When serial guest Adam Harris, Co-founder and CEO of Cloudbeds, comes in to share an update with the GetLakta team, you know it will be impressive, intriguing, and thought-provoking. Once again, Harris did not disappoint. He’s already been the recipient of many prestigious awards, including America’s best startup, Employer Inc’s Best Workplace, and E&Y Entrepreneur of the Year. The confident, award-winning CEO of the hospitality platform shared his industry outlook for 2024 and what he’s excited about, where he’s focusing his efforts to maintain a 3-year 75% CAGR, and how he’s crafted a solution for his customers that’s delivering a 13X ROAS.
- Launched in 2012
- Over $50m revenue, expected to hit $100m next year
- 75% CAGR over the last 3 years
- Raised $250m total
- Serving 2.5 m beds across 27,000+ paying customers
- Team of 757 in 41 countries with 250 engineers, up from 40 in 2018
Global leader in hospitality software present in 157 markets across 2.5 m beds
Harris kicked off the interview with a quick overview of Cloudbed’s business. “Hoteliers run their entire business on software. That tech stack used to be 18 different systems. Even after they moved to the cloud, they still struggled with disjointed systems,” the CEO explained, adding, “Cloudbeds takes the day-to-day operational side of running a hotel and makes it a much more modern capability. We’ve unified hospitality with one platform.” His SaaS, launched in 2012, is now in 157 markets across 2.5 million beds. “We are now the category leader for independent hoteliers,” summarized Harris.
“Revenge Travel” since 2021
Since the last interview in 2021, Harris explained that business is booming because travel has been booming: “It’s been all revenge travel since the lockdown; there’s been a tremendous surge in people wanting to take that once-in-a-lifetime trip,” the Co-founder shared. Looking forward, he noted more cautiously, “Unfortunately, the economy is catching up a little bit. 2024 will be a telling time, especially in winter in the Northern Hemisphere.” Undaunted, the CEO added, “But the last 2 years have been ones for the record book. I’m excited to see that the digitalization curve is finally catching up in favor of the consumer; the industry is finally giving them what they’re looking for, and that’s a good thing.”
75% CAGR last 3 years, no signs of slowdown
When asked how Cloudbeds continued to grow at such an impressive rate, Harris explained that they are continuing to add to the main product. “We’ve gotten tremendous acceleration by adding financial products,” quipped the CEO, continuing, “We are as much of a fintech now as a SaaS; our goal is to capture revenue and wallets. He noted that Cloudbeds added fintech just 18 months ago, and as of 3 weeks ago, they had expanded to 30 markets.
No singular take rate, over $10B GMV just in reservations
Quantifying the impact of the fintech portion of the business is not as easy as multiplying 1% by the GMV, as Latka quickly discovered. “Calculating the take rate is really hard, as every jurisdiction worldwide is different. It never works out to just calculate 1%,” noted CEO Harris: “In Costa Rica, you have to be a licensed business. In some fintech markets, we partner; in others, we underwrite. Money flows differently in different parts of the world. For instance, in Latin America, installments are big. And not every market takes credit cards. In others, they only take one wallet.” He added that Cloudbeds processed $10B just in reservations in their major markets.
Fintech less than 20%, targeting $87B in intermediary fees
Harris explained that although fintech is less than 20% of their current revenue, it’s quickly growing: “Right now, our SAM is paying too many intermediaries. We know they spend $87B in intermediary fees, maybe 15-20% of their total GMV.” The CEO aims to “fight back to bring more direct connection with customers to shave that commission rate of 15-20% for our customers.” It’s just one of the many hotel solutions the Co-founder is developing in order to grow their sticky fintech business. “When you’re close to the payment flows, you can do so much by finding opportunities; data is helping us find sweet spots,” revealed Harris. He added, “we are always testing then expanding.”
Amplify solution delivers 13X ROAS
With data at the heart of his insights, Harris revealed that 62% of all travel today is happening through social media influence. Cloudbeds is currently offering a solution that delivers targeted ads automated with generative AI to get in front of prospective customers looking for a property in a specific destination or around an event. By sending these ad leads to their own landing pages and booking experiences, they can save hoteliers’ 3rd-party intermediary fees and successfully charge a tiny fraction of the costs. Their program is currently delivering a 13X ROAS, so the CEO is looking to do more of that moving forward. “Currently, we’re doing millions of dollars a day; I hope we can do $1B next year,” shared Harris.
4X customer base from 2018 to 27,000 this year
According to Harris, Cloudbeds served roughly 7000 customers in 2018 and grew to 22,000 in 2021. Today, they’re serving over 27,000 customers and looking for more while helping their existing customers increase their revenue per guest. “We’ve been rolling out universal products that benefit the largest population of hotel customers, but it’s just the tip of the spear,” he noted.
Expanding microtransactions and upsells during stays
“We are looking at both sides of the market,” explained Harris. His focus today is on expanding the guest experience in the hotel through microtransactions and upsells: “We want to offer hotels payment solutions that allow guests to text for Snicker bar, get offered an upsell for a couple of bottles of water, and have the hotel reap the benefits, so the guest doesn’t need to leave the property.” Next, he wants to integrate local area experience bookings to support the local hoteliers further. Harris recognizes that by bringing revenue opportunities to his customers, he opens up additional opportunities to drive incremental GMV growth.
Favorite Book: CEO and Co-founder Adam Harris chose the iconic Atomic Habits by James Clear as his favorite book today.
CEO he’s following: “Even though he’s not a CEO right now, it’s Jeff Weiner,” proclaimed Harris.
Favorite online tool: Harris shared that he’s “having a blast with ChatGPT right now.”
Balance: 42-year-old Harris sleeps 7 solid hours per night. He’s married with two children under 4.
What does he wish he had known at 20? “I wish I had known that every coin has two sides. You either do or don’t, and either way is right, so you might as well do,” replied Harris.