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How venture funding gave Standard a whole new product

With US$5 million in Series A funding from the venture capital firm Swan and Legend, New York-based Standard International is spinning off its One Night app, which offers discounted last-minute bookings at independent hotels. The platform aims to expand from its base of 17 markets and also plans a new distribution channel serving independent city and resort destinations. 

The move is headed by Jimmy Suh, previously chief commercial officer for Standard. He co-founded the app which started in 2015 as a vehicle for Standard’s own expiring room inventory and then expanded the following year to represent other independent properties. In a recent interview, Suh said the app has exceeded expectations as local customers take advantage of the reduced rate for a night out and end up spending on food and drinks.

HOTELS: Why the outside funding now?

JIMMY SUH: The app was funded and incubated by Standard International (headed by CEO Amar Lalvani) to this point but we needed capital to grow faster and stronger. We’re opening Seattle— our 18th location—in March. There are still major markets to add, domestically and internationally as well as getaways within a two-hour drive. For example, we’ve added hotels in the Hamptons on Long Island, New York and Palm Springs, California, which offer easy access to the big cities nearby.

H: What is Standard’s new role?

JS: Standard remains the majority stockholder.  Swan and Legend joined the board and we have outside directors as well.

H: How is the app performing?

JS: People are planning less and traveling spontaneously for business and leisure. Revenues have grown quarter over quarter by 25% over the last year plus. Active users are growing by a similar amount on a monthly basis. Our customers spend more than the average guest on other services and that enabled us to raise RevPAR by more than 3%. Guests dine and have drinks in our lounges. It’s a one-night adventure and they don’t have to worry about the commute home. 

H: Who are your customers?

JS: The majority is local, a few hours drive or less. In the last year, we saw an increase in the number of people who fly. Our customers aspire to have an experience and are drawn to the lifestyle hotels not associated with chain brands. A last-minute stay should not be relegated to an unremarkable hotel. 

H: Don’t you compete directly with the site HotelTonight?

JS: We definitely operate in a similar realm in that we offer same-day, one-night bookings. HotelTonight has started to branch off beyond same-day bookings so that they start to look like the Expedias of the world. (HotelTonight offers reservations as far out as 100 days). By sticking to same-day reservations we assure our hotels that they are gaining incremental business and that we’re not competing with them. 

H: Do you exclude chain brands? What about trendy sub-brands such as Marriott’s Edition or Hyatt’s Andaz?

JS: We have stayed away from the chain hotels. It’s not as meaningful for the independent hotels we represent to be affiliated with chains. We also want to elevate the distribution platform for independent hotels that don’t have the power or backing of a Marriott or Hyatt. But we won’t have a blanket policy. There are certain markets in which a sub-brand is the most intriguing hotel and provides a unique experience. That would drive our decision. 

H: Would you rule out a hotel that’s listed on HotelTonight? Could a traveler find the same deal on both sites?

JS: We don’t want to discriminate just because a hotel is listed on HotelTonight or Expedia. In terms of the deal, we guarantee that we have the lowest rate and I’m sure HotelTonight has a similar value proposition. 

H: Hospitality has been criticized for lagging in technology. How will apps such as One Night move the industry along?

JS: That’s the consensus. Hotel operators have been slow to adopt widely used technology such as the kind of payment systems used by Uber and Airbnb. People are more comfortable transacting business from their mobile devices. Hospitality should not move away from areas where people want service. But there is a growing appetite to use technology for administrative tasks that could decrease labor costs. 

H: What are some things you’ll be able to do with the funding that you couldn’t do before?

JS: We’re looking for office space in New York. We have four dedicated employees and, in coming months, we will boost that to 10 full-time staff members. We plan to advertise for the first time—on social media and perhaps other avenues. We want to host events at hotel venues. It’s all about the One Night. If you had One Night, what would you do? Often the most remarkable nights of your life are unplanned.

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