RateGain Serves Over 12,000+ Customers In The Travel Space Across 100+ Countries
When Bhanu Chopra, founder of SaaS startup RateGain, wanted to start something of his own in India in 2004 after a successful career stint in US; he was sure of one thing – build a product company. Bhanu was a frequent traveller and the typical behaviour was to go on different websites and do a price comparison. Thus, his initial idea was to build a travel price comparison website.
But then he realised the challenge of building a B2C company targeting US consumers from India. So instead, he built a B2B company and started targeting travel companies which could use its technology to benchmark their rates against their competitors. Thus, RateGain was born in 2004.
Founded as a SaaS startup, RateGain sells software for the hospitality and travel industries for revenue management decision support, rate intelligence, seamless electronic distribution and brand engagement helping customers around the world to streamline their operations and sales.
Noida-headquartered RateGain’s global customer base comprises leading travel suppliers and intermediaries including airlines, hotels, cruise lines, car rental companies, online travel agents, tour operators and wholesalers. Today, almost 90% of its customers are based outside India.
RateGain’s Proposition: Helping Travel Companies Price Their Product Better
The startup basically enables its customers to price the product better so that they can maximise their revenue. Its solutions are mainly in the areas of pricing or what is referred to in the travel industry as revenue management. Revenue management simply means how you price a product such that you can maximise your revenues.
Bhanu explains, “Imagine a hotel or a car rental company or a tour operator. The big question for them is on what price they should sell their product at. Their product being the room, the package or the car rental. In order to determine that, there are three pieces of the puzzle that we help them solve.”
The first piece of the puzzle is the data. In order to influence their pricing decisions, RateGain’s software informs client hotels as to what competitors or other hotels in the vicinity are charging.
It also provides them information on what people are saying about their hotel or concept. Basis this competitive pricing data and their consumer reviews or perceived value, it helps these clients decide on the pricing for their products. Thus, decision-making is the second piece of the puzzle solved by RateGain. And the final piece of the puzzle is distribution. Once the clients have decided on their pricing, distribution through RateGain enables them to make that price public on all the OpenTravel Alliances (OTAs) that a user could possibly access – be it MakeMyTrip, Expedia or Yatra.
Additionally, every major OTA player is also RateGain’s customer. In the hotel segment, it works largely with midsize and big chains such as Marriott, Accor and Hyatt Group along with independent hotels. The only criteria to become a RateGain client being that the hotel should have at least 50 rooms and a $100 Average Daily Rate (ADR). Thus, it doesn’t focus too much on the smaller hotels or the bottom of the pyramid. Besides hotels, the startup today also works with almost all the car rental companies such as Hertz, Avis, and Europecars among others.
RateGain: Serving 12000+ Customers In Over 100+ Countries
As one of the earlier players in the travel tech space, RateGain uses a cloud-based SaaS model, which helps it sell globally online, without necessarily having a physical presence in a particular country. As of today, it serves over 12,000 hotel customers and several hundred large enterprises in travel and hospitality. These include big hotel chains, car rental companies, cruise liners, OTAs and big tour operators.
The monetisation model toois SaaS-based, where customers are charged on the basis of different products they choose. For instance, the big hotel chains will be largely charged on the basis of the number of rooms that they have. Hence, the larger the hotel, greater the charge.
While Bhanu did not disclose the actual ARR figure, he stated that the company’s growth has been quite dramatic over the last four years.
“So, we have grown almost 100% over the last four years and the growth momentum should continue as we have been investing a lot in foraying into local markets and also launching different products. We are also actively looking at acquisition opportunities,” he adds.
The RateGain Story
Most of this growth comes from the US and UK markets, as over 90% of its clientele is outside India. Which is why, the company will continue to focus on these markets, despite a rising awareness for SaaS in India.
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The startup, which raised around $46.9 Mn (INR 300 Cr) in its first round of funding round led by US-based private equity firm TA Associates in January 2015, has now grown to around 500 people. While around 375 people operate from the Noida office, the rest are distributed across its six global offices in the US, UK, UAE and Spain, among others.
Bhanu counts this investment as a major milestone for RateGain as it allowed the team to focus on expanding the product, having local offices, and really make the RateGain story more believable. “It was a big endorsement for our story and has impacted our ability to attract top talent,” he adds.
And while revenues have doubled in the last few years,now the focus is on trying to be smarter about how to go to market, on automation, AI and machine learning. With its international hires and offices, RateGain is now trying to transform from an Indian company to a global company.
Aiming To Become The Bloomberg For Travel
When it comes to the competition, Bhanu opines that local competition in India is not much. Rather most of its competition is spread globally across Europe and the US. Given that the hospitality space is extremely fragmented, there are many small local players in each of the countries. Some of the Indian players in the same domain include Repup and Hotelogix and international players like OTA Expert, Xotels and Guestline, among others.
RateGain, however, is unfazed by the competition and more focussed on improving its penetration further.
Bhanu explains, “The way we look at our business is that we have two customer segments. One is the hospitality segment, which is primarily hotels, and the other segment is everybody else other than hotels in travel (tour operators, car rental companies, and OTAs). So, for that segment of our business, our big ambition is to become the Bloomberg for travel. Data is the sort of new crude oil and we want to be the company of choice providing data and intelligence and insights to our customers in order to enable them to make more money. For our hospitality business, our big goal is to serve every hotel on the planet in some shape or form so that they use our technology.”
Deriving from these two broader ambitions, RateGain has a three-year goal to improve its reach and be the only dominant player in the areas of competitive intelligence, revenue management and pricing. Consequently, the startup is focussing a lot on continuously innovating on the product side.
And, for that, it wants to enable its customers to utilise smarter pricing and use more of external forces of data to price to better their demand.
Bhanu explains, “If you look at a hotel, they decide to charge you depending on what’s happening inside the hotel or basis the intrinsic data they have. What we are doing now is focussing on a whole lot of extrinsic data characteristics basis which they can use to decide how they price.”
So, while RateGain’s customers are a lot more tech-savvy than they have been in the past, it is further making it easy to adopt its products similar to adopting to Amazon or Google or Facebook. The idea is simple. Enabling customers to get the information they want without a lot of intervention from the company itself.
For instance, it launched Optima last year, a real-time competitive pricing intelligence tool which syndicates hotel software database with smart data analytics. The competitively priced Optima comes with an intuitive user interface and prudently breaks down market rate, OTA ranks and pricing strategy into logical insights. On the basis of these insights, even a non-technical user can smoothly optimise room rates to maximise the profitability of their brand. Which is why, the interface has been deliberately kept unfussy and easy-to-use.
Selling A High Touch Point SaaS Product From India
While RateGain was one of the early entrants in the space, but the initial challenge for the SaaS company which was bootstrapped initially was figuring out a global market strategy. For a bootstrapped company in 2004, the question was how do you go out and sell?
Says Bhanu, “In our space, i.e. hospitality, travel, it requires a bigger touch point with the customer. Things have changed now but when we started, it required a lot of handholding with the customer, a lot of face time. So, it was a high touch sale.”
But the startup overcame this limitation by establishing the right channel partners. Some of these companies had a lot of bigger companies as their clients and, thus, the startup could piggyback on their strength. In fact, for RateGain, the first significant milestone was establishing such a partnership with an important channel partner in the very first year of its operations. That partnership enabled the company to get off the ground even though it was bootstrapped and had no outside capital.
Furthermore Bhanu feels that attracting the right kind of talent in all aspects of one’s business – be it product or engineering or sales – is yet another challenge for SaaS startups. He says, “In the earlier days, attracting product talent in SaaS was very difficult as there was no concept of travel management and people did not understand product companies at that point. Now there is a lot more maturity in the Indian ecosystem.”
For SaaS startups looking to build a global SaaS product from India, Bhanu’s advice is simple.
“It’s all about customer delight. As long as you are solving a key customer pain point, it is very important to understand where you are in the evolution of your story.”
He believes that, in the initial days, it is very important to find the MVP. Once you find it, it is important to focus on the right market strategy. “A lot of us( 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 the customer feedback. So in my opinion, engaging is what allows you to eventually win,” he adds.
RateGain, India, And The Global Travel Space
While the global market has always been more rewarding for SaaS startups, RateGain is also vying for a larger share of the Indian market. But that does not imply that it will shift its focus entirely to India.
Bhanu says, “I think we could do a lot more in India, yes we can. That is the goal for the next couple of years. But would the 10% share of Indian clients in our list become 20%? I don’t know and I don’t think so. But I think we could be doing a lot more in India because this whole market has woken up through Internet and ecommerce.”
He adds that this has really changed the buying habits, whether it’s a B2C buyer or a B2B buyer. Both of them are now a lot more comfortable with technology and they understand how technology can really help solve their problems. So, the market in India is definitely much more mature now for RateGain to go after even in the hotel segment as that segment too has been trained well in the use of technology now.
Globally, he opines that hospitality is doing very well, with continuous growth in the overall inventory as well as there is expansion of Average Daily Rate (ADR). He believes that three major disruptions are shaping this industry:
- The first disruption is the audience itself. The millennial audience is more demanding than the customer of the past. Millennials look for experience and technology to reduce the friction points in the travel experience.
- The second disruption is the technology. He says, “For instance, your smartphone could now act as a key card to enter your hotel room and become the all-pervasive device on how you interact with travel providers.”
- And the third big disruptor is alternative accommodation such as Airbnb, which is furthering the trend of enabling people to have a local experience. Of course, with its hands full, RateGain is for the moment steering clear of the vacation rental space.
Technology is one of the biggest disruptors in the hospitality industry which is a multi-billion dollar industry globally. A recent Google India-BCG report has projected the in India itself, the overall travel market will reach $48 Bn by 2020 at a CAGR of 11%-11.5%. No wonder startups like RateGain, which have an early mover advantage in this space and more than a decade of experience, are strongly positioned to leverage this growth.
But, then again, with travel being a fragmented industry globally, there is enough competition even from local players in most of the developed markets, where the majority of RateGain’s clientele comes from. As even smaller players wake up to the benefits of technology, the audience for RateGain’s products will increase but so will the competition. And how well can RateGain tackle this competition while keeping its philosophy of delighting the frequent travel customer will decide the fate of this SaaS startup.