Hostels are not a popular target for travel startups, given that industry consolidation has led to only a few major players on the booking side. On the hostel technology side, there are plenty of opportunities to deliver a product that helps hostel owners do a better job of connecting to their customers while also creating a cohesive community around that particular guest’s stay.
This opportunity is being addressed by an increasing number of startups. RM8 is a new travel startup directly addressing this tech disparity, seeing a significant opportunity to deliver a full-on mobile-based experience for hostel owners and guests.
The product (see the video below) is quite robust, and does promise to deliver more merchandising opportunities to hostel owners for on-property guests, while enhancing the guest experience. Before guests even check in on property, there are many features that will likely appeal to hostel owners trying to set the best price possible for their rooms with the least amount of effort.
The St. Petersburg startup is currently testing the app in a hostel locally, with plans to expand after using that test to enhance the product.
Read on for the Q&A with Dash, the co-founder.
Tell us how you founded the company, why and what made you decide to jump in and create the business.
I’m fond of travelling and prefer to do it alone, because most precious thing in travels for me is meeting new people and that’s much easier when you are by yourself. Usually I stayed in the hotels, but once I appeared in Ostello Bello in Milano and felt absolutely in love with hostel culture. These were several 100% mad days, during which I ve met so many different people, with absolutely different ideas and different life experiences. Nothing can be more precious than communication with people around you.
What excites me most is this diversity of people. Every time life proves that there are no bad or good persons, there are just “yours” or not “yours”. Several times happened to me that “my” people I met only at the last day of my travel while we had been living for several days in one hostel! And we were very sorry we had not found each other before.
That’s how the idea of this app appeared. It helps to find “your” people very fast, choose the dorm to stay with them so you can spend your time with those who share your interests, purposes of travel, and life mode.
Also a very actual problem which I faced several times while travelling now is possible to fix with this app: once I ve stayed in one 8 bed dorm with 7 Chinese girls. They were absolutely nice, but the problem was that they didn’t speak English AT ALL, and, of course, I cant speak Chinese (unfortunately), so it was absolutely no fun) More then this, they went to sleep at 11pm every night, and I liked to party and guess caused lots of inconveniences to them when I was coming back around 4 am….With RM8 app you can choose those with whom you speak the same language and, lets say, wanna party or, on the contrary, go studding in the morning. Very convenient- everybody is happy)
What is the size of the team, names of founders, management roles and key personnel?
There are 6 people working on this project. We all locate in Saint- Petersburg, Russia. 4 programmers, one designer and me. I am the founder.
What are your funding arrangements?
We have not attracted any investor by that moment, and I am not planning to do this in the nearest future.
What is your estimation of market size?
According to different estimations, there are from 10 000 to 50 000 hostels in the world and this number is constantly growing. At the moment we have a database consisting of more then 3000 hostels (Asia not included yet.). Now we are more focused in European hostels and are planning to start form them first (in our database there are more then 2000 European hostels with the general Hostelsworld rating exceeding 75)
Who do you see as your competition?
There are Hallwaysapp and Seat ID which are quite close to our services, but do not allow the users to chose the dorm and people there can not be filtered by interests, purposes of travel and so on. More then this, they don’t provide hostels with possibility to have direct bookings on their websites avoiding commission payment to OTAs and using this app as a convenient marketing tool.
OTAs can also be considered our competitors from the certain point of view. Couse in general the idea is to give the hostels an opportunity to earn more. Actually sometimes OTAs doing nothing and only tacking this commissions earn much more from one hostel then a hostel itself.
I’m very much FOR hostels in this sense: it is the hostel who faces all the offline difficulties and expenses, and they are doing a great job giving the opportunity for people to enjoy incredible hostel spirit! As for me the hostels have a Mission- they open the world for young people and let them GROW.
They create an absolutely open- minded generation, people of new formation, who have no boundaries and limits. And this is really great and very important. So from my side I ll do my best to support hostel industry the way I can. The more hostels connect to RM8- the more bookings will be within the app- so at the end I think they will be able to exclude the commissions payable to OTAs from their expenses.
What is your revenue model and strategy for profitability?
Fixed fee for usage of the app calculating based on beds amount in the hostel. In 6 months- earnings from advertisement from local industries.
Why should people or companies use the business?
For hostels it provides the following opportunities:
No more commissions payable to OTAs. RM8 will forward potential customers straight to hostels website for booking. RM8 is an effective marketing instrument. With RM8 hostel owner knows his hosts, their interests and purposes of travel and can provide them with exact products and services they need. The data is provided in a very convenient format and is easy to use at anytime. RM8 is a loudspeaker, only better: Thanks to push-notifications and messages hostel staff will be able to inform everyone about events, news and offers. Introduce hostel staff with RM8: Good staff is what makes a host feel like home. To extend that feeling and encourage guests to visit more, keep your staff online. RM8 helps the hostel to create a strong bond with your customer. RM8 will allow you to keep in close touch with the hosts before, during and after their stay and follow-up with special offers. RM8 encourages social life and making everyone happy. RM8 provides a local network where everyone can find mates and have fun.
Possibilities for users:
Choose the dorm with the roommates the user wants to live with Meet new mates online beforehand, chat and plan Keep on chatting while staying at the hostel (special for smartphone addicts) See what events there are at the hostel the user stays Create the events and invite people from the hostel (applying the filters) Meet and communicate the staff of the hostel even before arrival Leave the feedback and keep in touch with new mates.
What is the strategy for raising awareness and the customer/user acquisition (apart from PR)?
Actually now the scheme is very simple. We will have users if we have hostels- so now we just communicate directly with hostels to have them connected to RM8.
Where do you see the company in three years time and what specific challenges do you anticipate having to overcome?
I see at least half of bookings (also in Asia) made through RM8- at the beginning of course while the amount of hostels is not enough this will not work, but when they become more, I think it is absolutely possible to substitute OTAs with this app.
Locals involved in RM8 as well. This opens a lot of advertising possibilities.
What is wrong with the travel, tourism and hospitality industry that requires another startup to help it out?
Hostels are not updated enough from technological point of view. While the travellers are mostly from generation Z and enjoy all the advantages of technological progress. They have already got used to communicate via mobile devices and this is familiar and convenient way of communication for them. So the hostels market needs something like RM8.
What other technology company would you consider yourselves most closely aligned to in terms of culture and style… and why?
AirBnB, EatWith and GetTaxi, because all this companies have WIN- WIN strategy at their background and are very fair.
The mobile hostel booking market has definitely sweetened in the past year, with hostel booking engine WeHostels being acquired by StudentUniverse and a couple of other travel startups emerging targeting this specific market (among them Hostel Rocket and Hallways).
The market is being defined rapidly by emerging players, and RM8 is taking a smart approach to offer multiple value propositions to hostel owners in a bid to become their dominant mobile marketing platform.
The ability for guests to select where they stay and with whom is also quite intriguing, as it could allow more comfort for travelers as they select their dormmates. Of course, serendipitous connections are also reduced, so this is something to consider.
The network effects are also quite appealing here, as hostel travelers are skewed towards the longer term journeys. This means that travelers can bring their knowledge of RM8 with them as they move around the world, providing some easy avenues for growth between hostels. And that sort of usage makes it easier to increase adoption, developing a truly viral spread of the app around hostel networks.
NB: Hostel image courtesy Shutterstock.