Climber - Helping Small Hotels Rise to Greatness

My name is Mario. I'm the founder and CEO of Klimber. Klimber is a revenue management system for hotels. We are hoteliers' best friend. So according to Booking.com, there's slightly over 200,000 hotels in the world. About 80% of those are independent hotels. No matter what type of hotel you have, you have to come up with what is the optimal price you should be selling the rooms in order to maximize your revenues. Large hotel chains like Accor, Sofitel, they use complex, expensive revenue management tools which independent hotels could never afford because they don't have the money to pay for it. Also, they do not understand that complexity because they do not understand complexity. So they ended up using spreadsheets, Excel, to come up with the optimal price they should be selling the rooms and to run their daily analysis. So in Klimber, we made their life easier. We do everything for them. They don't have to do anything manually. We come up with the best price they should be selling the rooms. So we use a machine learning algorithm that takes into consideration both historical data from the hotel and also market data like events in the city, the competitor's price, etc., to tell what is the optimal price. We automate most of the decisions that the hotelier needs to make on a daily basis regarding the channels they need to sell. And even we automate it. So we make the decisions for them. Not only we suggest, but we make it for them. So in the end of the day, we save them a lot of time. We bring up to 6 to 8 hours per week that they don't have to do manual analysis. But the most important is that we increase hotels revenue by 8 to 10%, and they don't have to do anything. We do everything for them. So we are speaking of a market that has 200,000 hotels, but only 4% of them use revenue management systems. We are speaking of an untapped market of 96% of the hotels who currently are not having access to revenue management systems. And Klimber is targeting specifically the 3, 4, 5-star hotels with more than 45 rooms. So we are not going for hostels or Airbnb. How we make money? We charge an annual subscription that is based on the number of rooms. So we charge €3.50 to €4 per room per month, which means that a hotel with an average 100 rooms is paying us €3,500 to €4,000 a year. We have competition. We are comparing with Duetto and IDea is much faster and easier to integrate. So while to these players it takes 2 to 3 months for the hotelier to try the solution, in case of Kleinbar we take 1 week from from the moment the hotelier wants to test it until he is able to have Climbrr in their hands. Comparing with the others, we are much easier to use. So we bring even less complexity to the system. We launched last year in July with 4 beta tests, but currently we have 20 paying customers. We are growing a lot. So we experience a lot of growth, not just in Portugal, but in Europe in general. We have 88% conversion from demo to trial, which means that every time we sit with a client and we present them Climbrr, The guys are really interested to test it. We have a team of 9 people, 2 PhDs, 2 founders. I come from the hospitality background, so I worked in the hotels. I founded 3 startups. João brings expertise in terms of product development. We have sales, we have data analysts, we have everything that we need to scale in this phase. And our vision is really to democratize the revenue management globally. So we will stop and we'll be happy when every single hotel in the world will be using a revenue management system, which we believe it will happen. So right now our roadmap is to really to consolidate the expansion that we initiated to France and the United Kingdom since we are already in Germany and Poland, get to 100 paying clients until the end of the first quarter of 2018, hire more people to join our team here in Lisbon, and make more product developments. Right now, September 2017, we closed a €350,000 seed round, which we'll use it to scale to Europe. And in approximately 14-16 months, we'll be fundraising a Series A to scale to US. So that's where you investors out there can come in handy because we will need you in that time. Right now, the money we'll be using will be to build the sales team, product team, and also to keep developing some integrations with hotel systems. Why is this the best time to invest? And I'm concluding here, it's because the revenue management expenditure is expected to more than double in 5 years, exactly as it happened with another technology that the hoteliers are using currently, which is called channel manager. So about 10 years ago, nobody was using a channel manager. Today, every single hotel in the world is using a channel manager. And we are facing the same type of trend. There's also the end of rate parity in the world, which means that hotels that before were obliged to have the same pricing in different online channels like Booking.com, right now they can sell at any price they want in different channels. So basically that's it. We are Klimber, a faster, easier, and more affordable revenue management system.

All right, good job, Climer and Mario. So I'm gonna make myself bigger here. A couple points just really quick. So you guys might have noticed that there were a lot of other messages coming up during Climer's pitch, and he was very diligently turning those off. This is the life of the CEO of a startup, right? Be ready to be managing 15 different things at one time. So I can definitely appreciate that. And also something else that I thought was just a little point out on your pitch was the fact that, you know, you, you just closed the seed round, but you're already looking towards the next one, right? So if you are a startup and about typically on these demo days, something like 60, 70% are entrepreneurs, then the other smaller minority are investors and mentors and advisors and this sort of stuff. If you are one of the entrepreneurs on this presentation, just know that, I don't know, I kind of like to call it the TechCrunch effect, right? Where a company raises money and they have like parties and stuff like that. But very clearly, Mario raised some money and he's still getting a million messages and now he's getting ready for the next one. Okay, so anyway, that's my bit. Mario, I'm gonna put you back on screen now and we got a lot of questions, so I'm gonna get started. So, Assan, and I hope I got that correct, I'm sorry, it's a very international event and I'm an American, so we only know one language here. How would you get data from local independent hotels?

So we get the data by integrating with their hotel reservation system, which is in the industry called PMS, Property Management System. There's about 100 reservation systems around the world. We are integrated with 33.

Okay. So that seems like pretty easy. Who are your competitors? Do you consider— so they're asking, I know you have that matrix, right? They're asking, is Airbnb a competitor at all?

No. No, not at all. So we compete with the other automated tools that recommend prices and make calculations automatically for hotels, not with other platforms that generate bookings for hotels like it is the case of Airbnb. So definitely Airbnb—

Right, Airbnb, you're a B2B, right?

Yeah, absolutely. So Airbnb has their own revenue management system.

Yeah, okay. Does the hotel need— so this is from Steph— does the hotel need a sales manager to use this, or is this software easy to understand for a non-tech-savvy employee?

Very good question. So we work with two different types of hotels. So we work with independent hotels that usually the person that manages our solution is the general manager, so the hotel director. And the other case, we work with microchains and small chains. Up to 5, 10, 15 hotels. And in that case, it's the revenue manager or the sales director or the marketing manager who uses our solution. So it can vary. But we made it so simple to use that it requires little training from our side. So 1-hour training and the client is good to go. And that's the major benefit of our solution, that there's no heavy trainings, no face-to-face trainings. And they can set it up and then in one week have it running by them, by their side.

Sure. So there's a couple more questions coming in, but I just have one question. You know, a lot of these markets are, I don't know, maybe they're described as like a blue ocean opportunity or something like this. But you have a lot, you know, it's kind of an older, more established business, right? Where honestly, you might even call your competitor like just doing nothing, right? It's like substitute, right? When you're working with this kind of long tail, like, what has been— has it just been the increase in revenue? What has been the value prop that you've been able to get these people that maybe have been, um, you know, not receptive to using any of these technological tools and this kind of stuff to start getting onto the platform?

So, so your question is, what's the benefit we, we bring to the hotels?

What's the value prop that has been most attractive to the hotels? You know, because you're working with a lot of hotels that might be smaller and a little bit more old school, right? And you're bringing them on to the internet, right? So there's a very distinct, you know, customer problem there. Like, what kind of gets them over that edge?

No matter the client that we are working with, all want to maximize their revenue, and that's core. That's the major benefit that we bring to the hotel. Then for the case of the microchains and small chains, so they already have 5 hotels working, what they want to do is not just to centralize revenue management, but to increase efficiency on the communication between the revenue management department and sales department, reservations department, group department. And we also help on that. So that's highly appreciated by the microchains. But in general, increase in revenue and time saved for the hotels. Are the most appreciated benefits that we bring.

Okay. So a couple more of the questions here. So, uh, Dejana, and again, I'm sorry if I got the name wrong, how did you calculate the 8 to 10% revenue growth?

Good question. So we have the historical data from the hotel from the last 3 years. So last year we know how much he did in terms of sales, the number of rooms sold, average price, etc. So having that as a base, we know how much we help them in a certain period. So what we did is for the first semester, the first two quarters of 2017, we compared it with last year results and we were able to get those results that you saw. For some clients, we were able to get 21%, to others we were able to get 10%, but in general everyone benefited.

Right, okay. And then the last two questions here, it seems like these are both from hotel owners, so maybe this is useful. So Eliza asked, do you work with hotels with less than 45 rooms? And then Tony asked, can I use Klima Hotel from Croatia? So I guess, you know, it's a market question in two pieces, so if you want to answer those together.

Yeah, absolutely. So we can work with the hotels anywhere provided that we are integrated es, for now, with their PMS. So if you are working with Opera, Protel, or one of the main ones, we can definitely talk today and you'll be up and running next week.

Okay.

Feel free to contact me later.

Yeah, please do contact him later and we're going to send you all that information. Mario, thank you very much.