H2O Hospitality Secures $ 30 Million Series C To Accelerate Hotel Digital Transformation – TechCrunch


The pandemic has sparked increased demand for contactless and unmanned operations in the hospitality industry, and now H2O Hospitality, the unmanned hotel management company, has closed a $ 30 million round thanks to this coup. thumb.

The South Korea and Japan-based startup is automating front-end and back-end processes, including booking accommodation, room management and front desk tasks, and it will use the funds to continue growing its business.

The Series C round of funding (equivalent to approximately 34 billion won) is led by Kakao Investment. Korea Development Bank (KDB), Gorilla Private Equity, Intervest and NICE Investment also participated. Along with the South East Asia mutual fund, Kejora-Intervest Growth Fund has also joined the round, a sign that H2O Hospitality will focus specifically on the South East Asian market. H2O Hospitality previously raised a $ 7 million Series B funding round from Samsung Ventures, Stonebridge Ventures, IMM Investment and Shinhan Capital in February 2020.

H2O Hospitality will further expand its business by adding various types of accommodation in South Korea and Japan in 2021 and 2022, and plans to enter Singapore and Indonesia in the fourth quarter of 2022 in line with its South Asia penetration strategy. Is, according to H2O Hospitality co. -Founder and CEO John Lee.

“H2O Hospitality is currently in discussions with several global hotel chains to partner with their digital transformation and operations outside of Korea and Japan,” Lee told TechCrunch.

H2O will invest in R&D to advance its customer channel solutions and contactless registration systems based on the needs of customers in each Asian country, Lee continued.

“We need optimal system development and customization for every accommodation and situation to successfully drive the digital transformation of hotels, even after COVID-19,” Lee said in an email interview.

Lee founded H2O Hospitality in South Korea in 2015, and it’s a wave of acquisitions and expansion. It entered Japan in 2017, for example, by acquiring several Japanese hotel management companies. In 2021, H2O acquired two South Korean companies – the contactless hotel solutions company ImGATE and the locally created start-up Replace – to improve its ESG technology and skills.

Today, the company operates approximately 7,500 accommodations, including hotels, ryokans and guesthouses, in Tokyo, Osaka, Seoul, Busan and Bangkok.

H2O Hospitality’s Information and Communications Technology (ICT) based hotel management system, which enables hotel management to automate and digitize, includes Channel Management System (CMS), property management (PMS), room management system (RMS) and facilities management system (FMS).

Its integrated hotel management system can reduce the fixed operating costs of hotel management by 50%, while increasing revenues by up to 20%, according to its release.

“COVID-19 has hit the hospitality industry the most, and most hotels wanted to reduce their level of fixed costs, but that was impossible with their current operational flow,” Lee continued. “They had to go through digital transformation.”

When asked how the pandemic affected H2O, given that COVID-19 still freezes most of the tourism industry, Lee said H2O’s revenue increased 30% from before the pandemic. , but that percentage fell to 5-15% after COVID-19. Revenue drivers these days are based on tools designed to improve the efficiency of its customers, including its Automated Dynamic Pricing (ADR) tool. and various sales channels such as online and offline travel agencies at home and abroad, he said.

Lee also pointed out that H2O has incorporated many properties which has also contributed to H2O’s revenue growth over the past 18 months.

“Every hotel we integrated during the pandemic reversed their profit and loss statements and began to recover their financial loss,” Lee said.

There are currently around 16.4 million hotel rooms worldwide that generate $ 570 billion annually, according to Lee. H2O believes it can digitize all accommodation in the world – the main goal of the company is not to create a hotel brand but to empower hotel owners to better operate their properties, he said.

Lee explained that the current hotel operating process is very similar to that of “2G phones”, the step ahead of smartphones, and H2O is turning the overall hotel operation into a “smartphone.”

“This is a very natural transition for the [hospitality] because it was also natural for cell phone users to switch from 2G phone to smartphone, ”said Lee.

Unfortunately, the cross-border inbound tourism market is still closed for Korea and Japan.

“We believe the inbound tourism market will recover within a year as vaccinations increase for both countries,” Lee said.

“We knew that this new wave of hotel digital transformation was coming even before the pandemic; however, COVID-19 has definitely accelerated the transition period, and we believe H2O will thrive in the changing hotel market, ”Kejora-Intervest Growth Fund CEO Jun-seok Kang told TechCrunch.

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