1 March 2017

Africa: Combining to Create Scale - Kenya's Savanna Sunrise Merges With Nigeria's Hoteloga and Is Raising Series a Round to Fund African Expansion

Two African online hotel booking companies have merged and will use their increased size to raise Series A funding for more expansion. Russell Southwood spoke to Savanna Sunrise co-founder Havar Bauck about what each party brings to the marriage and what they have planned together.

I last interviewed Havar Bauck, Savanna Sunrise in April 2016 in our sister e-letter Balancing Act's News Update: http://www.balancingact-africa.com/news/telecoms-en/36782/savannasunrise-opens-up-global-online-hotel-booking-in-east-africa-b2c-processes-drive-digital-take-up-and-data-use Savanna Sunrise was founded by Havar Bauck and Endre Opdal, both of whom had worked in the hotel trade and indeed set up and ran a budget hotel in the country they started in, Kenya.

Since our last interview, the company has continued to expand:"We have increased dramatically the number of hotels we have and more than tripled both in terms of hotels and revenues. We've now got 450 partner hotels in 40 countries and we'll turn over US$200,000 gross this month." This time last year it had 300 hotels in 12 countries.

It's also continued to expand its partnerships with other global bookers like Booking.com, hotelbeds, Expedia and most recently with Ctrip (the biggest OTA in China):"We're in ongoing talks with others."

All of this has generated 3,000 room nights per month, largely drawn from places like the USA, the UK, Germany, France, Australia and Kenya.

The Founder and CEO of HotelOga is a Pole called Marek Zmyslowski who between February 2013 and January 2016 ran Jovago in Nigeria, which has now been rebranded Jumia travel. HotelOga has around 450 partner hotels, making it approximately the same size as Savanna Sunrise, although the latter is more profitable.

Bauck says that the merger has been built on the strengths of the two companies:" The two co-founders of Savanna Sunrise built the company together and we don't have large bank accounts. We had to think about profitability from day one. We created a sustainable business model based on gaps in the market."

"HotelOga comes from being a travel tech start-up and know things from the entrepreneur side. They know how to get PR and visibility and we have largely avoided publicity. They will bring in some good PR talent. They have built great tech which is state-of-the-art and user friendly". Zmyslowski will become CEO and Bauck Executive Chair.

"HotelOga has worked with a different business model and their focus has been on the technology. It doesn't mean it can't be turned around. We'll need to sign new contracts with some of the hotels and offer a bigger and more interesting bundle for the hotels. It's a win-win situation for the hotels. We'll both make more money out of it."

Based on a US$8 million valuation for the merged company, it is now looking for US$1.6 million in a Series A funding round:"We've had strong traction from Scandinavia and interest from Turkey, India and some African countries. We've even had a visit here (in Nairobi) from a Scandinavian investment bank. We're very energized by the response we've been getting".

And what will you use the funds for?"We want to use the funds to create a self-sustaining company that makes rapid growth. We had complementary strategies. HotelOga was going to expand into East Africa and we were going to expand into West Africa. Instead of competing with each other, we can now open offices in North and South Africa. We can then start looking at parts of Asia, the Caribbean and the Middle East."

"In most frontier and emerging markets, most hotels below 5 star are facing some challenges in terms of online marketing. By 2020, we want to get 50,000 partner hotels globally."

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