Decoding Yanolja Cloud and Its Hotel Software Strategy

Yanolja Cloud has scorching growth plans for hotel software sales, fueled by Softbank’s $1.7 billion investment in its parent company, Yanolja, last year.

• Yanolja Cloud sells “global” hotel solutions, meaning ones built primarily for outside of Korea, as a division Yanolja, a Seoul-based startup that runs hotels and a travel and lifestyle booking app.
• Since 2019, Yanolja Cloud has increased the number of hotels that license at least one of its “global hotel solutions” by 60 percent, to 43,000 hotels.
• Yanolja Cloud appeared to have boosted its business, as measured by absolute customer count, more than any other maker of software for hotel operations during the past two years. Many of its clients are in the Middle East, Africa, India, and Southeast Asia, including Malaysia, the Philippines, Singapore, and Indonesia.
• Softbank, the world’s largest venture capital investor, often invests in startups with a go-big-or-go-home approach. Names include office-space provider WeWork, mobility app Uber, hospitality conglomerate Oyo, and tours and activities booking travel agencies GetYourGuide and Klook.

Yanolja Cloud is moving so fast that its media statements can seem confusing and sometimes contradictory. To clear up some details, I interviewed Jungyun Kim, the chief strategy officer of Yanolja.

Kim said Yanolja Cloud wants to overtake Oracle Hospitality as the global market leader in hotel operational software sales.

• Yanolja Cloud has many brands. “We touch everything from vacation rentals all the way to 5-star hotels, resorts, and chains,” Kim said.
• Yet as of today, the majority of Yanolja Cloud’s client base is in the small-to-medium-sized accommodation segment.
• “But we will be ramping up and accelerating our solutions business to serve the upper segment,” Kim said. “Oracle Hospitality is the competition we’re aiming to overtake.”
• Other companies such as Mews, Cloudbeds, Apaleo, Protel, and Guesty, are indeed competitors, too, Kim acknowledged. “But the clear market leader in our field is Oracle,” Kim said.
• “Not only will we be surpassing Oracle in terms of the number of customers, but we’ll also be competing on its playing field head-on by selling to the much larger and more complicated hotels than the budget segment,” Kim said.
• As a private, venture-backed company, Yanolja Cloud can afford to spend aggressively on sales, marketing, and software development while operating at undisclosed-but-presumably-high net losses. If it aims to go public in the next couple of years, however, it will need to show a path to profitable growth.

Yanolja Cloud has a mission of digitizing and automating “spaces,” which includes “hotels, restaurants, commercial offices, residential homes, and mobility.” It also intends to help with “global data distribution” for these segments.

• “We are aiming to become a ‘space-as-a-service’ company based on big data by digitalizing all information about occupied static space as well as covering the dynamic journeys among such spaces,” Kim said. “As part of that, we will become a full-stack hotel management technology solution developer and provider.”
• Yanolja Cloud ultimately has a B2B2C (business-to-business-to-consumer) strategy.
• “Currently we’re expanding aggressively on the business-to-business front, creating the foundation for our full business model,” Kim said. “In the near future, Yanolja Cloud will cover the full spectrum of touchpoints in the travel industry, from enterprise to consumer-facing.”
• Eventually, hoteliers will be able to view Yanolja Cloud as a one-stop-shop for technology to run their operations, such as for handling bookings, distribution, and revenue management (a.k.a., rate setting), Kim said.
• Today Yanolja Cloud offers its cloud-based solutions on both a subscription model and a transaction (or commission-based) model. It lets hotels buy services a la carte or as a suite.

Yanolja Cloud’s strategy of tackling “spaces” instead of just “hotels” is an ambitious goal. Perhaps overly ambitious.

• The conventional wisdom is that a vendor’s performance is likely to be better if it focuses on solving a customer’s pain points for a few key functions and then iterating fixes on those functions more quickly than competitors do.
• Yanolja Cloud instead seeks to be good at many things at once.
• “Yes, you are right that focusing on one thing is a good strategy,” Kim said. “But doing multiple things with data connectivity is better.”
• Kim gave two reasons why he believes Yanolja Cloud can succeed.
• “First, with increasing customer data accumulated at Yanolja and Yanolja Cloud, we’ve been studying the customer journey and accelerating our understanding of customer behaviors backed by big data,” Kim said. “By seamlessly connecting data, we can understand our customers much better and personalize the service across multiple spaces. We can use data from hotel booking to help identify whom to target in the restaurant sector, for instacne, as we personalize the experience on our superapp and in multiple solutions.”
• “For instance, we invested in Now Busking in 2020, the top waiting-list solution provider in Korea’s food-and-beverage [F&B] sector,” Kim said. “Since then, we’ve been studying customer data to expand in F&B.”
• “Second, we would like to pursue strong partnerships to quickly expand to other sectors,” Kim said. “As we’re expanding to new areas other than travel and hospitality, Yanolja Cloud has successfully secured trustworthy partners.”
• Skeptics might respond: Well, every company would like to do all of that, but doesn’t a baby have to learn to crawl before it can walk?

Yanolja Cloud has acquired or built multiple hotel tech brands, including eZee, Zen, Y Flux, SanhaIT, and Dable. To outsiders, the portfolio can look like a confusing patchwork with redundant offerings.

• “While at first glance, there seems to be a conflict or an overlap, there is actually no real overlap or conflict within our group and our offerings,” Kim said. “The services are all complementary to each other, and they also target different hotel segments and end customers.”
• Yanolja Cloud’s Y Flux PMS [property management system] was developed as a tailor-fitted product for the budget and business hotel segments in Korea, Japan, and China.
• EZee’s solution is targeting the three-star and below classes of hotels and chains in the global, or “beyond Korea,” market.
• “All Yanolja Group entities share and cooperate to ensure that any new products and developments made at any level are interoperable,” Kim said. He gave the example of an integration between eZee’s channel manager and Zen Rooms’ dynamic pricing solution, which he said creates a combined revenue management suite. 

What is eZee?

• Flashback: In 2019, Yanolja bought Indian lodging management platform eZee Technosys. It essentially used it as the foundation of Yanolja Cloud’s global hotel software empire.
• EZee Technosys’ core products, including its flagship property management system, are sold under eZee branding. Its latest product is eZee Mint, a revenue management solution that enables hotel owners to price their inventory using data inputs.  

What is Zen Rooms?

• Zen Rooms, which is part of Yanojla Cloud, has had multiple businesses. It’s been a hotel franchisor similar to Oyo or RedDoorz; an online travel agency; and a seller of hotel management software.
• “After being acquired by Yanolja, Zenrooms has transformed from primarily a franchise hotel business into a full-stack hospitality technology solutions company, which is being operated through a brand name of Zen Hospitality Solutions, together with its zenrooms.com online travel agency business in the Philippines,” Kim said.
• The business pivot has worked, Kim said. Zen Hospitality Solutions grew its worldwide license sales by 137 percent between the end of September 2020 and the end of September 2021.
• It now claims to be the number-one hotel management technology solution provider in Indonesia as measured by total customer count.
• In the Philippines, when hotels list their inventory on the online travel agency, Zen tries to crossell licenses to its hotel management tools.

What is Y Flux?

• “We currently use Y Flux as our branding for products launched in Korea,” Kim said. “However, we do look to launch our global products under the Y Flux brand in the foreseeable future.”
• Y Flux GRMS (Guest Room Management System), for example, refers to a hardware solution that enables monitoring and controlling in-room devices through internet of things technology, such as keyless door locks and remote control adjustment of temperature and lighting. “This is very different from the pure software-as-a-service products such as a property management system, a central reservation system, or an online marketing agency,” Kim said.

Yanolja Cloud in December acquired ad tech company Dable. How does that fit in?

• Kim said Yanolja Cloud’s vision is to build something it calls a demand-side platform, or DSP. Dable will be foundational for this.
• “A demand-side platform is similar to a channel manager in that both help hotel customers maximize revenue, but they differ quite a lot in terms of how they work to deliver the result,” Kim said.
• A channel manager is mainly about controlling which online demand partners have access to certain types of inventory.
• “A DSP allows Yanolja Cloud’s B2B customers to programmatically buy online ads to reach new and existing audiences more effectively,” Kim said.
• “Let’s assume you’re opening a resort in Da Nang, Vietnam, and you want to advertise it online,” Kim said. “A DSP will craft the ads so that their contents respond well with the targeted viewers, and then send them to the most optimal ad spots that would give you the highest clicks and conversions.”
• “The entire process is automated, so all you need to do is to set aside a marketing budget, tap the DSP, and track its performance,” Kim said. He argued that the product beats other offerings from ad tech firms in the market because its advice is informed by Yanolja’s customer and product data from its online travel agency business.
• Yanolja Cloud is still deciding how it will market and distribute the demand-side platform.
• “One idea we had was to combine the demand-side platforms with the internet booking engines offerings by our portfolio companies,” Kim said. “The hoteliers who use the engines and opt in for the demand-side platform to automate performance marketing can expect more reservations because their inventory will be more effectively marketed online.

What does SanhaIT offer?

• Sanha IT encompasses businesses such as an internet booking engine for hotels to add to their websites to take bookings. Its tools also help hotels manage their inventory, pricing, and marketing management across online travel agency channels.
• Together, Sanha IT sees itself as an “online marketing agency,” or OMA.
• “It aims to enable property owners to effectively manage their sales channels to maximize their revenue potential,” Kim said. “That’s very different from the typical channel manager, which only acts as an integration intermediary between properties and sales channels.”
• Yanolja Cloud charges a percentage of the property’s total transaction value, or gross merchandise value, each month.
• SanhaIT gives customers of its online marketing agency services its basic property management system and its channel manager free.
• “The PMS that is bundled with our OMA solution is a version of a property management system that is tailor-made to operate alongside the OMA solution regardless of the property size,” Kim said.

Dizzy yet? Yanolja Cloud also has been targeting Africa through “a strategic partnership” with HotelOnline.

• HotelOnline is a travel technology company that works with more than 6,000 hotels in Africa, helping properties to digitize their operations, marketing, and distribution.
• “We work very closely with the HotelOnline’s management in discussing, setting, and executing specific business initiatives,” Kim said. “Blitzscaling in Africa is the consensus we have, with the collective goal of becoming the number-one hotel tech solutions player across Africa.”
• “Yanolja Cloud is assisting HotelOnline by providing a full suite of hotel management solutions,” Kim said. “It is much more than a simple supply of technology. As a strategic partner, we also engage and participate in strategic business planning of HotelOnline’s business and expansion plans.”

Yanoja Cloud is nothing if not ambitious. The word Yanolja means “Hey, let’s play” in Korean. But the company doesn’t sound like it’s playing around.

• For example, Kim is also the CEO of Trustay, a residential platform business offering lifestyle services. Trustay is a joint venture between Yanolja Cloud and KT Estate, a hotel and residential real estate developer in Korea that brings to the partnership residential user behavior data and industry connections.
• Kim’s dual roles of overseeing hospitalty tech growth and residential tech growth illustrates either remarkable talent or a company prone to overreach.
• “Start-ups are easy, scale-ups are hard,” writes Reid Hoffman, co-founder of LinkedIn, in his book called Blitzscaling. Yet, as Hoffman notes in his book, scale-ups are becoming more common because companies like Airbnb show that the strategy can work.
• “When you scale at speed, you can capture the market quickly and also outmanoeuvre potentially global competition,” Mr Hoffman writes.
• WeWork is ridiculed today. Yet it’s too easy to knock the Softbank portfolio company for a failed initial public offering and to use the startup’s bad luck of a pandemic crunch in office usage to tarnish Softbank’s audacious approaches to scaling startups generally. WeWork’s ultimate destiny could still impress if the commercial real estate market rebounds. It remains a category leader in leasing co-working space, making it too big to fail according to the author of the book Too Big to Fail, thanks partly to Softbank’s cash machine having blasted away many rivals. Once the new normal in workplaces materializes, WeWork may prosper again.
• Salesforce, for example, was also criticized in its early days for over-ambition and unprofitability.
• Yanolja has another backer of note: Booking Holdings.
• It’s worth noting that South Korea has done better than any other democratic country at keeping deaths low in absolute numbers during the pandemic. Maybe the birthplace of Samsung, LG, and Hyundai has produced engineers who can do it all, and maybe Yanolja Cloud will go to number-one in hotel tech. Yanolja Cloud’s execution of its strategy, and how competitors respond, will decide.