Bobobox co-founder Indra Gunawan said the start-up would target budget-conscious millennial travelers as part of the burgeoning domestic hotel market, valued at US$6 billion this year, according to undisclosed third-party data. Almost athird of the market is facilitated by digital platforms.

In capturing the market, Bobobox intends to have around 600 capsules in nine to 10 locations by the end of the year. It currently runs 326 sleeping capsules in five outlets located in two cities in Indonesia.

“If everything goes well, we hope to be in 100 locations by the end of next year,” Indra said at the launch of Bobobox’s first two Jakarta-based outlets on Thursday.

Bobobox, taking its name from the Indonesian word bobok (sleep), typically used in conversations with children, launched its flagship outlet in Bandung in July last year.

Bobobox has turned an operating profit with every outlet by suppressing each capsule’s investment cost to a quarter of that for conventional budget hotel rooms, while renting them at higher than rule-of-thumb prices, Indra said. Bobobox recorded an 83 percent occupancy rate this year.

“We have a much bigger surplus margin than traditional or conventional hotels. This makes our payback periods shorter. Ours is at 3.5 years compared to eight to nine years for traditional or conventional hotels,” Indra added.