Why we invested in Beonprice: the Adara Ventures view on the €2.5m Series A
- Ross Strachan Principal
Beonprice, a leader in Revenue Management software for the Hospitality industry, announced last week that it closed €2.5 million in Series A funding, led by Adara Ventures and with participation by K Fund and Top Seeds Lab. Headquartered in Salamanca – with further offices in Madrid, Barcelona, Mexico City and Bogotá – the technology company plans to use the funds to enhance its product team, strengthen its leadership position in Spain and Latin America, and expand throughout Europe.
We are delighted to be backing Rubén Sanchéz (CEO), Emilio Galán (CTO) and the whole Beonprice team as they embark on the next step of their growth story.
Beonprice’s RMS technology utilises a bespoke Hotel Quality Index (HQI) within its artificial intelligence technology to assess a hotel’s reputation and market position, and make effective rate strategy recommendations to maximise a property’s revenue per available room (RevPAR) based on a true reflection of the quality of the property and its competitive set.
Adara’s view: an under-penetrated market ready for sophisticated Revenue Management Strategy
Although RMS started appearing decades ago, the hotel industry has exhibited low permeability to software solutions in this area. Various market studies by Hotel Tech Report, Expedia and Skift have estimated that the market penetration of RMS at a hotel level is between 3–12%, with a further 5% using internally developed tools (e.g. Marriott, IHG, Best Western). This leaves a large, fragmented mass of hotels that do not use RMS solutions. In terms of hotels, 82% are not presently using a RMS solution. The reasons for under adoption are understandable:
- Developing in-house systems requires unaffordable high initial and maintenance costs.
- The existent solutions are complex, very sophisticated and require high expertise in RMS to harness the full potential of the software. Hotels where knowledge of Revenue Management is limited and inventory is smaller, require more simplistic tools.
- Incumbents are considerably expensive, as they have always focused on large hotel chains.
Consequently, Revenue Management is still largely an excel based, or human judgment- based practice for the long tail of the sector.
Nonetheless, there are several converging trends that present a large, growing and relatively nascent market opportunity which we estimate to be worth $330Bn p.a (or 55% of worldwide revenues not presently managed through an RMS):
The time is now: Converging trends favour RMS implementation
- Changes in Consumer buying behaviour: the emergence and dominance of Online Travel Agencies (OTAs) that serve as distribution channels for hotel inventory has resulted in a drastic reduction in the information asymmetry between hotels and customers. Customers now have a range of prices upon which to benchmark, whilst chain loyalty has become a less significant factor. Therefore, pricing strategies that are dynamic, automated, and consider competitors rates and expected demand have substantially grown in importance.
- High OTA commissions (10–25%) put pressure on hotel margins and rate parity issues (where OTAs undercut each other via wholesale purchasing to circumvent “Best Rate Guarantee” agreements) further strain hotel / OTA relations. This has created a unique opportunity for independent RMS solutions that assist in maximising Net RevPar, taking into account the commissions charged by different OTAs when accepting a booking.
- Data accessibility: OTAs have opened the black box of sectoral data, which when combined with external data, provides full visibility over the competitive positioning of a Hotel. This, alongside the pervasive advances in the democratisation of technology, means that even the smallest independent chains can now access the same powerful insights as larger competitors.