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Capsule hotel start-up eyes RI's $6b market
Homegrown capsule hotel start-up Bobobox has set its crosshairs on a multibillion dollar domestic hotel market in Indonesia, aiming to be in 100 locations in 11 cities across the archipelago next year, from five outlets in two cities today
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span>Homegrown capsule hotel start-up Bobobox has set its crosshairs on a multibillion dollar domestic hotel market in Indonesia, aiming to be in 100 locations in 11 cities across the archipelago next year, from five outlets in two cities today.
Bobobox cofounder 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 a third 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.
Bobobox cofounder Antonius Bong, who was one of Indra’s peers at the University of Melbourne, said the company “was set to begin operating outlets in Bali, Surabaya, Semarang, Medan and Yogyakarta by next year’s first quarter”.
While Bobobox is not the first capsule hotel in Indonesia, it is likely the largest capsule hotel chain brand, easily outpacing competitors such as Capsule Indonesia and Whiz Capsule Hotel, which respectively have two and three outlets.
“There aren’t many capsule hotels in Jakarta. There are several in Bandung with similar concepts but Bobobox has an advantage in digital solutions,” said Achmad Fauzi, market manager at travel-tech unicorn Traveloka, which has worked with Bobobox since 2018.
Bobobox differentiates itself from competitors by offering more spacious rooms — enough to fit double beds — and by automating hotel-related processes such as check-in and check-out. The start-up offers rooms in Jakarta for as low as Rp 132,000 ($9.40) per night.
Bobobox's more serious competitors are hotel management start-ups such as OYO, Reddoorz and Zenrooms, each of which operate over 10,000 rooms and mainly target budget-conscious millennial travelers. In comparison, OYO rooms in Jakarta go for as low as Rp 137,000 per night.
Like other budget hotels, Bobobox’s growth piggybacks on the growth of Indonesia’s tourist industry, which accounted for 5.35 percent of last year’s gross domestic product, up from 5 percent the previous year, according to Tourism Ministry data.
Bobobox received in March undisclosed funding led by Indonesia’s Alpha JWC venture capital firm and in April $1.5 million led by Surge Ahead, a start-up accelerator backed by American venture capital firm Sequoia.
Indonesia’s online travel market, which includes online hotel and flight bookings, is expected to grow at a 16.12 percent compound annual growth rate over the next six years up to $25 billion by 2025, according to a recent Google-Temasek report.
Bobobox’s expansion aligns with the Tourism and Creative Economy Ministry’s development plan, which promotes improving domestic “access, attractions and amenities” to draw in foreign tourists. Hotels such as Bobobox fall within the “amenities” category, alongside restaurants.
According to Statistics Indonesia (BPS), foreign tourist arrivals in Indonesia hit 1.4 million in September, up 2.1 percent from the same month last year.
Tourism Ministry deputy secretary Edy Wardoyo said Bobobox played a particularly important role by diversifying budget accommodation options for millennials, who are the ministry’s main target market.
“As a rough estimate, around 40 percent of foreign tourists are millennials,” he said.
