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Profitable PropTech: SaaS for Smarter Stays in the Hospitality Sector

We recently invested in a YC-backed startup, StayFlexi, a ‘Modern Operating System for Hotels’. They’re already profitable with operations in 100+ cities around the world. It was a great fit with our VC fund at Blue Field Capital because we own a lot of hotels that carry a Hilton, Marriott or Hyatt flag and had some unique insights in this space that most VCs would easily miss.

The key premise is that many Independent Hoteliers and Vacation Rental Managers cannot compete with the infrastructure or technology of the bigger brands. For a Private Equity fund like ours, we would be more willing to buy and operate smaller hotels or vacation rentals if they were better managed.

StayFlexi —An Automatic Recovery

An empty room is every hotelier’s nightmare, as it represents lost revenue that can never be recovered. In addition, many hoteliers invest in amenities for their guests, like food and beverage offerings or meeting room facilities. When those amenities go unused, the profits from such investments may never be realized.

Stayflexi protects hoteliers from such losses by automating check-in and other guest interactions, providing better, safer, and more customized services for guests. Their proprietary software automatically establishes up-selling opportunities for the property owner such as room reservations, hands-free check-ins and contact-free payments. Guests can make adjustments for early or late arrivals or departures. The platform can upsell rooms and offer amenities and services through smartphone messaging and in-room QR codes.

Leading with automation, Stayflexi creates a better communication framework for property managers and guests to engage with one another. It becomes easier for guests to communicate their needs and for staff to elevate their offerings. Providing an easier way to get a cab, suggesting the pre-purchase of tickets to a Broadway show or have having breakfast delivered to your room at exactly the right time; opens up stronger avenues for additional cash flow while at the same time dramatically improving customer experience.

The value-add of the software opens up new opportunities for stronger revenue and increased cash flow while dramatically enhancing the guest experience. On average, hotels that have integrated Stayflexi into their system have seen an average increase of more than $300 per guest—that’s a number every hospitality professional can get excited about.

For Property Owners —More Efficiency, More Profitability

Property management personnel now have a way to delegate repetitive, labor-intensive tasks. Stayflexi can streamline accounting, sync a master calendar with all major booking portals—Expedia, Travelocity, etc.—coordinate housekeeping staff, and manage inventory levels of needed supplies and goods for sale. That delegation is saving hoteliers 10% in management costs, and it’s producing a tangible increase in guest satisfaction. Free from the minutia of management, property owners are better able to focus on providing individual, uninterrupted attention to every guest and their specific needs.

A Well-Proven Winning Model

Stayflexi is designed to assist upper, mid-market property managers. Boutique hotels or owners with multiple vacation rentals will see the most upside. Traditionally, those 50 to 70 room properties have to be managed manually. That wasn’t something hospitality professionals expected to change.

But large hotel chains—Marriott, Hilton, Hyatt—have proven the success of the automation model; their initial investment in adding automation to their go-to-market strategy has already paid dividends. Stayflexi is brilliantly bringing that same technological power and tactical advantage to the independent segment—and they’re making it affordable, intuitive, and hassle-free.

Raised in Oracle’s Strong Founder Breeding Ground

Stayflexi is brilliantly bringing that same technological power and tactical advantage to the independent segment—and they’re making it affordable, intuitive, and hassle-free.

The founders of Stayflexi are heavy hitters in the tech industry. They previously worked in the database department at Oracle, where many other founders earned their early experience. They bring a global perspective to the business that has positioned them to see the market potential through an expansive and informed lens.

Carnegie Mellon graduate Venkatesh Sakamuri is the CEO. His family in India is engaged in the hospitality industry; he has a unique perspective into the needs of both the consumer and the property manager. Preetam Shetty is the Chief Technical Officer and a graduate of Cornell, as is the third founder, CIO Krishna Sasank Talasila.

What They Saw

When they weren’t working at Oracle, Venkatesh, Preetam, and Sasank traveled a lot on the weekends. During their trips, they saw how inflexible hotel bookings could be. Check-in/check-out times revolved around housekeeping schedules and staff management rather than focusing on consumer needs. The first and last interaction that was happening with the guest wasn’t having a ‘guest-first’ impact.

They soon discovered they were not alone in their discontent. Over 80% of guests ask for an early check-in or a late check-out. As they started imagining a solution, they also learned that at any given time, 40% of hotel rooms are empty. Compared to other industries, that was an unthinkable loss.

Due to antiquated logistics, most independent hotels have not been able to fully capitalize on their own assets. The team realized this was a global problem. As they calculated TAM (Total Addressable Market), they were told that the 1 million properties in the US and India alone are expected to double by 2025. At $500 per property per month, that market could provide them with $1 billion in annual revenue (even without the projected doubling)!

Global TAM Potential

Founded in 2018, Stayflexi has barely scratched the surface of their market potential, but they are already sourcing 15,000 rooms across six countries, logging over 3000 room bookings across 740 hotels every single day. All of that is being managed by the Stayflexi platform.

It’s not surprising to me that they’re seeing 30% month over month growth. COVID-19 has put pressure on the industry’s digitization. The sector needs to find ways to cut costs in order to recover from pandemic losses; the timing for this company couldn’t be better. Fueled by the ascent of Airbnb, it is expected that there will be five times more vacation rentals added to the market in the next three years; a growing potential consumer base is inevitable. By 2024, the founders anticipate managing 15,000 properties and expect that number to grow to 85,000 by 2027. Their go-to-market strategy is clear, and they are well-poised to capitalize on the market potential. With their experience working in Silicon Valley, they are well-connected to influencers in the space and able to offer their product at one quarter of the cost of other (sub-optimal) competitive offerings. I can’t wait to see where these founders take this company from here. It’s already been a rewarding journey, and it’s just getting started.