Booking hotel accommodations in cities hosting in-demand events like Art Basel, SXSW, Coachella, and Sundance can become a nightmare, resulting in exorbitant rates that end up dissuading travelers. Hotels end up having rates that do not allow them to maximize occupancy, creating a massive inefficiency between demand and rate optimization. Hoken is a primary and secondary marketplace for prepaid hotel reservations centered around in-demand events that seeks to solve this problem. Consumers can purchase reservations well in advance of events and if they are not able to utilize the reservation, they can sell it through Hoken. Hotels are able to optimize their revenue collection by selling more rooms at optimal pricing with real-time visibility into pricing insights. Hotels are not charged a fee, commission, or distribution cost to work with Hoken and the providers are able to share in any revenue earned from secondary transactions, representing incremental revenue. Retail consumers and sellers are charged a nominal fee for any secondary sales on the platform. Right now, only reservations secured on the platform are eligible for secondary sales. Since launching earlier this month, Hoken has established a number of partnerships with independent and prominent lodging groups.
AlleyWatch caught up with Hoken CEO and Cofounder Tarek Daouk to learn more about the business, the company’s strategic plans, latest round of funding, and much, much more…
Who were your investors and how much did you raise?
Seed, $9M, Streamlined Led, BY Venture Partners, and individual investors.
Tell us about the product or service that Hoken offers.
Hoken provides the ability to buy and sell prepaid hotel reservations during in-demand events and high-compression periods.
What inspired the start of Hoken?
The pandemic made it clear that hotel bookers needed more flexibility while hoteliers needed guaranteed non-cancelable revenue to meet their obligations. Hoken solves both friction points while eliminating onerous distribution fees.
How is Hoken different?
Hoken allows trading and speculation in hotel bookings, creating a new asset class and bringing optionality and liquidity to the market; Hoken also is a zero-commission distribution platform for hotels and allows hotels to forward-sell/monetize on their released prepaid hotel bookings
What market does Hoken target and how big is it?
Hoken targets attendees of key events across the US, such as Art Basel, Coachella, SXSW; hospitality is a $550B global marketplace and growing.
What’s your business model?
We charge transaction fees to the buyer and seller when a room is resold/traded.
How are you preparing for a potential economic slowdown?
We have raised significant capital and are focusing on tight control over our burn rate to provide a long runway. The economic slowdown will also present opportunities to attract the highest caliber talent in the market.
What was the funding process like?
We raised venture capital in Q1’22 before the market dislocation and then again in the debt capital markets in Q3’22 to ensure sufficient liquidity to navigate choppy markets and achieve product market fit.
What are the biggest challenges that you faced while raising capital?
Hoken was oversubscribed by a significant margin. Our biggest challenge was turning away capital or filling tickets at a lower allocation to make room for value-add investors.
What factors about your business led your investors to write the check?
They all connected with our concept because they understood that compression events often drive lack of availability in markets and today’s distribution solutions are expensive, inflexible, and inefficient. Most have been around for 25 years and have focused on commoditizing the hotel experience.
What are the milestones you plan to achieve in the next six months?
We aim to achieve product-market fit, significantly expand our assortment of events, sign additional meaningful hotel partnership deals, and accept off-platform bookings for resale.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Keep hustling. There is a lot of private capital still available for good concepts, especially with public market dislocations and liquidity premiums turning into discounts. Don’t be afraid to pivot and surround yourself with great advisers who can guide you on your journey.
Where do you see the company going now over the near term?
We are working on validating our concept and look towards Series A funding in the next 6 to 12 months to help us scale.
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