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Driving Demand for a New Service in a Mature Market

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The bottom line

A new service in a mature market grows by building hotel supply and customer demand together, starting from insider connections. Without that balance, hotels get no bookings and leave, so marketing must grow with supply.

Key takeaways

  • Industry connections open the first doors to hotels. 3:51
    • Gaspart is the fourth generation of a hotel family and a former hotel general manager, so he knew the hotels' problems and had colleagues to call.
    • His co-founder Cristian brings the tech and marketing side, so the idea came from outside the industry and the execution from inside it.
  • Supply and demand have to grow at the same time. 8:01
    • Hotels that get no bookings get upset and close their sales to the company, so a city starts with about 15 to 20 hotels and then gets marketing.
    • Nobody searched Google for a hotel by the hour, so the first spending had to sell the idea itself before the brand.
  • TV works for both sides when local experts run it in each country. 9:26
    • TV campaigns run in Spain, Germany, Italy and France, with the spot adapted to each culture.
    • Seeing the brand on TV also makes hospitality people want to join as hotel partners.
    • Local media agencies pick the channel and slot, because the audience and creative differ in every country.
  • Offline and TV results are harder to track than online ones. 12:17
    • Different coupon codes per channel give a rough read.
    • Someone may see a TV spot today and book two months later, so tools only give an idea of investment against return.
  • Retention matters more than acquisition cost. 13:31
    • Investors ask about lifetime value and repeat use, and BYHOURS reports strong KPIs on both.
    • A loyalty program built with the hotels, plus new ideas every day, brings users back.

We have an incredible KPIs on that because once the people they know about by hours they want to repeat this.

Guillermo Gaspart, founder and CEO of BYHOURS

Chapter summaries

0:00 A new category: hotel rooms by the hour

BYHOURS sells short stays in regular hotels, a product no one offered before.

  • Guests book a room for 3, 6 or 12 hours and pay only for those hours. 1:05
    • The standard stay is 24 hours, but the gap between 2 p.m. check-in and noon check-out leaves about 22.
    • The rooms are in regular 3 to 5 star hotels, such as Marriott, Sheraton and InterContinental.
    • Japanese capsule cabins and airport boxes already existed, but nobody offered microstays in regular hotels.
    • There are now more than 3000 hotels across Europe, Latin America and the Middle East, with the US coming soon.

2:49 Selling hotels a new product

Hotels joined once they saw the service as extra revenue, not a price cut.

  • Hotels had to see a new product, not a cheaper room. 3:13
    • It was hard at first, even in Barcelona.
    • Today hotels see more sales and extra revenue on their P&L, and they are happy.
    • The hotel does not cut the price of the room night. It sells a new category.
    • Gaspart says it is simpler now, but the beginning was really complicated.

5:49 Going international from Barcelona

Outside investors pushed the company beyond Spain, and the model proved easy to scale.

  • New investors in 2015 pushed expansion, and the business proved scalable. 6:09
    • Germany came first in 2015, then Italy, France and the UK.
    • The team signs hotels across Europe, Latin America and the Middle East by phone from Barcelona.
    • For a long time the company stayed only in Spain, because convincing hotels was slow.
    • An office in Mexico covers the 7 to 9 hour time difference with the other side of the market.

7:14 Teaching both sides at once

Hotels and guests both have to learn a new idea, so supply cannot get ahead of marketing.

  • Hotels signed without marketing sit empty. 8:01
    • Signing many hotels in Berlin with no marketing spend brings them no bookings.
    • Guests must learn to book by the hour, and hotels must learn to rent by the hour.
    • Gaspart's family belongs to the main hotel associations worldwide, so contacts come easily between colleagues.
    • His network also reaches Latin America and the United States.

9:05 Reaching users across countries

The online playbook stays the same in every country, while TV and offline media add reach at a higher price.

  • The online strategy is the same everywhere, run by local people. 9:05
    • It combines Google, social media and retargeting.
    • Each culture differs, so locals manage the channels.
    • The thread is the same in Germany as in Barcelona.
    • Only the local execution changes.
  • TV is expensive, but it can pay off. 9:54
    • Each brand is different, so first analyze how TV works for yours.
    • Gaspart: it's really expensive but at the same time it depends.
    • For BYHOURS, TV mainly serves demand.
  • Offline media goes beyond TV. 11:43
    • BYHOURS ran ads in airports, on buses, and in newspapers and magazines.
    • Airport audiences cost a lot because big brands compete for them.
    • The ads also ran inside the airports themselves.

12:17 Measuring results and keeping users

Online results are exact and offline ones are fuzzy, but repeat use matters most.

  • Online sources are exact, offline ones are not. 12:17
    • Facebook and Google show exactly where each user came from.
    • With TV and offline, the source of a new user is much harder to know.
    • Coupons are the classic fix, one code per channel.
    • Newer tools give an idea of investment against return.
  • Retention is the key in e-commerce. 13:31
    • Acquisition cost matters less than repeat use.
    • Loyalty is worked on with the hotels, plus new ideas every day.
    • Once people know about hourly stays, they want to repeat.

In the growth library

Guillermo Gaspart, Founder and CEO of BYHOURS. BYHOURS built a new category, booking hotel rooms by the hour (3, 6 or 12 hours), and had to teach both hotels and travelers the idea at once. The episode covers how an industry insider won the first hotels, balanced supply with demand, and scaled to more than 3000 hotels across Europe, Latin America and the Middle East.

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Transcript362 lines
0:00

what is up app nation it is Steve P Young founder of app Masters dot-com the place you go when you want action-packed content in the app business because I talked some phenomenal people who are really creating some innovative products to really get their story and so that we can all learn from them and grow through their knowledge today i got a phenomenal guess he's doing something it's creating a brand new category when i talk about how do you do that especially when you're trying to grow growth like it's a marketplace and trying to get the supply and try to get to them in how do you do that early days so without further ado let me introduce the guests what I heard is it's kind of like William in the US in English but it's Guillermo gues bar and he is the CEO and founder of buy hours check out the app it's on both Google Play and Apple but it's by hours BY hours or check out the website by

0:50

hours calm garam Oh welcome to the show thank you nice to be nice to be here with you for the next few so for those were listening and don't understand why ours allows you to book hotel rooms by the hour essentially right like three six and twelve hour increments I get that right here mom exactly we that was the deceit of the beginning of the company when we asked it so many years ago why the minimum is Dana out there is 24 hours instead is 22 because the difference between the checking time 2:00 p.m. and they check out 12 a.m. and nobody were offering like microstates or something like that and that's why we started to create this new category I know what hugeinjapan they had these little like at the column cabinet several things where there's a super mikro where did you come up with this idea the idea that we know that these kind of boxes or cabins there are existing also in the airports okay but

1:50

when we want to offers like regular hotels I mean a Marriott Sheraton intercontinental the regular hotels or three four or five-star in the city center or close to the airport that they also want to offer this kind of microstate I mean the you decided to put in 24 hours they taking time how many hours do you want to stay in a hotel three six or twelve hours and just pay for those house we are introducing the concert that people use in the whole in the hotel industry when you actually what I want to talk to you about is currently worried guys available because we kind of talked about this to you but I want to make sure the listeners know I know you come into the u.s. so I'm super excited about that - yeah right now we're studying about Thoreau now we are mainly in Spain we said in Spain but right now we have more than 3000 hotels and all you dope the main cities of Europe the main cities of all Latin

2:44

America but also in Middle East and really soon we are going to arrive to the States that's awesome so talk to me about the early days cuz I have a old co-worker that started a hotel tonight and I remember like hearing about the idea this was like I want to say I mean it was way early in the times but I was like this is I'm well that's kind of a cool idea but like you have to work with hotels - right so was it easy to like approach these hotels and be like hey you know we're gonna try this new service the beginning was not easy because this is really important to convince the hotels in order to put in the market like a new product because they they are not reducing the price of the room night they're selling like a new category a new product and this was not easy at the beginning here in Barcelona in Spain but today the hotels they understand that they are having more sales and everything that they have from buy hours

3:37

like a meal revenue for the PNL and they are really happy and today I think it's more simple but the beginning was really complicated so when it was complicated how did you end up selling them like getting your first hotel to agree there's to be honest I am my background is from the hotel industry I mean I am the fourth generation of a hotel family business I mean I really know the industry I be working the other side I was working like a general manager of a hotel and after night in a hotel group and that means that I know what is the main issues issues of the hotels and everything but also the network I have a good friends good colleagues in the industry and that's why I think it's more easier I don't want to say more easy but even there's two to have the choice to open the door to the hotels to your colleagues in order to explain you or this kind of a new idea I mean you tell me if you agree

4:32

your mobile like I almost feel like that's not talked about enough like having that knowledge that background especially when you're starting a brand new service an idea like this you need some type of connection because it is so hard to put a marketplace together if you're coming at it like if it was me I had no but connections in the hotel space and I'm like I want to start this new idea like hotel tonight or by hours and I want to do this it's gonna be really really hard it's hard for you but you at least you have the connections but I almost feel like founders should know like hey what am I good at whatever am I connected to you and then start thinking about business ideas around there is to mix because we are two founders myself more in the hotel industry with my background in the whole in the hospitality and my other co-founder a Christian that his background is more from the tech or

5:25

marketing I at the beginning the main question or the main idea normally is from outside of any of the industry I mean from my business partner and after for the execution I think it's really important to know the industry but not only the innovation came from outside of industry I mean after you need the knowledge to let exhibition you say the best I love it hey someday that's working for you guys right now is the internal internationalization of the model can you talk about a little bit about that we started in the beginning was like really long mep because we were really a long time here in spain but it was not easy just to convince the hotels and everything and in 2015 we started first of all with new investors from outside that's something that was really important for the company and these those investors they they put on a table they challenged just to open like a new country and you know different market

6:25

was germany in 2015 but after that with germany it arrives italy france UK oh you know and really soon we realize that it's a really scalable business and everything from barcelona and over the phone we acquire out of hotels from all Europe right now Latin America and in Middle East I mean it's it's something that even though right now we have an office in Mexico because they're the timezone I think it's really important this at all it's like seven or nine hours of difference just to manage the other side of the market but if not from here from Barcelona we can manage the business did you already have connections in Germany that you can reach out to yes because I say nobody world industry and part of my family are there are members of the main hotel associations in the globe that's why I always between colleagues in the hospitality industry is more simple just to get those connections but also in

7:28

Latin America in the States yeah and I know some of the things that you kind of reference in our pre-interview document is talking about like since it's a brand new service you need to teach both parties right like you need to teach the buyers the people like me who want to stay at these hotels hey you can actually book you know that's the old way of booking hotels you actually book by the hour and then you need to teach the other side that hey you can rent out your rooms by the hour how are you able to run these campaigns or talk about that campaign that actually did fail when it was like you didn't have that explanation yeah I think the main challenge is the balance you need to supply at the same time the demand because if you acquire a lot of hotels in Berlin for example but you are not invested in marketing those hotels they are now going to the got to have some bookings that means they will be

8:19

upset and they will close they older cells to your company I mean it's really important to balance belief for example 1520 hotels at the beginning and after theirs to invest a little bit in marketing and then the maintenance at the beginning was just to with the needed just to to to sell our brand it's just to sell a new product a new idea and after that our brand I mean even in Google for example nobody were looking for for hotel by the hour yeah and it's like you have to as you say right now you have to teach the supply and the demand at the same time how did you get-go and initially especially when you're going into the German market because I'm sure you understand the Barcelona market but like when you were trying to get that demand how did you go about approaching that it's the strategies more or less the same I mean we have a lot of online strategy strategy in terms of Google you need

9:13

local people in order to manage this kind of different culture and everything but this thread is the same after that we have social media a different kind of online tools or retargeting and everything but also TV campaigns we are investing in TV campaigns in Spain in Germany in Italy in France and this kind of three campaigns even you have to adapt the spot to the different culture it's something that the helps users to go more faster in order to to make more awareness of your breath that's impressive I mean that's what was it whenever I hear TV I think super expensive it was a pretty expensive to run it's really spensive but at the same time it depends I think it's really important to to analyze to know exactly how it works the TV because each brand is completely different but for us it works very well because it's working for this for the demand definitely because the main purpose of the TV campaigns probably is

10:16

the demand but also works for the supply because a lot of hotels a lot of people from the hospitality they understand they see the brand and after that is okay I want to join this this new brand this new idea in order to be in a platform to be part of this hotel I mean is it's not win-win that's a great idea actually I didn't even think about the supply side so Cameron I want talk about this is how are you able to target these TV campaigns because you know people in Berlin may not they already live there right are you talking like neighboring cities or people who might be travelling to Berlin how are you going about targeting the best thing is because as you can know is really complicated just to understand each quarter it's just to hire like a local brand or media company that's what we did it in Germany but also the same in Italy or France or whatever because those people the local people the local

11:14

experts in the media they buys you okay once you know the target of your audience then they know exactly which kind of channel the the time the the slot everything and that's why I think it's more just to to be advice for the experts and not to copy paste in all the different countries the same because it's completely different the channel the audience but also the creativity it's also different yeah I like that did did you do anything offline yeah we we made we work with something like in the airport's for example and it's also really really expensive because all the audience that are in the airport are really expensive and a lot of big brands they want to impact these kind of audience and we try to make something in the in the airport's also like a bus I mean just put it sport in a bus in the newspapers in the magazines of the lines we are doing it's kind of offline the main problem for the offline or also the

12:20

TV is just to know exactly to the thought ability of this kind of new user that you have the online it's everything perfect because you have like a Facebook or Google or whatever you know exactly if this user came from this kind of investment in the offline or the TV it's more complicated how did you go about tracking is it like through a coupon code hey use this coupon code to save blah blah blah that's why yes this is the classical one you put in a different coupons but also the TV you can see an unsupportive TV of by hours today but maybe you are going to use or to you to book a hotel in by hours in the next two months or whatever that's why also it's really complicated to - exactly - no but today there are also incredible tools in order to know exactly but just to have an idea of your investment and your return nice D no I want to talk about retention too because how do you get people to come back and

13:20

use ya frequently but in the early days cuz you launched in 2012 like was it fully just online and when you get sending everybody there and then you started making the ABS yeah we have in terms of the loyalty program is really is really important for us and the rotation it's something that in the in the e-commerce or this kind of businesses this is the key because all your investors what do you want to know is what about your lifetime value or how it works in terms of retention because maybe the CAC the cost equation Chinese speaks but the most important is the retention and the repetition we have an incredible KPIs on that because once the people they know about by hours they want to repeat this is something that we work a lot with the hotels with our own loyalty program but also trying to put it like a new ideas every day you