Your browser is currently blocking notification.
Please follow this instruction to subscribe:
Notifications are already enabled.

Inc42 UpNext: RateGain On Pace To Join SaaS Unicorn Party On The Back Of Global Success

Inc42 UpNext: RateGain On Pace To Join SaaS Unicorn Party On The Back Of Global Success

CEO Bhanu Chopra says RateGain is on track to reach $100 Mn in revenue by end of the year

Among Indian companies, RateGain works as the distribution partner for OYO on OTA platforms

The SaaS startup works across the travel and hospitality vertical to set rate benchmarks for products

To celebrate India’s rising startups, Inc42 is profiling a new soonicorn every Friday in the Inc42 UpNext: Unicorns Of Tomorrow series. For the next few months, we will be speaking to founders and cofounders at these potential unicorns and shining light on their journeys and growth stories. We continue the series with a look at travel-focussed enterprise tech startup RateGain.

The way India travels and the way Indians go about planning their travel has changed dramatically over the past decade. While Indians always loved to fly abroad to the hippest destinations and the best holidays around the world, till the early 2000s, there was no way for Indians to check which are the best deals and comparisons between flight prices was next to impossible.

In the absence of digital platforms, travel plans were left to the travel agent — every home might have had one that they trusted the most. All this changed with the entry of the likes of Cleartrip, Yatra, MakeMyTrip and others. After all, the only thing people trust more than the familiar agent who promises great service is a great bargain. And online booking was considerably cheaper. Eventually, digital platforms won out as we know now. But this victory was not single-handed as one might believe.

It was a culmination of a range of services, software and products that changed the way the travel industry works. While shiny new ticketing platforms and websites were popping up from every corner, SaaS and enterprise software were doing the dirty work behind the scenes. To be honest, by the time travel enterprise software solutions came up in India, there was already a market waiting to be tapped in the US and Europe, where online bookings arrived much earlier than in India.

Doing the ‘dirty work’ behind the schenes can turn out to be really profitable if you get the timing and your product right. Just ask RateGain.

Working with hospitality and travel companies, RateGain sells software that helps these clients streamline their revenue management decision support, rate intelligence, digital distribution, and brand engagement.

Chopra told Inc42 he wanted to start something of his own in India in 2004 after a professional stint in the US. As a frequent traveller, he was familiar with the pain points for customers, but for RateGain, he chose a B2B model. Chopra’s idea was to offer a subscription-based SaaS product to these customers looking to add technology capabilities to their business to not only streamline operations but also get a benchmark for their rates against their competitors.

The success, according to Chopra, comes from the fact that RateGain focused on the right market strategy early on. “A lot of SaaS startups get too entangled in making the product perfect. But it is very important to continuously engage with the customers and iterate based on customer feedback. So in my opinion, engaging is what allows you to eventually win.”

Setting The Price Benchmark For Hotels

A large majority of its customers are based outside India, which RateGain founder and CEO Bhanu Chopra attributed to the more mature markets in Europe and the US. As of today, it serves more than 20K hotel customers and several large enterprises in the travel and hospitality business.

The startup basically enables these customers to price their products better so that they can maximise their revenue. It also helps hospitality businesses reach more customers by increasing the distribution points and providing marketing insights for various social media platforms.

“For any hotel, tour operator or car rental, the big question is what price they should sell their product at.”

RateGain solves this by influencing pricing decisions based on what competitors or other hotels in the vicinity are charging. It also provides hotels information on what people are saying about their property or concept online. It breaks down market rate, OTA ranks and pricing strategy into logical insights. This also helps inform hotels on the pricing for their products. And finally, once the pricing is set, RateGain’s distribution partners bring the hotel products to online ticketing platforms.

Vertically-Focussed Approach Brings Rewards

In the hotel segment, it works largely with midsize and big chains such as Marriott, Accor and Hyatt Group along with independent hotels. Besides hotels, RateGain also works with car rental companies such as Hertz, Avis, and Europcar among others, as well as OTAs. RateGain works with travel companies, big hotel chains, car rental companies, cruise liners, online ticketing agents and big tour operators

Most of its revenue and growth comes from the US, UK and Europe markets, with nearly 90% of its clientele based outside India. As a result, much of its competition is also spread in these markets, catering to local businesses there. Some Indian players in the same domain include Gurugram-based Repup and Noida-based Hotelogix and international companies such as OTA Expert, Xotels and Guestline, among others.

And even as Indian hotels and hospitality businesses get more familiar with technology and adopt SaaS products for their operations, RateGain is working players such as OYO in the Indian market. Chopra said RateGain is the distribution partner for OYO on OTA platforms, and even as the hospitality startup expands its footprint in the US and UK, RateGain too has added to its arsenal in international markets through acquisitions.

Inorganic Route To Growth

According to Chopra, this inorganic route of acquisitions has helped the company achieve scale in markets where it was losing out to local competition due to limited knowledge about the market, or in some cases, where the startup acquired brought in some interesting technology or functionality that’s relevant for the time.

“We recently acquired a company in the US — BCV out of Chicago —  a social media management and strategy company helping hotels utilise social media to innovate brand experiences for customers. We are able to attract a lot of business from hotels in Asia due to this capability. And we expect hotels to provide a higher level of personalised service thanks to these insights.”

RateGain has now grown to over 700 people, with the majority based in the Noida office, which is one of nine global offices it currently operates out of. “In a lot of ways, we are creating history at RateGain because we are the only company in this vertical from India. And the market is changing. I would say there is a lot of millennial spending happening in aspirational travel. And we can capitalise on this for our hotel partners around the world given our knowledge of the Indian traveller.”

Joining India’s SaaS Unicorn Club?

While the global market has always been more rewarding for many Indian SaaS startups such as Zoho, Freshworks, Icertis and others, RateGain is now vying for a larger share of the revenue from the Indian market. “I think we could be doing a lot more in India because this whole market has woken up through the internet and ecommerce.”

Over the past few years, Indian business operations have transitioned from traditional to digital. In addition to the market-driven changes, a proactive push towards digitisation from the government has catalysed the formal and informal economy. And this is where SaaS products focussed around digitising businesses have become a major interest area for startups in the enterprise tech sector. In Q3 2019, a total of $409 Mn in funding was raised by 25 unique startups in this sector, according to analysis by DataLabs by Inc42.

In particular, Al/ML-based SaaS products such as RateGain as well as marketing automation tools which RateGain is integrating made up 32% of the total funded startups in the most recent quarter i.e. Q3 2019.

Chopra believes that as tech adoption grows further RateGain will be able to gain more traction in the Indian market as well. As of now, with budget hotels dominated by the likes of OYO and larger hotels in India looking primarily at direct sale, there’s not much of a culture or appetite for the travel SaaS solution that RateGain offers yet.

We are here to create products that help drive more value to our clients. We want to continue to do that. Any milestone is momentary and relative to the opportunity. We have miles to go. 

The company has been growing at about 60% y-o-y in terms of the annual revenue, and is on track to cross $100 Mn in revenue by the end of the year. And Chopra is confident of reaching a billion-dollar valuation with that revenue return, and joining the unicorn club by 2020.

The CEO added that RateGain’s ultimate focus is on creating opportunities for all stakeholders and the company’s ambition is to become the most valuable player in the B2b travel and hospitality segment. “As we keep working, we are learning more and more about what we can do, and that’s the exciting part, and it shapes our milestones.”

With inputs from Bhumika Khatri