existing markets and work towards entering new geographies such as Thailand and Malaysia next year. Saberwal added that the company was on track to generate $200 million in annual revenue by the end of 2019, and aims to earn $800 million by the end of 2020.
The latest round of capital will give RedDoorz operational runway to last until mid-2020. Saberwal declined to disclose the company's valuation.
"Our growth in 2018-2019 has been exponential. It has been such an important period for us as we were able to set the pace and establish new industry benchmarks in the affordable hospitality segment in Southeast Asia. We are still deeply committed to our vision of empowering the local hospitality owners and connecting them with a growing base of customers who are using our platform to discover new destinations and travel more," he said.
RedDoorz was founded in 2015 by Saberwal and Asheesh Saxena, former senior executives at MakeMyTrip.com, a Nasdaq-listed Indian travel booking platform. The Singapore-based startup operates over 1,200 budget hotels across 80 cities in four countries - Singapore, Indonesia, the Philippines and Vietnam.
RedDoorz also runs an end-to-end hospitality management tech platform, which offers online management solutions for distribution, pricing, marketing, customer experience and technology to hotel owners.
Its latest funding round comes against the backdrop of rising competition.
Earlier this year, Indian budget hotel chain OYO announced plans to double its investment in Southeast Asia to $200 million. OYO's founder and CEO Ritesh Agarwal has said that the SoftBank-backed hotel chain is targeting to have over 2 million rooms across over 25,000 hotels in the region by 2023.
OYO recently announced Agarwal will buy back shares from early investors Sequoia and Lightspeed and invest additional capital in the startup in a $2 billion exercise. The company has also said it will explore an IPO in the next 2-3 years.
Saberwal dismissed notions about engaging in stiff competition with a more heavily capitalised OYO, explaining that the Southeast Asian market is still too wide for a "race to the bottom."
"We're building a long term profitable business with great metrics growing at a fast clip. At the same time, we have decent metrics which can turn around to profitability when the time is right. I think it's very good that OYO is making a major announcement that they're going to do an $18 billion IPO in 2021-22. This means that it opens the path for similar companies like us to be looking at such events for our shareholders."
Southeast Asia has a fragmented budget accommodation sector comprising more than 120,000 hotels rated two-stars and below. The other players in this space include Tribe Theory, Zen Rooms, Hotel Nida, Go Hotels and Airy Rooms. However, all of these budget chains combined (including OYO and RedDoorz) currently cover less than 1 per cent of total rooms available, indicating significant room for further market growth.
DealStreetAsia is a financial news site based in Singapore that focuses on corporate investment activity in Southeast Asia and India. Nikkei recently announced the acquisition of a majority stake in the company.