Irish hotel firm raises €3.5m in VC funding
The Irish hotel-booking firm Roomex has raised €3.5m in a Series A round of funding.
The money is coming from Irish venture capital firm Frontline Ventures, former Hostelworld chairman Paddy Holahan and the chief technical officer of CarTrawler, Bobby Healy.
Roomex, co-founded by Jack Donaghy and Karl Glennon, now employs 30 people having switched from being a holidaymaker booking engine to a corporate-focused one.
The company now has offices in Dublin and London. Its clients include AIB, the Musgrave Group, Allianz, the Sisk Group and Dairygold. It has 550,000 hotels on its platform.
Despite being in business since 2006, Mr Donaghy said that he had to take a "hard look" at its prospects in 2013, when it was getting lost in a sea of booking engines.
"We had to do a very firm pivot," he said. "And we chose to focus just on corporate travel. Right now, corporates are paying fees to travel agencies like Amex.
"We have brought the easy-to-use leisure tool approach but structured it for a corporate audience with special negotiated rates. And we don't charge them fees," he said.
"We also resolve the payment at the hotel so a company has one monthly invoice for all their people instead of 40 or 50."
Mr Donaghy said that the company now makes its money from hotels, which pay Roomex a distribution fee based on the size of their corporate clientele.
"Margins are tight," he said. "So it's all about scale. With scale comes better negotiation. We already do significant volumes. So when we approach a hotel chain, we're representing 500 massive corporate clients."
Mr Donaghy said the company intends to spend the €3.5m on marketing and technology research, developing its mobile tools more.
He said that the company has doubled in size every year since 2013. "Our staff has gone from 12 to 30 in the last 18 months and we'll probably double that again before the end of next year."
He said the main trading focus is on the UK market, where some of its biggest clients are. Brexit is not currently a concern to the company, he said.
"Right now, the currency drop has helped us," he said.
"It means staff in the UK aren't as expensive. But we have a natural hedge because if we buy a room in sterling, we have to pay for it in sterling. So it won't really matter much either way."
Shay Garvey, partner of Frontline Ventures, said: "Jack and Karl as founders have created a great team that is executing a fast growth disruptive strategy in a very large market. We believe they are building a very valuable company and we are happy to assist them in any way we can."