How to Market Your Marketplace with Yannis Moati
Just because a marketplace isn’t an overnight success doesn’t mean it won’t become one eventually. Sometimes, it just takes the right buzz for the market to take note.
Yannis Moati is the founder and CEO of Hotels By Day, a daytime hotel services marketplace that allows buyers to purchase daytime use of hotels and their amenities. You may recognize Yannis from Shark Tank, where he, in his own words, “bombed legendarily.”
As time would have it, the Shark Tank investors missed out. Today, Hotels By Day is a thriving marketplace that hosts 3,300 properties, including the three most prominent hotels in the industry. While the company’s success was a slower burn, It became a roaring fire when Yannis started using marketing to his advantage.
Generating marketplace demand from the ground up
Yannis came up with the idea for Hotels by Day by identifying a major market gap and solving for it.
“Customers would land super early in the morning, and they wanted a place to shower and change before their tour in Europe. The possibility of being able to provide something that is guaranteed, that is providing a service to customers, was becoming increasingly important.”
There was no concrete evidence or quantifiable demand for Hotels By Day. But Yannis saw how the concept could solve the following travel industry problems for both suppliers and buyers:
Consumer need for daytime use of hotels
Both business and leisure travelers often find themselves without a place to go, shower, or store their bags. Hotel By Day solves this by working with hotels to provide daytime access to rooms and amenities like co-working spaces, meeting rooms, and pools.
Wasted hotel inventory and amenities
Hotel amenities, like pools, restaurants, or spas, are often underbooked. Likewise, hotel rooms are unoccupied for long periods of time during the day. Hotels by Day puts available but unused or underused inventory to work.
Archaic hotel booking experience
Until recently, many hotel technology stacks were built on popsicle sticks. Tech was added on top of a rickety foundation comprised of manual, by-hand processes. COVID prompted a reengineering of the hotel technology stack, and companies like Hotels By Day stepped in to help hotels meet the needs of the modern tech-savvy customer.
When Yannis first started Hotels by Day, there was a clear need for daytime hotel use. Unfortunately, there was no defined market. It would be Yannis’s great challenge to create one.
How Yannis marketed his marketplace
“Building it” isn’t always enough to get consumers to come. It wasn’t until Yannis tapped into the power of marketing that buyers and sellers turned up in droves.
Yannis used marketing in two ways:
- To market his marketplace and generate buzz
- By selling the Hotels By Day marketplace as a marketing engine itself
Using marketing to put Hotels By Day on the market’s radar
By leveraging travel agents, Yannis didn’t experience much traction for Hotels By Day. So, he pivoted and did what the angel investors recommended: he invested in a good PR agent.
“Kelly Pelletier helped us jump out on the scene in a way that we didn't suspect we would or could,” he said. “She essentially knocked on every media's door, got us placements, and [got people] talking about us, which led to Jimmy Fallon. That was a big spike. We had constant press coming in, and that led us to being invited to Shark Tank. It also was a turnaround for the company, not just being invited, but also being covered.”
Many start-ups get the opportunity to stand before the Shark Tank sharks, but a rare few have their stories aired. Yannis’s Shark Tank episode was a breakthrough moment for Hotels By Day. It would lead to enough brand exposure for the company to solidify its place in the market and generate marketplace demand.
Pitching Hotels by Day as a marketing channel
When Yannis pitches Hotels By Day, he relies on two value propositions.
First, improvements to the bottom line
Of course, hotels are enticed by financial incentives. It’s easy for hotels to say yes to low-lift initiatives proven to generate revenue.
“Increasingly, our pitch is financially focused. We can predict the expected return on effort signing up to our platform based on locality, geography, quality of the property, number of rooms allocated, and amenities offered.”
Hotels have a cap on the revenue they can generate. There are only so many rooms available. Hotels By Day enables hotels to create more revenue using their existing assets and resources.
Second, a steady stream of new leads.
Hotels by Day’s major selling point is its ability to be a marketing channel. Hotels By Day gives its sellers access to new audiences, acting as a marketing pipeline.
Hotels By Day captures new leads and funnels them to hotels. Hotels can then nurture those leads and turn them into loyal customers later. Importantly, Hotels By Day helps hotels recapture leads lost to other accommodation styles. Yannis explains:
“If the apartment that you booked is close to a hotel with a pool, a gym, a co-working space, a meeting room, or another experience that your apartment does not have, then you'd consider booking it for a few hours or the day.
Suddenly, the front desk captures the details of that customer. Eventually, they email offers to that customer, and over time, that customer turns into a loyal customer. They will book the hotel in the future instead of booking the apartment. So, hotels are recapturing the customers that were lost.”
Advice to marketplace operators
Now, nine years into Hotels By Day, Yannis learned many lessons along the way. Would he do things differently? Not necessarily. He sees the fumbles he made upfront as responsible for bringing Hotels By Day to where it is today. With this in mind, he has three pieces of advice for marketplace entrepreneurs.
1. Buy technology before building technology
Yannis cautions entrepreneurs against building custom technology upfront. He believes that creating custom technology when you haven’t fully validated your business idea with the market will lead to rework and rebuilding.
“We made the mistake of going custom when we didn't specifically understand what we wanted to do and what the traffic would be. [We didn’t know] the limitations of the technology versus our growth imperatives. We were limited at various places and forced to do a whole refactoring of our coding multiple times because we engineered for the most economical solution.”
Yannis recommends launching with pre-built marketplace software, so if you do take on the enormous task of building a native solution, you’ll know exactly what you need.
“[Otherwise,] you’re building the plane while flying. And that's very, very difficult.”
2. Don't rush into a launch— but do't wait too long either
Yannis urges entrepreneurs to launch their marketplace efficiently — but not too efficiently.
“Measure twice, cut once,” Yannis says. “There's two sides of the coin. One in which I can tell you to be careful. Study, study, study before you jump into this water. Make sure you know how to swim. Make sure you can test the quality of the water before you go in. But also, don't spend too much time thinking because you can overthink it, and then you burn before you even start.”
He believes that some of the ongoing issues Hotels By Day has today are still due to launching too quickly. Yet, at the same time, Yannis believes his company wouldn’t be where it is without the path he took.
3. And finally, if you get a PR opportunity like Shark Tank, either ace it — or bomb it spectacularly
It would be easy to see a sunk pitch on Shark Tank as a failure. But Yannis credits his experience as part of the origin of Hotels By Day’s success. Getting a full sweep of Sharks is the goal, but Yannis believes if it’s not going in that direction, the best thing you can do is fail spectacularly.
“This is not a pitch to investors. This is TV drama. The show needs to be a circus in order to attract more audiences. So, that's what we were: a total circus. A shit show, pardon my French. We did so badly that they had to run [the episode] again and again and again.”
Episode links:
- Hotels By Day website
- Connect with Yannis on LinkedIn
Transcript
Yannis: [00:00:00] One of the pitches also that we gave to the hotels is the fact that, uh, we realized that customers were booking as a pre or post or even, you know, maybe a, a, a daycation at the hotel, even though they didn't stay at the hotel and they booked them in, you know, alternative lodging and would still need that hotel product for a certain period or, or a certain, you know, experience that the apartment does not have.
And so suddenly we're that channel. gets the customer familiar with the brand, with that hotel specifically. That that customer would have never been exposed to if it wasn't for us.
Niklas: Welcome to Operation Marketplace, a series where we talk to the people behind marketplaces, we dive into their mission, how they found success, and talk about the hurdles that they faced along the way.
I'm your host, Niklas Halusa, co founder and CEO of Nautical Commerce.[00:01:00]
Hello, and welcome to Operation Marketplace. I am as always your host, Niklas Halusa. Founder and CEO of Nautical Commerce. Uh, today I'm excited to introduce you to Yanis! Welcome Yanis.
Yannis: Hi Nicholas. Hi everyone. Thank you very much for the opportunity and for the invitation.
Niklas: And so, um, you are from years of experience now, uh, hospitality, uh, and, and travel industry, uh, uh, how do you say expert, specialist, um, and, uh, and, uh, it sounds like all of that has come together for you to build your life's work of building a marketplace around Um, uh, uh, that industry and some of the gaps, um, especially around monetization, but I won't speak for you.
Um, would love if you can share some of the story of both how you got here and, and, and, and, and what, [00:02:00] uh, hotels by day does.
Yannis: Sure. Um, so I'm born in Tunisia, uh, from a different, um, ethnic background from both my mother, my father and the country as in, you know, French, Italian and Tunisia being Arabic. So I come with very diverse backgrounds, um, ethnically, culturally, um, which has led me to, um, uh, essentially spend more, well, no, just be more inclined towards travel than anything else.
So I. I've had experiences in finance, in hospitality, as in restaurants, in which I open restaurants as well. Um, I've done a bunch of things, uh, you know, when you're kind of looking for what you'd like to do, you, as an entrepreneur, you try your hand in multiple things. But the one thing that came back to me, On a fairly record recurrent basis is travel and, [00:03:00] uh, discovering new locations and helping customers essentially from the United States, discover Europe and all that.
And in, uh, in my, uh, last gig before hotels by day, it was essentially, you know, promoting France, Spain, and Italy for American travelers. But at that time, customers, uh, landed super early in the morning and, uh, they wanted a place to be able to shower and change before their tour in Europe. So, you know, like they would take an overnight from the States into Europe, land around 6, so 5, a.
m. And by 9 a. m., they would love to be in the hotel room. Nothing was guaranteed. And, uh, the possibility. Of, you know, being able to provide something that is guaranteed that is providing a service to our customers that we know we should vouch for, um, was becoming, you know, increasingly important and, um, long [00:04:00] story short, I was speaking with various hotels.
In order to be able to get that inventory as pre, pre check in. And I realized that it wasn't a question of inventory, but it was a question of protocol and technology for those hotels to be able to process that flexibility. And they, they were lacking that at that time. I've seen some models in Europe that were doing something similar, but more, mostly for romance and not necessarily for, um, uh, You know, the leisure or business traveler that needed the guaranteed space either as pre check in or post check out.
And so I decided to launch Hotels by Day with the idea of providing daytime room hours, uh, so that the customer would be able to, uh, book their overnights and then attach it with a daytime service. We launched in 2015. We had nine hotels, mostly at airports at that time. And then we grew from there. Yeah.
Niklas: I, so I've been one of those people before who's booked a hotel room. [00:05:00] Uh, not just, first of all, booked a hotel room because I've landed somewhere and I wanted something, not even to sleep just during the day, put a bag somewhere, you know, change clothes, have a shower, you name it. Um, I've also been one who's booked a hotel because I have a one or two in the morning flight from an airport.
Uh, or a 6 a. m. flight from an airport with no intention of sleeping, but, uh, you know, I needed something right to go and, and, and, and, and put, you know, put my stuff down and not have to sit in the lobby of an airport. Um, so how, you know, where are you now? You started with your nine hotels around airports.
Yannis: We now have over 3000 properties. We have now over 3000 properties. We now have, uh, well, it's been nine years of experience now and Um, 3, 300 and change as of possibly last week. Last time I checked on those numbers, we're getting [00:06:00] on a daily basis and monthly basis new hotels to sign up. Um, not all hotels are live, by the way, so some would either disconnect or take a break or be, you know, turn off for a certain period of the day or of the week.
Um, and we are, uh, now approved by three large brands, global hotel brands. Uh, we're connected to, uh, more and more systems that, you know, we can source inventory from. And last but not least, what's also very hopeful for our sector is that it is just recently being, um, covered by analysts. And the daytime sector is now something that is.
A source of revenue that is bubbling up all the way up to the executive levels of the hotel brands that are now expecting a certain level of revenue, whereas before it was a nice to have, or even when we launched, it was, [00:07:00] you know, hardly heard of, uh, and definitely not very keen for the hotels to work that new revenue source.
Um, then you stream of revenue and asset up to optimization and, you know, nine years later, it is slowly building up to becoming a sector that hotels are, uh, increasingly dependent of. So we feel very, very hopeful that, um, a very bullish that the next 9 years are going to be very exciting.
Niklas: And you mentioned at the beginning that, that one of the challenges was the fact that they didn't have the protocol or the technology systems in place to, to be even able to handle that.
How did that look for you at the beginning, trying to go and get this supply on board, but also trying to do it with a [00:08:00] set of systems? That isn't ready to go and do that for you. And yeah, what did that look like?
Yannis: Look, it looks, uh, it looked slightly harder than what it is now, but I will not hide the fact that it is still quite difficult.
Um, hotels in, uh, their Um, you know, in the core of their business, they're very human centric, right? Because it's all about hospitality and being, you know, having that face to face and, you know, and welcoming somebody into your premises. Um, and so, um, technology is not necessarily something that, uh, hotel brands or independent have focused a great amount and a great deal on.
And unfortunately, um, Even when investments were made towards technology, it's technology that kind of layered on top of layers on top of layers with a [00:09:00] core that was not necessarily, um, engineered for flexibility. So, long story short, um, when we launched the platform, we had to do pretty much everything manually.
As in, you know, onboarding the hotel manually, loading the pictures manually, creating descriptions manually, doing the tutorial manually with the hotel managers. And then eventually, um, once the booking was made, sending emails, we used to send faxes as well to the hotels because they preferred receiving a fax at their front desk, then, um, then receiving an email and having to look into a different screen, at least the front desk fax would like pop out with a reservation and they could just pop it in.
I mean, take it in and then just enter it in their system. Uh, nowadays. Especially post Covid. Covid has given, um, time and funding as a matter of fact [00:10:00] to a lot of hotel brands. You know, being able to be helped out by government loans and, you know, further investments. Um, it has given a, a different perspective on the business, how to run the business.
Um, and fortunately for us, we are now since then. Part of the increasingly part of the, of the, uh, of the, what's the word, the, um, the mix. Yes, the mix of revenue and the mix of channels. Um, and, and so long story short, they are re engineering their PMSs. their property management systems. And with that, they're also making new, um, upgrades to their CRSs, the central reservation systems.
Uh, and so there are essentially slowly, but surely [00:11:00] coming closer to where we are so that we can meet, integrate. And scale. Uh, the good news is that we've done this integration now with the second biggest hotel brand in the world. So we know it works. We've got, um, about 500 hotels in operations that are opening or closing inventory on a daily basis with this brand, which I'm not, I cannot publicly state which brand it is, but everybody will recognize it.
Uh, and just count to one, two, three, number two is, is that brand essentially long social where COVID actually has been an enabler for our business, uh, to get to a place where we can integrate and we can scale. And so we're working those kinks right now to get there. The good news is that in the last three years, um, we went from five countries that we used to sell.
Uh, [00:12:00] all, you know, since from 2015 to 2020, we were in 5 countries and post 2021, we moved on to 7 countries. We're now in, well, technically we sold into 36 countries as of the end of last year. But we're prominent in the 11 of them. So that scalability is happening as we speak.
Niklas: What is the exact pitch that you put forward to a hotel?
You know, the, the, what's that, what's the calculation they need to make, uh, to be able to say, okay, this is worth. The effort and, and, and, and, and, you know, it's worth getting these folks on site to go and make a connection.
Yannis: Well, increasingly that, uh, pitch is, is, is, you know, financially, uh, focused as in like we can predict now the, um, the, the expected return on effort in, uh, signing up to our platform.
Uh, you know, based on, [00:13:00] uh, locality, geography, um, quality of the property, number of rooms allocated, uh, amenities offered, we have an expec we, we can estimate, more or less, what the return will be. We're still seeing some variables in terms of brands, uh, we realize that some brands actually command, uh, traffic that others don't.
Um, so that's pretty interesting. That's a new discovery. That's a new insight that we weren't, you know, familiar with. Um, of course, you know, categories of motel versus hotel, which we don't accept the motel, we knew that there was a different type of clientele, but we weren't, we weren't fully aware of the brand by itself and the, and the, the The conversion power of a brand.
Um, so we're increasingly getting aware of that. And, um, that's the variable that we're not 100 percent sure of. Well, I mean, there's very little we're 100 percent sure, but [00:14:00] it's a variable still that we're not, we cannot calculate is what I'm trying to say. But before we got to this point in being able to give a financial number to attract the hotel and to, you know, bait the hotel into working with us, If maybe that's not a good word, but anyway, you, you caught my drift.
The pitch more generally and more broadly is on the fact that the hotel might want to do the following things. One, attract a new clientele that needs flexibility to, uh, modernize their operations, their systems, their, um, their protocols. Uh, in order to be able to widen the net of customers that they would attract.
Because again, when we were talking, we just talked about brands just a minute ago, you know, you'd fall, uh, into the category. You know, [00:15:00] everybody's kind of accustomed to getting their own customers, right? Unless you do something different. And once you do something different, then you attract a new set of customers.
And so we're that thing that is different amongst others, but we're that different. product and service. And last but not least, one of the pitches also that we gave to the hotels is the fact that we realized that customers were booking as a pre or post Or even, you know, maybe a, a, a daycation at the hotel, even though they didn't stay at the hotel and they booked them in, you know, alternative lodging like Airbnb or an apartment somewhere, you know, so they, their family or a couple would book somewhere that is not a hotel product and, and would still need that hotel product for a certain period or, or a certain, you know, experience.
that the apartment does not have. And so suddenly, where that channel, uh, gets the [00:16:00] customer familiar with the brand, with that hotel specifically, that that customer would have never been exposed to if it wasn't for us. Because, you know, a customer and the general public still at large think of a hotel as a place for a night stay.
And so if you booked an apartment, what would you consider a but if the hotel that you booked Or if the apartment that you booked is close to a hotel, uh, that has a pool, a gym, a co working space, a meeting room, or that offers a, you know, a variety of, of experiences that your apartment does not, then you consider booking it for a few hours or for the day.
And then suddenly you're exposed to this properly. And then suddenly the front desk is now, um, capturing the details of that customer. So that eventually they could email offers to that customer so that that customer eventually turns into a loyal Customer to that hotel [00:17:00] in the future instead of booking the apartment next time.
So it's recapturing the customers that were lost With you know new formulas of alternative logic. So that was definitely another selling point
Niklas: You know, I think a lot about marketplace math, particularly around, you know, how, what a sufficient incentive for the supply side is, first of all, you know, how do you calculate your success in being able to be, if the marketing channel is the sort of the primary goal, how do you, how do you calculate that success?
And at what number or percentage. You know, improvement uptake, you know, what does it take to get a hotel to, to, to, to bite, right? What's the, you know, what does it take them to get out of bed at night and do this?
Yannis: We were very shy of the potential return, return [00:18:00] on effort, right? The return that Hotels By Day would be able to bring.
Not only because the channel was not fully developed, and it still isn't, you know, we're still at the starting phase. That's the way I see it. We're still really at the beginning. I wish it didn't take nine years, but you know, it is what it is. And we all like what we're doing. So, you know, might as well spend it doing, um, something that you like.
So, um, but yes, stakeholders, investors would love, uh, you know, a little bit of a faster growth, which we're working daily. But this being said, we were very shy on the revenue that we were potentially bringing to the hotels. We weren't really sure about it for one. And then once we kind of knew, we felt like, well, you know, it's not a gigantic number.
And then we realized, I mean, the hotel is in the business of actually having a wide mix of different channels. Um, and so we're one that does not cost them anything. [00:19:00] We're one that, um, essentially optimizes assets that they already have. Um, we're one that creates a whole new source, uh, of customer acquisition and customer, um, uh, revenue essentially that did not exist before.
And then suddenly we realized that actually the arguments are very powerful, um, and no matter the financial number, the, the, the, um, the asset of being part of our platform is, is there regardless. Um, consider this, uh, if a hotel were 100 percent sold out, you know, let's say they did an amazing year last year, um, you know, how will they be able to improve next year?
You know, increase, increase rates. Yes. Okay. So they've all done that in the last three years post [00:20:00] COVID. There's a certain limit in which you can increase rate and then you're kind of stuck because, you know, otherwise you lose customers, you lose traffic, you lose, uh, revenue in that sense. Um, so revenue.
Optimization of your night stays is definitely something that hotels are getting better and better at. But if you want to significantly significantly make an improvement, you cannot add more rooms into your hotel, right? You cannot cut them in half or add an extra layer or an extra floor, but you could use us as this tool to be able to out of the same asset, be able to turn it.
Uh, once, twice, without impacting your overnight, without displacing your overnight. Why? Because there's essentially a game theory out there that even when, so we, we know the numbers, but at a certain level of occupancy, even when you're running red hot, [00:21:00] you know that there's X amount of customers that leave very early in the morning, your hotel.
And there's another sets of customers that come in late. to check in. Um, other customers, not the same. Um, and so within guests that left early in the morning and guests that comes in late at night, even when you're high occupancy, you could slide in a certain amount of rooms during the day. Or even pool passes, gym passes, cabanas, co working spaces.
Um, you could slide them in and make the most of the assets that you currently have.
Niklas: Yeah. Now, one of the things that I noticed that stood out to me is that you have, it seems, made a conscious decision to not get into the event space of hotels, which is the other, I Uh, believe big revenue stream that [00:22:00] hotels tried to, you know, take advantage of using their ballrooms or the dining rooms of their conferences, conference rooms, um, and their existing hospitality staff that know how to deal with these things. Why not?
Yannis: Because it's not, uh, because the, the idea behind it is not as innovative as, as, uh, We, we, we basically, you know, the concept of Hotels by Day is to create a new category and not necessarily to monetize or to perform better on something that already exists as simple as that. Now, why have we not gotten into it at some point?
Uh, because, you know, every company has its own muscles with its own habits, with its own, you know, objectives. Uh, it's hard enough already to manage whatever you do best. And to keep on being the best. Um, and so moving into events, as in, hold on a second, because we've rent out event spaces, [00:23:00] but not, we've not organized the event.
Uh, so we're, we're in a way, we kind of getting close to that sector, but we're not an event organizer. And I know the business because I was a travel agent, which is in a way an event organizer. Um, you know, because if you do it for a group of 30, you will organize a lot of events. Uh, and so, um, Yeah, that's just not the muscle and the technology that we've created at Hotels by Day.
But we're, we're the, we're the real estate optimizers, not necessarily the, um, you know, we're an experience as well. As in like, it's a new experience that didn't exist before, but we're not an event, uh, focused company.
Niklas: The investor and the entrepreneur in me loves the sound of focus. Uh, that's, uh, that's, that's key.
And now switching a little bit to the [00:24:00] buyer side of things. Um, how do you manage that at the, first of all, you know, how did you manage that at the beginning, trying to build through your cold start problem of having, let's say only nine locations. And trying to fit into that, you know, the kind of demand that, that is, that is willing to buy.
Yannis: Yeah. Um, so it was a shot in the dark. Uh, I knew that there was demand, but I wasn't sure exactly how to get it. I suspected that I needed to talk to travel agents, which I did, but we never really got that much traffic from it. Um, we got most of the traffic from the public. And, um, essentially what we did and what, you know, early angel investors have recommended we do in very correctly.
So was to [00:25:00] invest on a very good PR agent. Um, and that PR agent, uh, Kelly, Kelly Pelletier, I have to mention her name. She, she essentially helped us jump, uh, from, uh, Out on the scene in a way that we, um, didn't suspect we would or we could, uh, we hoped, but we didn't know exactly how and so P. R. was crucial and she's one of those P.R. agent that not only through her connection, but also through her hard work. She essentially knocked at pretty much every door, every media's door and got us a placement in communicating and talking about us. Which has led to a Jimmy Fallon, um, you know, uh, coverage one night, and that was a big spike, um, and constant, you know, press coming in, and [00:26:00] that has led us directly into being invited to Shark Tank, and that also was a turnaround for the company.
Not just being invited, but also being, um, you know, uh, covered, um, and, and, and, and we were, uh, on their, um, we were live on their, um, on their series, um, which, you know, there's a chance. They invite so many startups. There's a chance that some of them will actually not be aired, aired was the word I was looking for.
So we were aired on that. And that also was a turnaround in 2017 for the company. And that was very helpful.
Niklas: So I consider myself a shark tank. Uh, fan, and I do not remember watching your episode, so I'm going to go back and watch because I actually think Shark Tank is one of the best ways for people to hone investing instinct, even if it's of course a little bit groomed and cut and, and manicured, let's [00:27:00] see.
Yannis: are you kidding? It's a circus. It's like, it's the craziest thing I've ever had to experience. One of the craziest in my life for sure.
Niklas: Maybe we stick it in the show notes. Kind of going a little bit deeper than on the, on the, on the user side of things. Um, so you got your, you know, your initial flow and obviously with the PR, um, got that, got us back in that customer base.
How much do you worry or focus on, um, on return customers for hotels by day versus, um, You know, net new ones. What's the, what's the driver in that business for you?
Yannis: The good news is that we've got, um, we've got them all. We've got a certain amount of new ones versus a certain amount of repeats versus a certain amount of multiple, uh, you know, high traffic, high, uh, repeat users.
So that's the good news. Now, I do [00:28:00] recall the moment in which we focus more, um, of a marketing effort being that, you know, we're still quite limited in our resources, right? But I do recall this moment in which we spent a lot of time on the repeats. And we kind of spun our wheels on that, and we didn't, you know, like three to six months later, we didn't get the return that we expected.
Why? Because, look, there's, at the end of the day, there's just, So many bookings you can do for the day, uh, whether you're traveling or you're meeting or you're working or you need to nap, you know, this is not a daily consumption of a product, right? Uh, unless in very rare cases, it's not a daily consumption.
So spending so much time on repeats sounds like a business. smart idea. But then he kind [00:29:00] of, um, drains the funnel of new customers that eventually could repeat the second time, but not so many more times. Um, and so you, you kind of, you, you throttle the flow of, of entry, hoping that the ones that are already there would repeat it multiple times.
And yes, you can make a little bit of an uptick here and there, but at the end of the day, if that customer is not traveling to, say, Chicago or Atlanta or Miami, or, you know, you can't influence a person to do that, right? Uh, so you can remind them that you're there and that's what we do. Um, but, uh, but focusing on, uh, repeats, um, in a very narrow, uh, sense of just having that strong, strong focus and making sure that you can monetize your repeats better than anybody else, um, is not a strategy that I thought was a winning one.
[00:30:00] So we change our marketing, our PPC to then, you know, be a little bit more broad. So spending more on branding campaigns versus on, um, you know, repeat conversions, if that makes any sense.
Niklas: Yeah. Now, naturally we're on our side, uh, very interested in the technology part of it, or the technology question. One thing that stood out for, for me is something you said earlier, which is that one of the incentives of your, of your hotels is for them to have a reason to modernize their, their PMS systems and their, and their protocols.
How deep do you go? You know, how much of a hand do you have in affecting that for them? Are you consulting them on their, are you consulting them on, on, on their tech [00:31:00] systems or are, do you, are you, uh, uh, just, uh, uh, let's call it a forcing function,
Yannis: a forcing function, explain.
Niklas: So for that to be a sales angle for you to, for them to, to go and to go and modernize. Um, are you explicitly helping them or is it, is it that, you know, you've got to find some manager, some IT person internally who says, I've been wanting to do this forever. Finally there's money on the table, helps me do it, but it's not you doing it.
It's then kind of finally getting over the, getting over the hump.
Yannis: The relationship that we have with the hotel is of trust of. of loyalty, of kindness, of, you know, of good partnerships, and that's extremely important. But the one thing that does not exist is a tie [00:32:00] up to us in a way that you'd like a partner to be tied up to, you know, the people you work with.
Um, like maybe in a, in another industry, like you could tie yourself up to one partner and you stay with that person. Yeah. Absolutely. That does not exist. I'll tell you why it does not exist in hospitality. When the large OTAs came into the, um, into the, into the, into the market, like internet, you know, online travel agencies came into the market, they asked for, um, exclusive contracts.
And that was something that they were able to get in the first few years of their business. And that exclusivity essentially just, um, tied the hands of a property to be able to do whatever they thought was best for the company. So now, uh, there's very few, if not [00:33:00] almost none, uh, exclusive contracts being, uh, set up in the sector.
'cause the hotel would not tie itself up to any one operator or any one channel. And it led to past lawsuits. It led to a lot of raca, you know, that. The hotels don't want to deal with anymore. And because of the somewhat abusive tactics of the large operators, uh, sucking the chat, the customers, you know, away from the traffic that hotels were totally blindsided to, um, to, to, to, to adopt as a new technologies, like late nineties, early 2000.
They didn't think of technology in order to capture customer. They thought of technology, you know, to be able to operate a little bit better. Um, and even then, and even then that was like the most, you know, forward thinking properties were just adopting technologies within the operations, but not [00:34:00] necessarily into the marketing side of things.
And so they depended on online travel agents a little bit too much. And that created a somewhat of a friend, frenemy situation where it's a friend, but it's also an enemy. It's somebody that you need in order to get to. resources into our new customers into, but you don't necessarily want to pay them the exorbitant fees that the online travel agents used to charge, which is no more.
But that created somewhat of a bad blood, a legacy of a bad blood that would not allow a hotelier to grant you access to their technology. For you to get into and for you to make tweaks so that your channel is well placed into. So there's a firewall and, uh, there's many different, uh, service providers in hotel and hospitality technology that are essentially, um, API boosters.
Uh, they're, [00:35:00] um, they're connectors as we call them, uh, in which you connect to them and then you connect to the property and that those are the, um, place of trust and of access for you to be able to then connect to different properties. So a direct connection to the property itself. does not exist anymore.
This is old school. Hotels don't do that. They actually severe and cut that channel now. And they ask that you go through those hubs and from there you then can't connect to different brands, which to us is good because now we just have to create one channel to the hub and not 500 channels to 500 different properties.
One channel to the hub. And there's like, you know, three, four big hubs in the world. And those hubs, us being connected to the leader, uh, allows us to be able to scale through the hub, and that's already quite of an achievement in its processes in technology. Um, now [00:36:00] I'm not so sure if that actually answers the question that you were asking, which is.
Are we a force, are we, are we a forcing function to changing the technology? Um, conceptually speaking, yes, and increasingly yes. Uh, look, the various millions that we generate, I cannot put a number, I cannot state the number, but the various millions that we generate on a yearly basis, Is not yet a game changer for them to say, Oh, no, no, I need to, you know, change my technology all around.
The good news is that we are part of that tech agenda upgrade that every hotel nowadays is considering. Uh, you know, it's not just hotels by day being a buzz word. Uh, it's the concept that you, your customers are asking for something different. You know, the, the more modern, the younger, the customer. The, [00:37:00] the, the new generations coming in, I expecting things to be done on the app, I expecting things to be done around their own agenda, not the hotel's agenda, so think about it, you know, uh, the, the protocol and the systems of a hotel is fairly antiquated, you know, for thousands of years, they did not allow you to come in before three, and they forced you to get out by 11.
I mean, maybe that worked when, you know, your daily routine was not so hectic as it is today, where, you know, from our phones, we have 25 different things happening pretty much the same hour. Agendas change. They're more flexible, more fluid than they've ever been. Um, And so, uh, in a world of fluidity, in a modern world in which things change all the time and then flights depart and, and arrive 24 7, not just, you know, seven hours during the day, and buses and cars and, essentially, traffic [00:38:00] is all over the place.
Uh, for a hotel to think itself hospitable when they tell you, no, you cannot come in before then and you must leave after, is inhospitable. It's turning inhospitable. So they understand that. In the core of their business model, they're not being as hospitable as they wish themselves or they claim themselves to be.
So we're part of that, we're part of that thinking, we're part of that, you know, new, uh, world. That we all are building together in order to be able to operate.
Niklas: Makes sense. And do you consider yourself technical?
Yannis: Uh, I'm not an engineer, but I'm increasingly understanding the components of it.
Niklas: How do you build?
The software stack for hotels by day, you know, what, what is, what does that look like?
Yannis: Um, so the, the framework, uh, the [00:39:00] language, uh, the connection, uh, the API language as well. Um, all of that I was not involved in. Um, and we have, uh, we had, um, an agency that we hired in order to create. technology essentially.
Um, we had the option of either using different plugins, um, or the option of creating everything native. Uh, it was our original backers, uh, choice to go with something completely native because when you have something native, then you hold an asset that you can eventually exit from. With something in your hand, as in the plug in, you're never the owner of that product.
If that plug in decides to disappear out of the market, you're in trouble. Um, but the good news is that the good thing about a plug in is [00:40:00] that it, um, it, uh, it gives you that versatility of being able to either add more plug ins very quickly. Um, because the resources are already built in and the resources.
That it, that it requires to create that connectivity is much less than building the whole stack. Um, and the advantage of a plugin is that it costs you so much less because you just, you know, you just pay a certain fee on a monthly basis. And you don't have to have the operations of multiple engineers, uh, in your staff, uh, roster.
That you have to pay regardless whether you're making updates or not, because they need to be there to make sure that everything is running smoothly, because something will always break, unfortunately. Um, so, uh, my, my recommendation to, uh, startup entrepreneurs, especially [00:41:00] on the, on the, um, on the marketplace ecosystem.
is to look into plugins when you first launch with the objective within one year style. Once you've seen the traction to then move on to something native, as native as you can. So when you say native, it's sort of custom. Yeah, custom, like, yeah, build it for yourself. Um, and I think we've made Uh, the mistake of going custom when we didn't really specifically understood what the traffic was going to be, uh, the limitations of that technology versus, you know, the, the growth imperatives.
And so we, we were kind of limited at various places, uh, being forced to do a whole refactoring of our coding, uh, multiple times, uh, because we were kind, we kind of engineered for it. Uh, I wouldn't say the cheapest solution, but definitely the most economical [00:42:00] solution without necessarily, you know, because you come into, like, not knowing exactly where you're going, you don't necessarily build for the largest spaceship that you could build.
That makes sense, right? What's the point? So you kind of build for. You know, a certain, uh, boat size, uh, and then you outgrow this boat size and you're kind of stuck because now you're kind of, you're, yeah, I think the analogy is you have to build the plane while you're flying, uh, and that's very, very difficult.
Niklas: Yeah. What I often tell people is, uh, is if you think building software is hard and sucks, maintaining software, that's the real, that's where the real pain is. It's something breaks and. It's an important month and there's an update to your software package and there's a security hole or something. And.
You have to do something about it and that headache never goes away. I mean, are you, [00:43:00] are you open to sharing what percentage of your, of your OPEX today is, you know, that, that technology overhead that you, that you maintain?
Yannis: Yeah. Um, it's, it's within the 30 percent or so, uh, of our, uh, of our PNL. Yeah.
Actually, I actually. If you consider that the software that you, uh, you subscribe to are the software you need for you, the good operation of your native technology. Uh, then, yeah, like you're, you're reaching close to 40%.
Niklas: With that said, culturally, do you think of yourself as a hospitality company or a technology company?
Yannis: So it's a very good question. And we're definitely, uh, a tech centered [00:44:00] company, but with a very strong component of marketing. Basically, what I'm trying to say is that there are two pistons here. Um, and one does not work well without the other one and they both have to run. Like when you run the engine, one is up and the other one's down on a constant basis.
And so being a marketplace, I think you have to run with four or five pistons because they're all like kind of like moving at different moments. But, uh, marketing and tech are the main pistons of your engine. And so we think ourselves as a marketing company as well. Because we are essentially taking a hotel and marketing to a whole new audience in a whole different way, or a different way, pardon me, with using different words, um, and, and communicating a whole different experience that a hotel was not even aware that they could provide.
Uh, so the marketing component is as strong in our DNA as the [00:45:00] technology is.
Niklas: That makes sense. What other advice would you have for people who are, you know, we're thinking of, of building a marketplace or thinking of adding marketplace to what they do? Um, obviously you already shared some of the fantastic stuff on, on, on how to think about learning about what solution you really need to build, but is there anything else that really jumps out at you from your experience and you've been doing it for a long time now that, that you would want to share with an audience?
Yannis: Um, conceptually speaking, I think, um, Hotels by day is still, um, paying the price of launching maybe a little bit too quickly. Not so much market research, but more as an objective and a goal. Let's remember that there was very little market research you could do. You had to have a hunch that I had that there was enough of a demand out there, uh, to create a business.
Well, it turns out there wasn't so much, but we had to build it. We had to create it. And so those [00:46:00] nine years passed. Our nine years in which every single year we grew, but we grew with tremendous effort in educating both the hotelier and the customer that there's something else we can do together.
Because it wasn't a question, as we mentioned earlier in the interview, just like in the event space. It wasn't a question of performing better events that already had demand for. There was very little demand. There was conceptually the need. But there was no demand for it, if that makes any sense. So we had to essentially put all of that together.
So long story short, um, and it's, you know, there's, there's some, um, like, I'd like to give advice, but there's always a counterpoint to be said. But, um, if I were to, uh, suggest to an entrepreneur, uh, and give a few, you know, main advices, uh, [00:47:00] measure twice, cut once. Um, spend essentially, and I've been asked the question before, and I'd like to just give that analogy.
Once you launch in your tracks, you're on that railroad track and you have one single goal or multiple goals, but you are within those rails, right? Uh, and you're launched and there's very little, you can't stop the machine anymore. You can't go back unless you want to make a hard pivot. Um, and you have to live with the consequences of your past decisions.
And so there's been a lot of stumbling blocks to hotels by day, uh, because of things that we didn't necessarily spend too much time in. Evaluating, studying, testing, um, uh, questioning. We just launched it. We were like the, you know, the, the, the, the typical entrepreneur that was like, I want to [00:48:00] do this. I don't care.
Let me just jump. And in a way we are, you know, so I'm saying all that, all those caveats, but in a way, it's also part of a success of the company. It's the fact that we can be a little bit of a kamikaze. A little bit of, uh, Hail Marys, you know? Just jumping to something you don't know. You don't know the, the, the temperature of the water.
You don't know if it's hot or cold. You just jump and then you'll see if you can swim in it. Um, that's also been part of our of our success. So there's, you know, there's a two sides of the coin in which I can tell you, be careful, study, study, study before you jump into this water and make sure you know how to swim.
You make sure you can test the quality of the water before you go in, but, but also don't spend too much time thinking because you can overthink it and then you burn before you even start. Um, so, you know, you have to be, you have to be in this equilibrium. Oh, and by the way, I think that's the DNA of a marketplace.
You have to be [00:49:00] able to be a proper judge because one day you'll wake up with one, uh, this one, one problem in your head that will just obsess you. The very next day it will be the exact opposite problem. Uh, so, and that's the nature of a marketplace. Um, you can build supply, supply, supply, and then suddenly you realize you don't have as many customers for that supply.
You can build customers, customers, customers, then suddenly you realize that you've got a hole in supply in one specific spot. And that's the marketplace. You always have to balance things.
Niklas: Yeah. One of the things, one of the lines that always echoes in my head is product market fit is a hell of a drug for a business.
And so that question I think is the one that really just needs to be answered ahead of time. Um, but really appreciate your time and appreciate you coming on here. There's maybe one last question that I've been dying to hear the answer to, and I'm sure our listeners, um, uh, have as well, which is, did you get a shark?[00:50:00]
Yannis: Oh no, I did not get a shark. I did not get a shark. Um, I, I actually did the opposite. I bombed it almost legendarily. Uh, it was, it was, it was, it was such a, a, a bombing show and act in the show that it actually gave us something that was unexpected, which was they aired it multiple times because it was so dramatic.
So much fun to the audience, uh, that, uh, that actually that was, if I have to give a suggestion on what, how to run a shark tank, um, you know, interview and opportunity, you can do two things. Uh, either you AC and you've got every single shark that wants to be part of it. And then Sunday, like, you know, they will repeat that show multiple times.
Well, if you get the investment from the shark, that's great. But if you feel that it's not going to go there, [00:51:00] just try to be as dramatic as possible because this is not a pitch to investors. This is TV drama and TV audiences that needs to show as much of a circus in order to attract more audiences. So that's what we were.
We were a total circus. We were a shit show, pardon my French. And, um, and we did it so badly that they had to run it again and again and again.
Niklas: So that is the attitude of a growth hacker right there. There's no such thing as bad publicity Guys, Marty, really appreciate your time. Thank you for coming on the show and best of luck with business.
Yannis: Thank you, Nicholas. Um, the interview was great. Your questions were amazing. Uh, incisive, uh, very thoughtful and I, which led me to really enjoy this podcast interview. So thank you so much. It was great to be part of it.