Deal focus: Bobobox rethinks budget hotels

Many hotels struggling with COVID-19 have tried simultaneously to fill empty beds and help their communities by offering special rates to frontline healthcare workers. Bobobox, a capsule hotel operator in Indonesia, is no different. However, before committing to the plan, it had the foresight to do a customer survey.

As it turns out, many, if not most, Indonesian healthcare workers can’t use the hotel rooms made available to them, either because they don’t have time for the commute or their employers haven’t the budget to pay their way. As a company that prizes modularity and the flexibility to relocate or set up in new locations, Bobobox was in a unique position to help.

“It was a nice initiative, but it wasn’t very effective. So we said, ‘Why don’t we bring the rooms to the doctors so they can stay close to their patients?’” explains Indra Gunawan, a co-founder and CEO of Bobobox. “Our investors thought that was a win-win solution because we could help the community and at the same time, people get to know more about Bobobox.”

At the time, the company was in the middle of a difficult Series A fundraising process, with COVID-19 hammering operational numbers and slowing down due diligence for investors. With all this on his plate, Gunawan reached out to his seed-stage backers about financing the installation of about 10 capsules at a local hospital. 

This led to an introduction to the Li Ka Shing Foundation. The Hong Kong-based charity liked the idea so much it paid for 100 capsules across several hospitals. Separately, but not coincidentally, Horizons Ventures – Li Ka-shing’s VC unit – led Bobobox’s $11.5 million Series A round last week alongside existing investor Alpha JWC Ventures.

Bobobox now has 572 capsules in three Indonesian cities, and the business has proven relatively sustainable during the pandemic, with occupancy rates around 50-60%. Considering the company’s virus hygiene measures involve spacing guests between empty capsules, 50% occupancy is effectively 100% capacity.

A focus on domestic travel, coronavirus-related commuting, and improving work-from-home situations has made this possible. One of Bobobox’s key differentiators in Indonesia’s broader budget hotel space is professionally reliable internet connectivity. And unlike most capsule hotels, it also provides a small work desk next to the bed.

Gunawan identifies the key pillars of the company’s success to date as comfort (virus sterilizing is a priority), affordability (capsules start at $10 a day), and the ability to access strategic locations (modular construction has eased real estate pressures). He plans to double down on all three, while also exploring Bobobox’s newfound identity. Though intended as a no-frills bunk for backpacking vacationers, the company is now more of a service to the local workforce.

“We see that long-stay packages can sell well,” says Gunawan. “So we’re going to create a subscription model where you can pay monthly and stay in any pod of your choice.”

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• Topics
• Southeast Asia
• Real estate
• Technology
• Early-stage
• Indonesia
• Venture
• Alpha JWC Ventures
• Horizons Ventures