Hotels.ng, Nigeria’s leading hotel booking website, plans to cover most West African countries by the end of this year before venturing to other regions of the continent, but it will not raise any more funds anytime soon after it got a financial boost from venture capital funds Omidyar Network and EchoVC.
Last week hotels.ng, which covers over 7,000 hotels of the estimated 10,000 hotels in Nigeria, announced it had raised $1.2 million from the two venture funds and that it planned to scale up the business to other African countries, starting with Ghana.
“We hope to have covered most of West Africa by the end of the year,” Mark Essien, founder and chief executive at hotel.ng, told AFKInsider in an email response.
“We have typically run as a very capital efficient company, spending $225,000 to achieve results that other companies have spent in excess of $5 million. So I believe that we will be able to achieve a lot without raising much more capital.”
Essien said the planned expansion would “cost money” and was likely to increase the company’s operation and staff costs in the short term until it manages to generate some revenue from the new markets to “balance it out.”
Hotels.ng was founded in 2012 and received intial investment worth $225,000 from Lagos-based startup accelerator, Spark. It posted its first profit in 2014.
Currently, the website has 40 staff across Nigeria visiting hotels and striking deals with owners, which has enable it to tailor its services to local travelers’ needs and beat international brands such as Expedia and Bookings.com.
“We have been able to hold the market while earning only from profits. So I believe with new capital we will do well,” Essien said, adding that while “sending people out there and meeting the hotel managers” was an expensive exercise it was a “necessary process” to grow the website.
This, he said, will help hotels.ng beat off competition from both international and local companies.
Nigeria’s travel market, estimated to generate $2 billion in revenue annually, has seen a number of online booking sites spring up in recent years, with Hotel.ng facing stiff competition from Jovago, funded by German Rocket Internet venture, and local booking sites Wakanow and Nitestay.