Indonesia’s hotel industry has become a devastating victim of COVID-19 pandemic, which began causing a series of blows to the country’s economy. The country’s statistics body shows that the national average of hotel occupancy rate, which had always stood at over 50%, plunged to 12% in April. The staggering rise of COVID-19 cases across Indonesia and the globe was responded with travel restrictions, physical distancing, and so on. Hotel occupancy rate in main tourist destinations like Bali even fell to a single digit. Businesses were forced to shut down due to burdening operational cost. Thanks to its business concept, pod hotel PT Bobobox Mitra Indonesia (Bobobox) still manages to take less hit.
The Bandung-based accommodation startup claims to have maintained its occupancy rate amid the pandemic at 50%-60% through its nine hotels in Jakarta, Bandung, and Semarang—although its average regular occupancy rate could reach 90%. And as it has been running on a lean operating model since its inception in 2017, Bobobox hasn’t only been resilient against one of the most challenging times but is also one step ahead in fulfilling its purpose to disrupt the budget hospitality industry.
The idea of Bobobox came from Antonius Bong and Indra Gunawan who lead the company as the president and CEO, respectively. They saw how traveling has become a lifestyle, whether it’s for leisure or business purposes, and how demand for budget accommodations has picked up significantly. However, affordability often compromises other aspects, such as comfort, quality, and even business sustainability. Since the COVID-19 pandemic, some customers also stay at the pod hotel to avoid long working commutes or to elevate their work-from-home experience. Hence they tapped into the opportunity, bringing space efficiency and modular sleeping pods as key points in solving the problem. Having run a tech startup together before, both are aware of the importance of scalability and sustainability in growing a business.
“At Bobobox, we believe that disruption isn’t about slashing prices and killing other businesses in order to stay cheaper and survive. We think about sustainability, growth, and collaboration—how we can invite existing property owners or even existing hotel owners—so that we can offer three things to travelers: standardized experience, great locations, and affordability,” says Antonius.
What distinguishes Bobobox from other budget hotels is its approach to tech-integrated experience. By using its app, customers can complete the booking, check-in and check-out process, and control their pod’s secured door access and customizable lights. The sleeping pods are designed neatly and spacious. Each pod has a single bed or king-size bed and comes with a compact working space, a personal air conditioner, and a bluetooth speaker. The average pod price is relatively affordable at Rp 130,000 for a single bed and Rp 220,000 for king-size bed a night.
Bobobox has a couple of ways in extending its footprints. The first one is by renting a property and transforming them to suit Bobobox’s concept. The other is by collaborating with existing property owners—ruko (shop-houses), offices, and hotels. Either way, Bobobox will fully operate the hotels, from handling renovation, operation, amenities, IoT and operating system. Bobobox converts these unoccupied rooms into sleeping pods, therefore allowing its partner to have more available room, and generate higher occupancy rate and revenue per sqm. The collaboration follows a profit-sharing agreement, where the partner gets 20%-80% share depending on their contribution/capital injection for the renovation. Indra says that Bobobox’s investment per pod ranges from Rp 80 million to Rp 100 million. In June 2018, Bobobox launched its first flagship hotel in Bandung with 62 pods. By mid-June, its footprints had grown to 572 pods from nine hotels. Bobobox claims that its revenue in 2019 grew by ten times from 2018.
The pod hotel concept also helps the company to run on a leaner operating model. For instance, the ratio of total cleaner to the total room at conventional hotels is usually 1:2, and 1:5 at virtual hotel operators, but Bobobox’s is 1:12 since pods are smaller and easier to clean. Bobobox doesn’t provide a kitchen either seeing that travelers prefer to eat out, thus eliminating a hefty cost of building a kitchen and hiring chefs and waiters. And since booking is mostly made through the app, the hotel requires minimum receptionists.
Continuous improvisation is made for the sleeping pod, mostly focusing on material refinement, size efficiency, technology optimization, and shorter assembly time. The pod’s modular and prefabricated model allows easier shipment, and Bobobox is exploring the possibility to have them installed as sleeping facilities in public places such as at the airport, hospital, and coworking space. Such installations have been done since April, where Bobobox together with Li Ka Shing Foundation donated 100 ‘shelter pods’ at 14 COVID-19 referral hospitals across Indonesia, to provide proper sleeping facilities for medical workers. The project is still ongoing with 50 more to roll out in June, involving other donors. Entering the new normal, the pandemic has changed how a business operates, including in the hospitality industry. Fortunately, Bobobox has already applied processes that adjust to the current situation.
“I think we can say that the odds are in our favour. At first, we developed the technology for efficiency purposes—to reduce the number of people involved in running a hotel, and to have a lean operating model. It turns out it also allowed us to be more flexible in changing our operating model. We can eliminate host interactions, and our contactless experience has become one of the key drivers, especially during COVID-19. We had just the right timing,” says Indra.
The company’s steady performance and adaptability also earned themselves trust from investors. In May, Bobobox secured an $11.5 million series A funding led by Horizons Ventures and Alpha JWC Ventures. Most of the fund will be allocated for development, domestic expansion, and technology. As for their target this year, while many aspects are subject to how the pandemic develops, Antonius says that at the minimum Bobobox will have 500 additional pods from five to six new hotels, spread in six cities. They will first expand in major cities, where activities are expected to bounce back quicker.
“We want to expand not just in Indonesia but also start looking at the region. Our next fundraising will possibly focus on our regional expansion,” Antonius says.