E-commerce site Hotels.ng, Nigeria’s largest hotel booking website, has been growing fast. It already has built a hotel network to cover 7,000-plus hotels in 21 regions across Nigeria. The new company’s staff of 34 has overseen one million-plus hotel searches and ended 2014 with an operating profit.
Hotels.ng had more good news recently as it closed another investment round that will allow it to expand into Ghana and French West Africa. In May it secured an investment of $1.2 million from EchoVC Pan-Africa Fund, a seed-stage technology fund, and Omidyar Network, the investment vehicle of eBay founder Pierre Omidyar. The funding round follows the company’s 2013 seed investment of $225,000 from Spark.ng, the Lagos-based accelerator fund launched the same year by Internet millionaire Jason Njoku.
“We were able to find VCs that see the potential in emerging markets. They liked our numbers and performance so far, well enough to make them willing to invest,” software developer and Hotels.ng founder/CEO Mark Essien (above) tells AfricaStrictlyBusiness.com.
This was a major feat. “Raising capital in Africa is arguably more difficult than for other regions, but we did not experience any overwhelming difficulties securing this investment,” Essien asserts.
Based in Lagos, Nigeria’s most populous and Africa’s second largest and fastest-growing city, Hotels.ng provides online booking for both tourist and business travelers, giving them access to more than 7,000 hotels, including images, rates, availability, amenities as well as a user-review and rating system. Essien says the new the funding will help him to grow the company significantly.
“This funding will help us in our expansion plans across the entire African continent. Ghana will be our pilot market and as soon as we have the platform running stably in Ghana, we will begin to actively expand within a matter of months to all of West Africa,” he explains. “Today West Africa, tomorrow the entire African continent. Apart from this, we will also use the funds to focus on being more mobile-friendly, as this is the way most Internet users in Africa access the web.”
Essien argues that he is filling a much-needed niche. “We have been a profitable company for more than a year. I believe that the important factor that made hotels.ng a success is we identified a market that worked and conscientiously built and executed a business for that market,” he points out.
While the company has been successful so far, doing business in Nigeria is not without its challenges. For Hotel.ng, access to reliable electricity was a major stumbling block challenges from the very beginning. “We were, however, able to quickly adopt solar technology for our power generation, thus largely circumventing that hurdle. Also, due to the fickleness of communications, we have more than one medium for communicating with customers and ensuring that we always deliver no matter the circumstances,” says Essien.
Hotels.ng also ran into some of the same problems that startups all over the world tend to encounter. “Hiring the right staff and getting the right people to fit in certain areas of the company was a startup challenge I experienced,” Essien says. Putting the word out online and having potential candidates compete for a spot via the Internet helped to solve the problem.
Challenges aside, Essien is quick to note, doing business in Nigeria has its rewards. “Nigeria is Africa’s largest population and its largest economy. If you can focus on the market and create a viable product where there is a proven market for it, you are almost totally guaranteed to have a good business running,” he says.
Still, negative perceptions about the country’s business environment persist. Essien elaborates: “There is the perpetuated myth that Nigerians are not open to making online payments, but in my experience I have found that this is not the case. Hotels.ng began to receive online payments on its first day of operations.”
He is looking ahead. “Our goal is to have 10,000 hotels listed on Hotels.ng by December, and to capture 90 percent of the Nigerian market and 50 percent of the African market within three years,” he says.
