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Rent, don’t buy: The transformational journey of linen management

How do professionals with backgrounds in managing large power projects and developing software that integrates a hotel’s internal telephone system with its property management system, end up starting a company that rents bed and bath linen to hospitality clients?

A childhood fascination with crisp, white uniforms. A thorough understanding of the back-end of hotel operations. A readiness to research and test almost endlessly, as well as the willingness to learn from feedback and reinvent one’s model. These qualities have helped Narayanan Raghavan, CEO and Ram Mohan, COO of Rent-A-Towel pioneer a linen rental model that has taken the Middle-East by storm, and is poised to repeat the feat in India and other Asian countries.

The seeds are sown

After working together on another venture, Raghavan and Ram were in a coffee shop, pondering over what to collaborate on next. The hospitality industry felt like a good fit, and they wanted to zero in on something that is not a core activity for hotels, but still challenging. A need-to-have, rather than a nice-to-have. In a flash, they knew what that was – linen. They decided to offer linen…as a service.

The love for linen was long standing. As a schoolboy, Narayanan was a stickler for his uniform to be pure white and crisp. As an adult, he only ever trusted the few laundries that met his standards. In their business travels, both men had noticed discolouration and stains on the sheets of the finest hotels. Clearly, supplying clean, comfortable linen was a pain-point for hotels.

Most hotels in the West already leased their linen. The duo decided to introduce this paradigm shift to the Middle-East and chose Dubai as their testing field.

Spadework and more spadework

Not so fast. A full three years passed between the time they first conceived the idea of a linen rental service, to actually incorporating the company that would provide it. Why? They needed time to familiarise themselves with every aspect of the linen and laundry businesses, before rolling out a commercial model.

Raghavan travelled to the textile hubs of Coimbatore and Erode in India, to understand the types of linen, from raw material to finished goods, and came back with samples. Meanwhile, Ram began to digitally map the entire linen management process.

Emboldened by their research, they ordered a few hundred pool towels – the dead stock of a manufacturer. Ram said: “I was in a supermarket, on a phone call with Narayan. We had the towels in hand, and we said, why not call ourselves Rent-A-Towel? The domain name was available, and we booked it immediately.”

So it began.

Aggregators meet linen

The duo determined that for a hotel/hospital/spa/gym, linen, laundries and the labour to process that linen, and the logistics required to transport linen between hotels and laundries, are the four pillars of efficient linen management. Earlier, each pillar was supported by a different entity or company; by becoming an aggregator and vesting itself with the responsibility of all four pillars, Rent-A-Towel managed to bring down costs for hotel clients, as well as rely on volumes to sustain its own business.

Dipping toes in the water

A few hundred pool towels. One enthusiastic Dubai housekeeper. That’s what it took to demonstrate the proof of concept. But the housekeeper convinced the duo that leasing out pool towels was not enough; they would have to supply the entire range of bed and bath linen for their model to be a one-stop solution. For processing, they partnered with the only laundry which could support their pricing structure at the time, a now unimaginable 120 kilometres away.

Raghavan said with satisfaction: “That first customer who signed on with us in 2015, is still with us now”.

Lessons learnt

  • Look for local partners. Once, a van carrying laundered linen back from the distant laundry met with an accident, and the client was left waiting. Rent-A-Towel now chooses laundry partners within a 10 kilometre radius of the client.
  • The pricing model needs to evolve with the price of linen and the laundry process.
  • More volumes boost profitability. The sales cycle of a hotel may take months; the company started renting linen to beach clubs, fitness centres and beauty centres too.
  • Continuous knowledge sharing with housekeeping and laundry managers will improve the acceptance rate of this model.

Convincing unsure customers

If a hotel doesn’t lease its linen, it will need to procure at least 3 PAR (Per Available Room) stock of linen – one for use, one as a buffer while one will be in the wash. According to Ram, “Initially, housekeepers weren’t sure about how many PARs we could rent to them. What if we were suddenly unable to supply linen one day, was their concern. But housekeepers realised that it is easier to rent linen from us than to get approval from management to purchase their own linen. As clients referred us to others, our business grew steadily”.

Looking down the road

From the very beginning, Rent-A-Towel did not envision itself as just a linen supplier. Its recent tie-up with the Lenzing Group to supply linen made from sustainable, comfortable and hygienic Tencel fibres birthed the Dr. Linen™ brand – a milestone. Renting out healthcare linen, and uniforms for the pharma and heavy engineering sectors, will be milestones further down the road.

Raghavan said: “Currently, the market penetration of our model in the region is just 1-2%. But in just 3-5 years, 50-60% of the Middle-East market will embrace the rental linen model. We are also interested in providing the same range of services to B2C customers.”

The duo is all set to ride the tech wave by adopting a strong B2B digital platform using Artificial Intelligence, Machine learning, IoT and Blockchain technology for efficient and sustainable textile services globally. The platform will also ensure price standardisation and transparency across the ecosystem.

As per Statista, there are around 189 millions rooms globally; a $25 billion market for textile services. Rent-A-Towel’s new platform will set a goal to achieve 1% market share. Bengaluru will be the base of their digital journey; this future unicorn is already raring to go.

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