Coworking hotels in M’sia aren’t their end goal, it’s selling the SaaS tech that runs them

It’s only recently that we’ve noticed the launches of new coworking spaces across Klang Valley slow down. Considering the pandemic and travel restrictions, it makes sense.

If you’re already familiar with coworking spaces, you’re probably also no stranger to coliving spaces (which may or may not have their own coworking spaces too). These can be easily found in Klang Valley as well.

So, what can one do when one wants to launch a mix of the two concepts, but not within such a saturated space? You could take a page out of Badzlan Bakar and Syaiful Adam’s book, and launch it in Kelantan instead.

Their concept turned out to be a coworking space plus hotel called Rihla Hotel in Gua Musang, but this barely scratches the surface of what they’ve really got planned, as explained later.

A calculated experiment

Badzlan was formerly a cabin crew member, and later became a sales strategy lead for the AirAsia group. He’d also worked with Microsoft APAC before for around 3 years. With his experience, he drives marketing and strategy as CEO.

Syaiful, on the other hand, was previously an architect and led the ecotourism development in Gua Musang. Now he handles construction and operations as COO at Rihla Hotel.

While neither of them has a background in the hotel or coworking business, both the founders are avid travelers and backpackers. This, Badzlan shared, taught them a thing or two about how to make people love Rihla Hotel.

Gua Musang is the largest district in Kelantan and is actually a tourist attraction given its rich flora and fauna.

“Gua Musang has an ecotourism asset to it, which is our anchor to attract foreign travelers who also want to do remote work,” Badzlan shared with Vulcan Post. For example, he projected that those in Chiang Mai or Bali would be able to stop by for 2 weeks or a month to do their remote work.

He explained that their choice of Gua Musang is also because it’s cheap to experiment with their new idea there. Their debut in Gua Musang in February 2020 was just a MVP, and Badzlan shared that this experimentation is aimed towards building replicable models in target places. 

The goal is to digitise operations 

“Our endgame is not really the hotel itself. It’s the software we are building to connect all these establishments, [which we’ll] then sell globally as a SaaS subscription model,” Badzlan emphasised.

“This is the key to our IPO exit in the 10th year.”

The software that they’re working on is an AI-infused Systems Applications and Products (SAP) for accommodation. 

Dictionary Time: SAP is made up of individual modules that perform various organisational systems tasks. In the heart of the system, it executes business logic, is responsible for processing client transactions, print jobs, running reports, coordinating access to the database, and interfacing with other applications.

MIT and and ERProof

“We’re not aiming to be a marketplace platform like Airbnb and don’t intend to evolve that way,” he clarified. “We want to focus on understanding how operations at our establishments work and connect, and then digitise them.”

“The end result of this would be the C-level (ourselves) and mid-level management completely managing the business from our laptops or on our phones,” Badzlan said.

Badzlan and Syaiful are actually already doing this right now, as there is no other staff manning the place aside from a cleaner who works for 4 hours a day. “My partner and I are now managing check-ins, communications, and checkouts from random cafes around Gua Musang.”

The types of establishments they’d like their software to cover include hotels, coliving, and coworking spaces. “We’re thinking of adding cafes to the list, since hotels come with cafes. But that’ll be after we understand how these first 3 establishments work with our AI,” Badzlan added.

Downtime = opportunity

Starting a space like this during the pandemic seems risky for obvious reasons, but the duo explained that this downtime affords them experimentation. And despite a tighter cash flow, Badzlan said it was still positive.

RM200K was invested to jumpstart this business, most of which came from Badzlan’s savings when he worked for Microsoft. “Half of the coliving space’s investment also came from my mother, which I’m forever grateful for,” he said.

With the pandemic, they also found it easier to get capital from the government. “TEKUN Nasional helped us a lot in the early days with their CBRM, and BSN with their COVID-19 loan,” Badzlan added.

They saved a lot on construction costs too because they hired a local constructor and personally got involved on-site with painting, electrical wiring, etc.

The fact that 70% of their operations is automated also helped. Badzlan shared some advice, “Utilise the technology available around us fully and be super disciplined on cost. And if tech is in the equation, cost efficiency will come naturally.”

An expansion model that’s done and doable

“Our expansion model is straightforward. 3 establishments in each city with an average of 30 to 50 rooms, and to maintain a YoY revenue growth rate of 30%, and profit margin of 30%. Done and doable,” Badzlan confidently shared with Vulcan Post. 

The duo also proudly stated that despite the pandemic, they’re on track to double their revenue and are reinvesting to triple it. Currently, they get 93 bookings a month on average. 

With the money raised from the IPO at the 10-year mark of their journey, they want to penetrate Chiang Mai and Bali, with the target of having at least one establishment in each ASEAN country.

“And it’s not just the physical brick-and-mortar accommodation business,” Badzlan reminded us. “The software business will be key to our success. It’s scalable, network-driven, and geo-independent. And coming from the software and tech world of Microsoft, the market is up for grabs.”

• You can learn more about Rihla Hotel here.
• You can read about more coworking spaces we’ve covered here.

Featured Image Credit: Badzlan Bakar and Syaiful Azam, founders of Rihla Hotel