“We are in the business of offering ‘stay solutions’ for a business traveller, not in the business of providing service apartments,” says Vinod Thimmaya, founder-director of Bengaluru-based Humming Bird Suites (HummingBird), when asked what sets his organisation apart from competition in the service apartment space. Thimmaya goes on to elaborate that his organisation offers clients a gamut of services that include transit accommodation, relocation accommodation, guest house management, customised housing for senior managers and hostel management for companies, and this diversity keeps it ahead of the pack. In fact, Thimmaya is confident that HummingBird’s current fiscal turnaround will increase 60 per cent to 70 per cent over the last fiscal. “Hence, we think it is the right time to look out for our second round of funding for expansion. We have mandated Spark Capital to identify companies that would be interested in investing in us,” he says. In its first round in 2008, HummingBird received funding from venture capital firm Helion Venture Partners (Helion) to the tune of US $ 4 million. And Thimmaya says the organisation is open to the idea of Helion increasing its investment. HummingBird has charted out an aggressive growth plan for the times ahead: in every fiscal, it wants to increase its presence in 10 new cities across the country and a second round of funding will help realise this ambition.
We last spoke to Thimmaya and his brother and co-founder, Vivek Madappa in our issue dated April 15, 2010. By Thimmaya’s own admission, a lot has changed at HummingBird since then especially in the additions to its service offerings. How these changes have impacted the organisation and its clients will have a say in HummingBird staying on track to achieve its future milestones.
In the last three years
Post its inception in 2008, HummingBird has evolved as an organisation. “From bootstrapping we have evolved into a company driven by structure, system and processes,” says Thimmaya. It has also acquired an ISO 9002 certification and is in the process of acquiring a CII (Confederation of Indian Industry) certification. In addition, HummingBird has introduced four special services this year and Thimmaya says that clients have taken to these ideas. These services include project-based temporary accommodation in tier II cities, accommodation for new hires and outbound training programmes, and guest house management. To ensure that each turnkey project under the new services is glitch-free, HummingBird instituted a new division under operations which has designated individuals heading various deliverables. “You could call this the ‘logistics’ team,” says Thimmaya.
Thimmaya makes it clear that the agenda was always to sell convenience to corporates and it continues to be so. “We have segmented the corporate market into large, mid-size and small businesses. We have a sales team working on each of the segments,” he shares. Previously, the company shied away from hiring people with a hotel management background, especially for sales and operations, and that has not changed with expansion. “We prefer to bring in people with experiences across industries so we are able to absorb the best practices of each,” adds Thimmaya. To manage the growth of the company, HummingBird has looked inwards. It has not invested in senior management hires; instead, it has relied on its existing employees and groomed them to take on more responsibilities. Thimmaya rues the fact that neither was there resources nor time in the past to invest in extensive training practices and this is an area he wants to focus on in the upcoming quarter.
One sales tactic HummingBird has always steered clear of is the practice of offering discounts to clients. “When we started off, we did not offer discounts to acquire clients. Our tariffs were much below the market price. We acquired clients by offering a compelling value for money proposition. Even now, we do not use discounting as a strategy to acquire clients,” he states. There has been a revision to the company’s rate charts, but this is just in keeping with current inflation rates says Thimmaya. “Our prices have gone up by close to 15 per cent to 20 per cent. Just because we now have our clientele in place, we have not increased our prices by say a 100 per cent,” he says.
Growing forward
Thimmaya believes that HummingBird is poised for “exponential growth”. “Our growth strategy is to cover new markets and segments and come up with innovative product and service offerings,” he says. One of HummingBird’s latest initiatives is its foray into the leisure holiday market. This is a completely new territory for the team as it will now have to find ways to beat the competition looking to attract individual holiday goers. The first trial project has been established under the brand name ‘Rio’ at Coorg, earlier this year. “The idea is to build on the concept of ‘getaways’. We are looking at destinations that are four to five hours away from the metropolitan cities,” shares Thimmaya. He also adds that this project has been a huge learning experience for the company and while other ventures have broken even in under a quarter, this has taken over three quarters in the year just to get started. Thimmaya remains positive about the future and pegs this concept to be an “explosive” addition to HummingBird’s existing line of services.
With an average occupancy rate of 70 per cent to 80 per cent in its key markets last fiscal, the company registered a turnover of Rs. 30 crore and is all set to touch Rs. 50 crore this fiscal. HummingBird might even consider an initial public offering soon if, as Thimmaya says, it is the best way to reward all its investors.
