For Yogendra Vasupal 40,000 rooms are not enough.
For Yogendra Vasupal 40,000 rooms are not enough. The 33-year-old founder of Stayzilla, an online marketplace of hotels wants to add half a million more rooms in his aggregation business in the next three years. And he plans to do it the “home stay” way—akin to what AirBnb does.
Vasupal says he entered the online hotel aggregation vertical that has exponentially grown in the past two years witnessing more than $100 million investment, pretty early, to be precise in 2006. Along with his friends Sachit Singhi and Rupal Surana, Vasupal started an online accommodation aggregation business in 2006 under the name of Inasra, which he re-branded in 2010 as Stayzilla.
Subsequently, Inasra Technologies became its parent company.
But entering into this vertical at a premature time was precisely the problem for the then Insara that was going through a bad phase. This is also the part of his life which his friends, family and investors don’t want him to talk about. But Vasupal says he is proud of what he had achieved then, when there was neither any startup ecosystem nor any easy VC money available. Stayzilla has raised $20 million till now in two rounds of funding from Nexus Venture Partners, Matrix Partners
What worked for them was that the nature of their business is supply led and not demand led. “We knew that when the time comes for the market to inflect, the platform that has the maximum supply will have an upper hand over the new comers,”
But all that estimation did not work for Vasupal until 2014. “We were expecting the market to inflect by 2012 but due to external economic slowdown it got delayed by two more years. Even when we doubled our supply the business grew only by 30%. That was a bad phase for us.”
By 2013-14 when other hotel aggregators started entering this space, Stayzilla had already listed 18,000 properties in 2,500 cities. Currently, it boasts of 32,000 listed hotels and over nine lakh rooms spread across 4,500 towns in India.
The listed properties pay a commission of 15% to Stayzilla on each lead that sometime even go higher. The company claims to have a strong hold in smaller towns and says 50% of their customers come from Tier 3 cities.
“Comparing the initial years of slogging this was like the picnic in a park. We had enough rooms to cater to the demand and instead of we approaching the hotels they started coming to us,” Vasupal said.
However, Vasupal believed India had a serious problem of not having enough real-estate for people to stay which was spiking room prices.
In early 2015, the company launched the option of personalised home stays by connecting people with similar interests to share their room or house and host travelers. The company expects more than 50% of their revenue to come from the alternate stay options. It clocked $4 million in revenue ending March 2015.
“There is an under supply of rooms in India. There are a million rooms needed in India and we want to add at least half a million rooms in three years. We have convinced people to become hosts and rent their house, a floor or few rooms for people to come and stay. It is under the bed and breakfast guidelines. We don’t need permanent rooms or hotels, we want temporary rooms and places that can accommodate increase in demand in a particular season or festival,” he said.