STARTUP STAGE: Katanox aims to simplify hotel distribution

Katanox

Katanox is focused on opening hospitality distribution to enable hotels to capture more direct bookings through multiple channels and to provide more choice for travelers. 

Founded in June 2020, Katanox connects directly to the PMS or CRS to capture availability, rates, inventory and content of each property. 

What is your 30-second pitch to investors? 

Katanox is re-piping the B2B distribution in hospitality that for so long has been impaired by gatekeepers, outdated infrastructure and lack of trust, by enabling a true connectivity solution that allows for direct contracting at scale between travel sellers and accommodation providers.

With direct contracting, travel sellers such as travel marketing companies and independent online travel agencies can significantly increase their commissions while accessing exclusive deals, whereas accommodation providers like hotels and chains can take control of their distribution by defining terms of trade while lowering their distribution costs. 

Describe both the business and technology aspects of your startup.

Katanox connects directly to the single source of truth of any property, which is either the PMS (property management systems) for the independent hotels or the CRS (central reservation systems) for chains. Katanox then pulls the availability, rates, inventory and content of each property and stays in sync with the property for any updates. Once the property is onboarded to the Katanox marketplace, it can directly be sold to travel sellers which have a partnership with it. Travel sellers can request exclusive and private availability and content to show to their travelers. Then they can send bookings via the same API which will end up immediately to the hotel’s PMS. 

Give us your SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis of the company. 

• Strengths: Our team has deep industry knowledge, and we bring to the market a true connectivity solution since we integrate directly with accommodation partners’ PMS or CRS facilitating direct relationships between travel sellers and accommodation providers.
• Weaknesses: Travel technology often has a stigma of overcomplexity, taking away precious company time for integrations and having exorbitant costs. Our challenge is to educate players of the industry on our technology, bringing about a new era in travel distribution by creating an open market that is allowing direct business without constraints. 
• Opportunities: In a COVID-19 world, hotel chains and travel sellers were forced to take a step back and optimize their connectivity infrastructure of outdated IT. By using Katanox, transparent B2B marketplace hotels can not only significantly reduce distribution costs but also take inventory trading in house to own the margins which is now in control of wholesalers and bedbanks. On the other side, travel sellers can maximize their commissions by contracting directly with the hotel exclusive and private deals without the need to share revenues with intermediaries and accelerate time to market, capturing more share of wallet of their travelers. 
• Threats: When travel recovers from COVID, accommodation providers might need more time to focus on improving their margins and taking control over their channel mix.

What are the travel pain points you are trying to alleviate from both the customer and the industry perspective?

On the supply side, accommodation providers can significantly lower their distribution costs while taking control of their channel mix by controlling private contracting terms with the ultimate travel sellers without having intermediaries in their way. On top of this, accommodation providers can negotiate with smaller and medium sellers since complexity to trade is significantly reduced with Katanox.

On the demand side, travel sellers through Katanox marketplace can negotiate direct deals with accommodation providers to maximize commission revenues without sharing them with an OTA affiliate program or a bedbank, while accelerating the time to market and ultimately owning the traveler information.

So you've got the product, now how will you get lots of customers?

Our market strategy opens up for both business and leisure segments on the demand side and independent hotels, properties and chains on the supply side. With every hotel, chain or apartment onboarded on the marketplace, more and more travel sellers will interact with them, bringing more demand that would require more accommodation supply generating a virtuous circle that results in a richer marketplace. 

Tell us what process you've gone through to establish a genuine need for your company and the size of the addressable market.

When COVID-19 hit, we quickly validated the need for trust in the distribution layer with current key players and numerous travel sellers from airlines, publishers, OTAs and TMCs, as well as traditional hotel chains, independent hotels, key travel players and a new generation of accommodation providers, gaining a lot of reinforcement on our initial thesis since all the parties involved saw the urgent need to optimize their infrastructure and improve unit economics. 

Then lockdowns gave us momentum to accelerate onboarding of accommodations and launching alliances with property management systems. We successfully test our product and prove the value of direct contracting, adding value on increased commission share and higher conversion rates for sellers and giving more control to hotels by direct contracting while reducing latency operational issues. We are just scratching the surfaces when it comes to the hotel booking market done through an agency, which accounts for $665 billion in 2021. 

How and when will you make money?

By replacing gatekeepers and outdated intermediaries to facilitate direct partnerships between travel sellers and accommodation partners, Katanox takes a distribution fee based on booking volumes on the travel seller side. Hotels distribute it for free. 

What are the backgrounds and previous achievements of the founding team?

Our team has a background in building programmatic media technology, scaling travel supply, airlines ancillary revenues and developing payment products. We are applying very similar strategies and technologies to transform the arbitrary B2B distribution in hospitality into a programmatic industry, similar to the transformation the team has contributed to in media and payments over the last decade. Transparency and data are key values to drive change in trading. It all starts with direct connectivity and direct contracting.

How have you addressed diversity and inclusion within your business?

Our team, advisors and investors are multi-national, multi-lingual, multi-generational and multi-gendered since the foundation of the company. We foster a company culture where every voice is welcome, heard and respected. We foster diverse thinking and personalize one-on-one discussions to make words matter. 

What's been the most difficult part of founding the business so far?

In an industry with so many network effects and little transparency, the barriers for trust are high, that's why our team, advisors and investors come from the travel industry giants from all verticals globally.

Generally, travel startups face a fairly tough time making an impact - so why are you going to be one of the lucky ones?

COVID-19 has placed unprecedented pressure on the travel industry and demonstrated that either party in the chain prioritized its own interest without considering the interest of the two most important parties involved: the accommodation supplier and the guest. Travel sellers need to offer flexibility while remaining a trusted partner for accommodation suppliers.

On the other hand, accommodation suppliers need to reduce dependency on big OTAs, improve their available data and secure their cash flow position. We clearly see the seeds of opportunity in the midst of the COVID crisis since it has prepared executives in the hospitality industry to adopt new technologies and embrace disruption. Thus, Katanox is solving this problem at the right time, with the right team with the correct market entry strategy that carefully considers key travel segments.

A year from now, what state do you think your startup will be in?

Katanox has unlocked business for travel sellers and accommodation providers, demonstrating the value of direct partnerships at scale. We will be focusing on more value additions that can enable travel sellers and accommodation providers to bring in more guests and help increase the volume of the overall share of the travel market, serving leisure and business markets while bringing a new era of a more transparent and trustable distribution in the industry.

What is your end-game? (Going public, acquisition, growing and staying private, etc.)

Our intention is to remain an independent entity to truly ensure a more transparent marketplace for all parties involved with no other interest rather than facilitating business in an open marketplace.