BRICS series #1: how Brazil's Hotel Urbano dominates the online hospitality industry

Countries, Innovators, Markets, Startups

Celine

Celine

July 22, 2014

The 6th BRICS summit has closed its doors last week, so we feel it is a good timing to showcase a few big startups from Brazil, Russia, India, China and South Africa, and we’ll start with Brazil’s Hotel Urbano. The 5 countries were actually four when the concept of BRIC (minus South Africa) was coined back […]

The 6th BRICS summit has closed its doors last week, so we feel it is a good timing to showcase a few big startups from Brazil, Russia, India, China and South Africa, and we’ll start with Brazil’s Hotel Urbano. The 5 countries were actually four when the concept of BRIC (minus South Africa) was coined back in 2001 by a British economist, to symbolise the shift of economic power between a declining (or flat, at least) West and fast-growing emerging markets.

brazil middle-class growth innovation is everywhere hotel urbano startup BRICS countries emerging markets tourism hospitality e-commerce

Since 2009, the BRIC officially hold a yearly summit where they discuss strategy, economic policies. In 2010, they integrated South Africa in their group. The BRICS could probably be better called BRICSMI by adding countries such as Mexico or Indonesia, both similar to South Africa in terms of GDP per capita, and way bigger in terms of market size. Anyway, this year, the BRICS summit launched a common initiative with a New Development Bank with a dotation of $100bn, based in Shanghai, to work mostly on infrastructure projects.

If the solemnity and high level of the summit puts forwards politicians and corporates, we can here discuss a bit more of their startup scenes, as we plan to visit these countries during our world tour this year.

All these countries have local success stories when it comes to startups and most of the ones we’ll be discussing this week are expanding regionally, which makes them even more interesting

Hotel Urbano, from Brazil to Latin America, a marketplace for an expected tourist boom

With both the 2014 World Cup and the 2016 Olympics in Rio, Brazil is bound to attract more tourists this decade. So far, the figures are still a disappointing 5m/year, pretty low when in comparison, Mexico attracted about 24m tourists in 2012 (with huge increases from Russia, Venezuela, and… Brazil). With the two biggest sports events, a noted amelioration of safety conditions and more infrastructure, Brazil is improving.

Redefining Brazil's Emerging Middle Class: How to Prepare for th

More importantly, the middle-class is growing fast, with 20m more Brazilians entering it over the past decade. They now account for 50% of the population, a figure which is way higher than in China or India. As this graphic from the BCG shows, the top 10% only is consuming travel, but on a population of almost 200m, it’s already an interesting volume.

Enters Hotel Urbano, which focuses on hotel bookings (65% of its revenues) and travel packages (not including flights). In a record three years since its foundation in 2011, the startup has grown to 500 employees, with 450 000 rooms available in 35 000 destinations on the website, and about 15m users (all data are from Techcrunch May 2014 article)

hotelurbano screenshot brazil booking website startup from BRICS countries emerging markets innovation is everywhere middle-class online

As the hospitality industry in Brazil is very fragmented, with 85% of small hotels owned by individuals rather than groups, being a local helped Hotel Urbano to take over Booking.com in May 2012, barely a year after inception.

On an interesting note, HotelUrbano has also launched two concept stores in Rio, where they recorded a strong increase on the average booking. Online, the average cart is around $600, when it reaches $2500 in these brick and mortar ventures.

brazil hotelurbano concept store rio de janeiro e-commerce BRIC countries startup emerging markets martin pasquier innovation is everywhere

HotelUrbano has already closed four rounds of funding for a total of $85m, mostly from Insight Ventures, a VC based in New-York. With this money in the bank, the company can now start its expansion to the rest of Latin American countries.

Tomorrow, we’ll be talking of the “R” in BRICS, with Russian-based B2B-Center, a giant marketplace for procurement services.

You can find back our BRICS startups series herewith amazing stories from Brazil, Russia, India, China and South Africa