Miami — GuruHotel wrapped-up Y Combinator just as the pandemic was underway. They were part of the first batch that pitched virtually. And while they thought that getting into YC would help them get funding (it usually does), the hotel and tourism startup was flipped on its back by the pandemic and the strict no-travel policies enacted around the world.
“We were close to dying two times, it was crazy,” said Josue Gio, co-founder and CEO of GuruHotel.
But the company survived - and grew rapidly - and today it’s announcing the close of a $2.1 million funding round with participation by Anthemis Group, Magic Fund, 500 Startups, Shruti Challa and others.
“When we finished YC, investors said, ‘No way. Travel is going to be crazy in the next 5 years.’ Now it’s changed a lot,” he said.
Guru is on a mission to become the Shopify of hotel websites, with the promise that with a better looking - and working - website, hotels can increase their direct bookings and keep more of the money for themselves. Guru allows hotels to onboard themselves, get a website, and start taking bookings within 1 hour, the company said in a statement.
“Almost 80% of online bookings come from Bookings.com and Expedia.com and they are charging between 15-40% in commissions to these hotels,” said Gio.
Guru, on the other hand, charges no upfront fee, no monthly SaaS fees, and instead only charges 5% of each booking. “With a SaaS model the company doesn’t worry about conversions because that’s not how they make money, but we only make money when they do,” Gio said.
The key to this company working is the assumption that hotels can drive enough traffic to their own website, and Gio said that’s not a problem for them. He explained the concept of the billboard effect, meaning that people learn about a hotel elsewhere - such as on Expedia - but then visit the hotel website.
“We have data that shows that people search for hotels on online agencies, but then they go to Google and want to book direct because they think they can get a better price, they can get other offers and amenities, and travelers are interested in that,” Gio said.
“If you see a website that’s not updated, you immediately don’t have trust in that hotel,” he added.
The company launched in Mexico in July of 2019, and admittedly, the first few years were really tough. It was able to raise a pre-seed round of $550K which kept them alive. Today, the company has 38 employees and is used by about 150 hotels in Mexico and the Caribbean.
And its GBV (gross booking value) has grown from $400K in 2020 to $2.5M in 2021 (and the year’s not over).
“Some of the Guru Hotels started with 5% direct bookings and now have 40%,” said Gio.
The company plans to use the money from this round to grow its product and acquisitions team. Going forward, it wants to take a bigger piece of the pie when it comes to hotel bookings.
“In the future, we want to build a complete experience from booking, to check-in, during your stay, when you checkout, or when you are ready to share your experience in that hotel with your friends,” Gio said.