Why Airy Indonesia Failed?

Airy is Indonesia startup, was founded at the end of 2015. Started as VHO (Virtual Hotel Operator), which a business model also adapted by OYO, then 2 years later Airy joined as a player of OTA business. 

Airy known as a budget hotel, starting from 150,000 rupiah you can get a good quality hotel. Airy’s growth was quite good actually, but when the pandemic hits, they are collapsed. Many other businesses are suffering from the pandemic, but why Airy failed yet other businesses similar to them still survive?

Back to 2017, Airy was reported for having more than 20,000 rooms across more than 100 cities in Indonesia. Thus bringing them as the largest VHO in Indonesia at that time.  With a variety of room types, they could acquire customers from across segment. Airy echo, Airy standard, and Airy premier, each of which guarantees pleasant services. While customers get a comfortable place to stay, they also get free drinks and snacks. Apart from those, Airy also had other business which would make a company be able to manage their employee business travel easily, it was Airy Business. To raise room occupancy Airy also partnered with Online Travel Agents such as Traveloka.

Airy saw another opportunity as they part of the tourism business, so they started to change their name from Airy Room to Airy Indonesia and start offering not only a room but also flight ticket. It was started in 2017 and they seriously run as OTA business by lowering their price and giving an additional discount to the customer.

Airy was not alone, they have some competitors as well. Tinggal.com, Nida Rooms, and Zen Rooms are the names that we might never hear of, but they ever exist and competed with Airy. Not to mention another giant company such as OYO, which backed by SoftBank, also expanded its business to Indonesia in 2018 allocated a budget of $100 million. Although Airy never mentioned the funding they were got and who investors are behind them, they certainly have funding in some way, otherwise, their business might be collapsed earlier,  just like others. 

2019 was a year of growth for Airy, in fact, they reported the growth of 50%-60% yearly. And 2020 should be the time for them to gain profit, but the unprecedented pandemic has to cause them at the opposite condition.  Louis Alfonso Kodoatie, CEO of Airy, said that on March 2020 the business declined by only 20% but a month after 70% of their employee was laid off and then a month after they completely stop the business. How about Airy’s competitors? Well, they do the same in term of laid off, OYO laid off 12.000 employees globally in the response to the crisis. Now remain 2 big players in Indonesia, OYO and RedDoorz, they both have good funding and they might have a bit longer age, are they will survive until the pandemic completely gone? That’s is the next big question

The bottom line is that Airy run out of money and others still survive by hanging on investor’s money. And we will see if the next Airy will emerge after the pandemic over.

 

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