Tarun Gulati, Co-founder, Djubo

Anil Mascarenhas,  IIFL | Mumbai | May 30, 2016 17:14 IST

Tarun Gulati, Co-founder, Djubo, did his MBA from IIM Banglore (2005). Tarun spent 1.5 years at ICICI Venture and 5 years with the NY-based D.E. Shaw & Co’s Indian Private  Equity team and has been involved with deals ranging from $400 MM to $18 MM during his Private Equity career. He was among the youngest Global Vice Presidents ever at D.E. Shaw & Co at the age of 27 when he quit in 2011 to start his venture. He comes with a lot of new age hotel management experience being fully involved in hotel operations for the first 4 years of his entrepreneurial journey. Having adopted and used  cutting products available globally for his own family hotel business, Tarun is very well versed with the entire Hotel Tech landscape globally and has been the first adopter of many global tech products.
 
DJUBO is now used by close to 1000 hotels across 120+ cities in India and already manages and facilitates close to 2000 room nights every single day which is bigger than many OTAs in India. DJUBO’s offering includes digitization of the price and inventories of hotels, manage bookings from all channels like OTAs, own websites, offline bookings and travel agents. They also offer mobile friendly website templates and mobile apps with booking systems and payment gateways, online channel management for automatic integrations with multiple travel partners.
 
Replying to Anil Mascarenhas of India Infoline, Tarun Gulati says, “DJUBO’s vision is to be the number one travel intelligence player nationally & internationally by providing hoteliers with a one-stop cloud ERP for hotels, which enables high-grade occupancy yield along with giving insights into long-term strategies to generate huge revenue for their hotel.”
 
Given the digital disruption happening in most industries, how are you reading the situation in the hotel industry? Is technology enabling the smaller hotels to compete in any way with the larger ones?
Consumers want mobility, flexibility and real-time access to information when booking on the go. They expect seamless connectivity allowing them to book whenever they want across all platforms. Connectivity has become an essential part of the hotel creating lot of challenges for hotels – but also opportunity.
 
While these trends present some opportunities for hotels, they also present a dilemma because as hotels try to differentiate themselves – from each other and from online intermediaries –how can they evaluate the optimal channel distribution and keep customers while doing it profitably?
 
However, things have changed in the hotel industry. New hotel tech products have come into the market that has led to creating more visibility for small hotels, thus generating higher revenue for them. Give small hotels more cost effective tools to manage a complex sales system and they become more formidable to larger hotel chains.
 
Would you call yourself an IT company?
Technology lies at the core of the Djubo. Our motive is to empower hoteliers with simple tools to maximizetheir revenue and service delivery using cutting-edge technology.  DJUBO provides its software as a Softwareas a service (SAAS) offering with real time connectivity and minimal upfront investment to the new-age hotelier. We wouldn’t call ourselves an IT company but a new-age tech company for hotels.
 
How many clients do you have on board? What is the revenue-sharing agreement?
We currently have over 1000 clients on board. DJUBO has a fixed subscription model along with a transaction based fee for direct bookings.
 
Who is your target customer? How do you manage to help hotels automate their inventory management?
Our target customers are mostly hotels ranging from small B&B’s to 4-Star hotel chains. Problems faced by the entire segments are alike when it comes to managing their reservation desk and sales channels efficiently in a way which maximizes their revenue generation potential.
 
Most small business owners have been recording inventory by hand and performing tasks manually in order to manage bookings from various sales/distribution channels and OTAs but with DJUBO’s software, all their offline and onlineinventory is managed via a single login. This automation helps hotels manage their inventory.
 
Complexities that a hotel sales desk has to deal with have increased. What are the current pain points?
The current pain points that a hotel sales desk faces are:
 
Increase in distribution channels-The number of distribution channels is increasing day by day in the market andhoteliers not only have to manage inventory on old channels but also have to push inventory on newer ones. This increases their workload and complexity of the work involved.
 
Costly Standalone Tech products-Hoteliers are spending on costly standalone tech products that are unable tointegrate with other online inventory distribution channels thereby losing potential customers who prefer to book online.
 
Hotels fixed cost optimization-With increase in distribution channels more manpower is required to manually handle inventory and manage bookingsthereby increasinga hotelsoperational cost. This has increasingly become am area of concern for hoteliers.
 
How much of your service is accessed on the mobile?

We offer the following services through our mobile app:
  • BookingChart
  • Reservations&Cancellations
  • Inventory Management on all OTAs
  • Room Inventory Distribution
  • Booking Creation, Search & Edit along with Guest & Agents Management
Internet penetration is picking up in India. To what extent has it helped the industry in terms of displaying the inventory?
Currently only 20% of total hotel inventory is visible online. 80% is utilizing either very little or no technology. Since Internet penetration is very low, hoteliers are still relying on offline sales channels and are wary of investing in tech products. Even though Hoteliers are able to perceive the benefits of technology, making them adopt the system on a daily basis becomes a bit of challenge at times. Djubo conducts workshops and events across the country to bridge this gap and increase awareness about the New Age Technology landscape and ways of overcoming it. We believe this is an important juncture in the Travel Space and the transition is happening at a very fast pace, with more and more hoteliers getting open to use and adopt to manager their hotel sales & inventory.
 
What trends are you seeing in price comparisons being done by customers?
The arrival of meta search engines like Kayak, and its features facilitated by advancements in technology as compared to OTA’s, ensures that customers get the best price by adding real-time availability, price comparisons and enabling rate shopping across multiple channels. Meta-search players are also adopting a semantic search, ensuring near accurate customized price comparisons based on customer preferences.
 
Another trend to be seen is the growing importance of sites such as TripAdvisor in travelers' decision-making, where hotel reviews have very much influenced customer choice while booking.
 
Most consumers want to extract the most value for money. Hotel websites are now providing easier tools to compare prices. In the context of this trend, Djubo recently launched its price comparison widget which compares the direct prices of a room vis-à-vis theOTA channels connected with the property. Hotels have since noticed anupward trend in direct bookings from customers.
 
A lot of inventory is not exposed to OTAs. What is your advice here?
Most hoteliers are using standalone tech products but in order to reduce the risk of overselling they don’t push their complete inventory on all OTA channels. This results in under exposure of the hotels complete inventory across all channels; be it a direct booking on the hotel’s website or bookings made at the hotel.
 
Our advice tohoteliersis to adopt an integrated approach to managing their entire sales channels, which not only will give them more visibility and also maximize their revenue potential. A system that integrates a Channel Manager, CRS and Booking engine all under a single interface will help them cash on this growing opportunity.
 
What are your focus areas?
Since DJUBO has solved the core problem of the lack of an integrated system, we are now focusing on building more innovative features for the hotel sales process. The next step will introduce more advanced modules, predictive & analytics tools and leveraging big data to give superior dynamic pricing management.
 
DJUBO is also working continuously to improve a hotel’s operations by developing a light version of a PMS to handle their day to day operational activities across the different departments of the hotel.
 
What would be the triggers for growth for the industry and your company?
The deep penetration of internet usage and smartphones in India have been the triggers for growth in the hospitality industry.The number of Internet users in the country is expected to go up to 50 crore, from the present 40 crore, in the next 5-7 months. Out of these, 70% of the people are going to access the internet through their mobile phones.
 
Hoteliers are struggling to manage the number of increasing distribution channels and the growing demand to expose their inventory online because of this growth.DJUBO takes advantage of this opportunity with itsautomated system to manage all bookings from various sales/distribution channels and OTA's through a single dashboard to increase efficiency and revenue. 
 
Any measures you seek at the regulatory end or from the government to boost the industry?
Although the government is taking the initiative to boost tourism in various states, there is a big journey that remains to be covered. State Tourism Boards should be the front-runners in adopting new age technology for state-run hotels & guest houses. Also, a lot needs to be done in standardizing the Tax structures across different states, which at times becomes a bottleneck in people adapting to softwares.
 
Cite some interesting anecdotes where your solutions have brought about a meaningful change for the client.
Mr.Joshi, the owner of HotelKrishna, manages the complete hotel with a minimal staff. He offers a comfortable stay and even though his guests love him. Yet, he faced the problem of low occupancy. His hotel did not offer a lot of add-onservices and his costs were more or less fixed. Through DJUBO’s effective sales and revenue management, his occupancy increased on a daily basis by a single room per night. This mere 4% increase in occupancy doubled his profits.
 
VResorts, a chain of 30+ boutique properties across the country. VResorts leverages Djubo to centrally manage the reservations & inventory for all its hotels. By just deploying a minimal man-power, VResorts has seen a 2x growth in their OTA revenues in just a matter of few months.
 
Brief us on your financials. What is the outlook?
Djubo has healthy revenue stream through platform subscription fee & transaction fees on direct bookings and plans to hit break even with just the first round of funding it raised last September.  Currently out in the market to raise a second round, the plan is to deploy the funds to build new features to and fuel the growth capitalizing on the perfect transition timing in the long tail hotels space in India.
 
What is your vision for the company?
DJUBO’s vision is to be the number one travel intelligence player nationally & internationally by providing hoteliers with a one-stop cloud ERP for hotels, which enables high-grade occupancy yield along with giving insights into long-term strategies to generate huge revenue for their hotel.
 
What is your message to young entrepreneurs?
Young entrepreneurs today only think about the end result, but not about the journey that takes them to their dream. In order to succeed, don’t just sit at home but look past your failures and pursue your goals with relentless persistence. Opportunities and problems exist all around us. It takes courage to see a problem, own it, solve it and transform the world forever.