Branded players will get scope to increase their market share: ZoloStays founder Nikhil Sikri

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Updated: Sep 09, 2020 10:59 AM

Going ahead, branded players would have a better chance of survival. This shock has sort of created a differentiation between a reliable partner and a normal accommodation.

It’s tough to comment today on how much more time expansion plans would take.It’s tough to comment today on how much more time expansion plans would take.

Almost every sector in the economy is being mauled by Covid-19 and the co-living industry is no different. ZoloStays, one of the leading players, estimates that almost 50% of local PGs and hostels will be wiped out in the short term due to the pandemic. It’s co-founder, Nikhil Sikri, in an interaction with FE’s Rishi Ranjan Kala, however, said it is also an opportunity for branded companies to increase their market share as unorganised players bow out. Edited excerpts

Q. What has been Covid’s impact on ZoloStays?
It has been a mixed bag. Lot of tough times as people have gone to their hometowns. We had reverse urban migration, which impacted demand. Good part is that we were able to demonstrate safety and hygiene practices much early. It also helped us establish a strong reputation of a safe and, operationally, a protocol-driven place.

Q. What has been the impact on industry?
Industry took a strong hit. Around 30% of local PGs and hostels have shut. In next 15-30 days, we will see another 20% gone. In all, Covid-19 will end up wiping off 50% of the industry. These people do not have the resources to sustain losses for long. This 50% will be wiped off for the time being, but they would be able to revive later with time.

Q. What trends are you witnessing? What about consolidation?
Going ahead, branded players would have a better chance of survival. This shock has sort of created a differentiation between a reliable partner and a normal accommodation. We expect to end up getting a large share of this unorganised market, going forward. How exactly consolidation will happen and who will acquire whom is anybody’s guess, but this, as a trend, will happen in the co-living segment. The process has started, but it will take some time.

Q. What impact would work from home have on co-living?
Co-living, as an industry, will take a short-term recalibration, given that it is a very large market, more than $20 billion annually. And even if it were to shrink by 20%, it is still basically a $16-billion market. It’s basically a very large market with space to grow.

Q. What about plans of adding 500 more properties in five years?
It’s tough to comment today on how much more time expansion plans would take. This year has slowed down our plans, but we will catch up in the coming years. As of now, 15,000 beds are occupied physically of the total 40,000. In last five years, we have had 125,000 customers.

Q. You recently had a funding round ($56 million), but is this enough to meet expansion plans?
We will certainly have one more round of financing, whether it would be private or public needs to be seen. This money might be enough for us to have a public round of financing as well. Before reaching our target of 1 million beds, we will certainly have one more round.

Q. What about your plans to develop 5 million sqft of space for custom-made properties?
Real estate is going through tough times. In the residential asset class, we will build spaces in collaborations with builders and sell it to investors. We will design it from scratch and developers will build it. We will soon have one property each coming up in Mumbai (MMR), Delhi NCR, Bengaluru and Chennai. We will soon come out with an announcement in a couple of weeks.

Q. When do you expect co-living to start recovering?
I’m certain the market will recover by December because we are seeing people coming back to work. Companies have also started asking employees to come back. Our target group is between 22 and 28 years and this group has one of the least vulnerable to corona. They are also a little bold in their approach towards life.

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