Traveloka-affiliated hotel startup Airy to shut down business amid virus

Indonesia’s Airy Rooms, a Traveloka-affiliated budget hotel startup, is set to permanently close down its business as it becomes the latest casualty of the COVID-19 pandemic, DealStreetAsia has learnt.

According to our sources, Airy is set to cease its business operations in less than a month and has started notifying the hotels it works with about its plan.

A document seen by DealStreetAsia shows Airy notifying its property partners of an arbitrary partnership termination, which will take effect on May 31, 2020.

Airy has “decided to stop [its] operational activities permanently” on account of the COVID-19 outbreak, which has dealt a direct blow to the tourism sector, says the document.

“We have carried out our utmost efforts to overcome the effects of this national disaster. However, given the significant decline in business, as well as the reduced number of human resources we have at the moment, we have decided to permanently stop our business activity,” the document reads.

Airy becomes the second startup to shutter its operations in the space of less than a fortnight after STOQO, a marketplace for F&B businesses, gave up the struggle to keep its lights on.

An Airy spokesperson we reached out to was unable to comment on the matter.

The decision to completely shut down its operations comes after significant downsizing by the company — we reported in April that Airy had laid off over 70 per cent of its staff — in an attempt to survive the crisis brought about by the pandemic.

A former employee we spoke to said that Airy was pushed to the brink by the numerous refund requests for room and flight reservations made on its platform after the virus paralysed the travel industry.

Faced with the same situation, its affiliate company Traveloka, too, has laid off hundreds of employees to stay afloat amid the high tide caused by the virus. The Indonesian unicorn has also witnessed the departure of several executives, including chief technology officer Benjamin Mann, chief investment officer Hendrik Susanto, and Singapore and Malaysia head Halif Hamzah.

Airy’s affiliation with Traveloka dates back to 2015, the year the budget hotel startup was founded.

According to numerous industry sources, Airy Rooms was incubated at Traveloka, before it was spun off to run its own course. However, in an interview with us last year, the company described itself as a “strategic affiliate partner” of Traveloka, with an “independence to build its own organization, direction and products.”

Founded by two former Traveloka engineers, Airy Rooms was created to bridge a gap in Indonesia’s fragmented budget hotel industry, a sector adjacent to but not at the centre of Traveloka’s online travel agency (OTA) business.

Over the past four years, the company had quietly made significant strides in the market, partnering with budget hotel owners or landlords to transform their property and improve their business.

This year, Airy had started to focus more heavily on profitability, much like other startups around the world whose growth-at-all-costs model came under increased scrutiny after the botched WeWork IPO last year. In January, it had roped in former Traveloka executive Louis Alfonso Kodoatie as its new CEO, replacing co-founder Danny Handoko.

The reversal of fortunes is not unique to Airy. Its closest competitor Reddoorz recently invoked force majeure, saying it was unable to fulfil its contractual commitments to its Indonesian property operators due to the pandemic.

Budget hotel giant OYO, too, has announced salary cuts and furloughed some of its staff in India. It had in February laid off around 200 people in Indonesia.

Sarah Yuniarni contributed to this story.

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