Letting go is never easy: Lessons from a 2-year-old startup

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After two years of building SuiteLyfe, a Singapore-based travel startup, my co-founder and I have made the tough decision to close it.

We first built this business as an all-student team from NUS. Juggling it with college, we managed to launch our mobile apps with direct distribution from several hotel groups and independent boutiques.

I started this company with the vision to help hotels monetize remnant rooms while providing staycation-ers with great prices and perks at the eleventh hour. (In our terms, staycation is the replication of an overseas hotel experience in a local hotel.) As these rooms would have gone unsold anyway, we hypothesized that compelling prices and free treats could possibly stimulate last-minute bookings from the locals. We also accepted same-night bookings (up to 5 am) just to cater to the late-night crowd. Sounds cool, right? However, we were not able to fulfill our vision due to several factors, which eventually led to our failure.

With that, let me briefly recount our key challenges during our startup journey.

Challenge 1: Securing hotel contracts without tangible numbers

The hotel industry is strongly “governed” by the incumbent online travel agencies (OTAs), which account for more than 70 percent of the revenue stream for hotels around the world. There was price parity throughout different channels. Coupled with technical barriers to entry such as integration with channel managers, it is relatively difficult for a travel startup to establish direct distribution with the hotels.

For the unacquainted, channel managers are systems that allow hoteliers to manage all their OTA extranets at the same time. Some examples of channel managers are SiteMinder, RateTiger, and eZee Absolute. Without channel managers, it would be tedious for the revenue team to maintain an independent channel as room rates can change more than five times a day for certain hotels.

Due to limited technical resources, we were not able to integrate with channel managers and instead built automation tools, which allowed revenue managers to load rates within minutes. However, it was still difficult to secure new hotels due to different revenue priorities, i.e. we were focusing on a relatively untapped market with low frequency of bookings.

Without any prior connection or experience in the hotel industry, it was almost impossible for us to secure meetings with key decision makers of the management team. But with the help of mentors and friends, we managed to secure initial introductions and built relationships from there.

There were many layers of negotiation that we needed to overcome: (1) compelling prices and add-ons, (2) adoption of dashboard without a channel manager, and (3) acceptance of same-night bookings up to 5 am. On average, it took us a considerable amount of time to secure a signed agreement with a hotel group. This brought me to question the scalability of the B2B side of the business as it took a lot of time and effort to prospect and close a deal.

Challenge 2: Unit economics does not make sense anymore

From the SMRT train ads to social media giveaways, we’ve done it all. I admit that although we created great marketing plans, our execution was far from perfect. We failed to capitalize and build on the initial hype for our app. We had a slow start but we managed to turn it around by building up social capital and reaching out to a wider population through large-scale events and social media marketing.

Despite getting competitive prices and add-ons from hotels, these deals were not compelling enough for staycation-ers to convert at the last minute. There were also not enough variety of hotels for potential customers to choose from. To date, we have more than 6,200 downloads with an average of 100 active user sessions a day. Although there was a strong interest among users, only a handful of conversions materialized. The volume of successful transactions were way lower than what we would have expected and the unit economics did not make sense anymore.

Challenge 3: Expectations and priorities within the core team

A startup journey can be compared to 4 x 100km track relay where one passes the baton to another during the course of the race. Why 10 km? Because it’s a long distance to get to the finish line as a team.

In my analogy: founding team is formed → technology team starts the race and creates an MVP for demo → the sales team uses the MVP to secure deals before launch → the marketing team creates hype and builds brand equity → our products go live!

What are the lessons I’ve learned?