As the country moves into an endemic phase and the borders are reopening, Eric Lai and Norton Wong, CEO and COO of Flow speak to BusinessToday about the changing practices in the hotel industry as well aspects of their journey in building Flow.
- What were the highs and lows of your entrepreneurial journey while developing and expanding Flow?
As mentioned below – the beginning was always the toughest. It took us 4 months to sign the first hotel. Apart from the beginning, another low we went through was in 2020, when the Covid hit and there were zero cross-border travellers including the short-haul ones which affected the hotel industry very badly. There were 2 months of silence in the hotel market.
Our reaction was we quickly pivoted our strategy to focus more on local users – who now could not travel abroad and looked for ways for relaxing away from home. Then, hotels become an ideal place where customers can book for an afternoon and still use the pool/gym/facilities – “Daycation”. Nowadays, almost everybody in the city has been on one or two Daycation in the past year.
- What were the major challenges that the both of you (Eric and Norton) faced while trying to build partnerships with hotels?
When we started in HK, the major challenge was that flexible hotel booking is a rather new concept to high-end hotels. Previously those hotels that offer hourly hotel booking were rather basic hostels/motels.
However, we were glad to demonstrate clear values to hoteliers in terms of bringing in additional revenue from quality local “daycation” users and short-haul travellers, improving their revenue per room. This is because we can help hotels to resell their rooms for more than once per day, which results in a higher total revenue and a higher hourly rate compared with selling just 1 full night.
By the time we launched our Flow App in SG & KL in 2021, we were already working with over 200 hotels including quite some 5-star hotels and chain hotels (e.g. Travelodge Hotels, ibis, Intercontinental, Novotel, Dorsett, Pullman) in Hong Kong.
So it was fortunate for us that given we’ve been working with those hotels for over 2 years with great traction, it made it easier for us to also talk to their sister hotels in other locations like Singapore and KL. Hotels did not hesitate in making introductions and referrals for us, and some of them even invited us to stay at their hotel during our business trips to SG/KL!
- What was the deciding factor for the very first hotel that signed on?
It almost took us 4 months to sign the first contract, after being rejected by over 40 hotels.
In the beginning, we approached some big names first (just like every startup wants to aim for the big fish at the start!)
Then we changed our strategy to talk to mid-size and boutique hotels, as we thought it would be easier – only to find out it was not!
One of the first signed hotels was in Mongkok – the busiest regions in Hong Kong and popular among short-haul individual travellers (e.g. from Macau/China) to stay for half a day as well as local users to hang out. At first they were not convinced these demands could be huge since they have been selling by nights for over 20 years and everything was fine! And in the end, we decided to simply just tell them we would lose our job if we cannot sign up for any hotel by the end of the month. They gave us a favour just by signing the contract without much expectation, but to their surprise, we proved the flexible booking model workable, and they were also very happy with the result as we brought them extra revenue and a new stream of customers.
On hindsight, we realized the traditional and big hotels back then only focused on big tourist groups and long-vacation travellers, hence Flow App didn’t “click” for them when we first approached them.
As we grew our inventory and slowly established our presence in the hotel industry, then we re-approached the bigger hotels to help them see the value from short-haul & local travellers which are more frequent and drive more revenue per room for them.
And then some local media came to us which also helped our brand. Only then after around 1 year of launching Flow App, did the process of onboarding big hotels started to get smoother.
- How have Eric’s and Norton’s past experiences influenced the development of the app both from the perspective of a user and as entrepreneurs?
We were high school classmates and worked in different industries before we founded Flow App. But what we shared similarly was:
Travelled often on short business trips to Singapore/SEA, and we almost never checked in at 2pm but instead late at night, and checking out early in the morning. Then we thought if the hotels could resell those empty times during the daytime after the guest checks out, it would help hotels increase revenue.
At the same time, we observed there is also local user demand for hotels like young couples who need private space for intimacy or a bunch of friends who want a low-key party, families who go on weekend daycation, etc. These are people who do not need a full-day room but only the daytime.
If the hotel room booking became flexible, wouldn’t it fit for both groups of customers – short-haul travellers & local users – perfectly?
That was how the idea started.
- What was the biggest challenge for Flow while expanding abroad to Singapore and Malaysia? Were there specific cultural differences that presented an obstacle?
When it comes to expanding abroad, localization is the key to success. Especially for us targeting domestic travellers, we spent much effort in localizing our marketing materials (e.g. ad copies, flyer design, tone and manner) in order to make them “resonate” with the locals.
Mentioning “Lah”, “Sia” in our ad copies, for example.
Not only marketing but also functionalities need to be localized. We know SG/KL is popular with mobile wallets, so we also add ShopeePay/Touch’n GO/etc for KL, Grab Pay for SG as our payment.
- How did you build a hotel-related business during the pandemic and how are you now accommodating for the shift in the market as things return to normal?
While cross-border travellers will slowly come back, it is also good for us that 1) inter-state travel will also rebound, and 2) local usage for hotels will remain:
Malaysia tourism is supported strongly by local travel. In fact, 40% of hotel users, before the pandemic, were domestic users. Among them, there is a good portion of short-haul interstate travellers who are our target customers.
Aside from interstate travellers, we believe the “daycation” trend from local users will still stay because – outbound travel on a 4-day trip is not similar to having a lazy afternoon at a 4-star hotel’s swimming pool near KLCC – it is totally different needs and usage.
In the past, there were not many 4-5 star hotels offering hourly bookings, but now many hotels have seen greater value from local demand.
After all, “Why book a hotel for the whole day, if you need to stay for only a few hours?” – that’s the key value we want to create to customers
- How can hourly hotel booking revolutionize the hotel industry in the years to come?
A report estimates that international tourism is not likely to return to pre-crisis levels until 2024, and we can expect the pandemic will be on and off that prevent people’s interest in travelling abroad.
It is crucial for the hotel and travel operators to adjust their service offerings to cater to the local travel demand which will be the new normal for the industry.
For hoteliers, offering more flexible booking options to customers is the way. It is because domestic travellers tend to stay for a much shorter duration (e.g. compared with 4D3N international visitors). Traditional 2pm-12nn the next day will not suit most local users. Offering more packages together with hotel rooms will also help, e.g. room with dinner or workshop, since local users look for curated local experiences.
- What is the role Flow plays in improving hotel revenues and popularity?
We provide a web-based portal for hoteliers to easily manage their timeslots and prices, which are then listed on our Flow Website and Flow App in real-time. We usually advise hoteliers to offer 4-8 hour timeslots, e.g. 10am-5pm or 3-10pm session, but it can be flexible and adjustable catering to hotels’ operations.
And most of our hotels’ price a session at least 30% lower than a traditional overnight price. If the room can be sold by 2 sessions in a day, that already results in 40% more revenue than selling by 1 night.
- What are the future plans for the Flow app in terms of diversification and expansion as international borders begin to reopen and we reach an endemic state?
In the short-run, we hope to bring our hourly hotel booking service to 2-3 more cities in Malaysia, such as Johor and Penang; and more regions across SEA including Vietnam, Thailand, and Indonesia, as we see domestic travel will be the new normal.
We will also venture into other services that have synergy with our hotel bookings, such as dining, local events and happenings that will fulfil other needs for the locals and, when the borders open, short-haul travellers – evolving from an hourly hotel booking app to a daycation platform for urban travellers.
We will hire local business development and marketing staff in each region to help build relationships with hotels and merchants.