If you wanted to find somewhere to sleep in and around India a couple of years ago, you were limited to booking a hotel in one of the large cities or simply arriving at an area and finding one on foot.
Stayzilla, the largest Indian homestay startup, is now five years old and in that time it has grown and evolved to suit the changing tastes of international tourists and Indian homeowners.
“We wanted to be the marketplace for rooms” is how founder and CEO Yogendra Vasupal puts it.
Initially, the Indian homestay startup worked a lot on their online structure, focusing their attention on marketing hotels across the country particularly in eight major cities such as Chennai, where the company started, Mumbai, Hyderabad et cetera.
Over time however they noticed that this was starting to lose out to an alternative accommodation type.
“From January 2014, we had 5 500 properties on our platform with traditional properties like hotels forming 95% of those.”
It’s important to note here that each property has an average of 20 rooms.
However that figure changed dramatically in under a year forcing Stayzilla to re-evaluate their business trajectory.
“By the December of that year we grew to 20 000 properties and of those, alternative stay percentage made up 36% of that total – that was one of our largest inflection points for us.”
Alternative stays are seen as short term rentals in lodges, private houses and guest houses.
The Indian homestay startup also scaled up: early last year Stayzilla were booking 500 rooms a day and by the end of the year that rocketed to 4000 rooms.
“The alternative market growth provided the biggest rise for us and so, to match our growth patterns, we’ll be looking at that more keenly.”
Currently, Stayzilla has 30,000 properties registered on its site catering to 4,000 towns.
The reason for this growth could be because of the rise of the backpacker and “experience tourism” but Vasupal has other ideas.
“It’s more of a stay owner habit; more and more people are now putting up their second home or a room in their own home for short terms rentals.”
Recognizing this trend has also helped them market their company to investors.
“Luckily we entered a hybrid market place right from the start so the investors could understand that we had done our research – the one difference that sets us apart is we don’t compartmentalize types, we bring people access to rooms in all types.”
The Indian homestay startup isn’t just an open marketplace though.
They recognized that when someone makes the decision to open up their home to a stranger, two issues arise: how do I ensure safety and security? How can I balance acting as landlord with my other commitments?
For the first issue, Stayzilla are “…an end to end marketplace and we have a large amount of control over which guests can view our properties.”
The second issue needed more attention and led them to create their Concierge service.
“We act as an e-concierge service; we get all your calls and emails redirected to us and after a period of time we start to understand the property as much as the host does.”
For most hosts, this is an incremental income so the Indian homestay startup wants to streamline the process as much as possible.
Potential guests have to fill out information and some of those may be helpful when matching them with a property – or advising against.
So if someone has stated that they will be travelling with someone elderly, but Stayzilla notices that the property they have booked doesn’t have a lift, that hotel, guesthouse is contacted to provide them with a ground floor room.
India wasn’t an easy market to startup in however.
“Initially there was the fact that there wasn’t a lot of entrepreneurial activity here when we set up: we had to grow using our own cash flow.”
The young team travelled to over 250 cities and towns around India and even canvassed people who don’t know what a computer was, let alone the internet.
“It was difficult but we were young and foolhardy but it paid off.”
That’s one way of putting it.
In April, the company listed 26 000 properties on their lists and by the end of this year they want to nearly double that to 50k.
The roughly US$20 million that Stayzilla raised has been used to fund that growth however.
“We have chosen growth over profitability and our revenues come from the commission we get by managing the back-end functions of hotel properties.”
These decision processes, as well as others, stem from understanding the geography of the Indian homestay market.
Delhi, Mumbai, Calcutta, Hyderabad, those cities are considered “tier 1” and account for 70% of markets for Stayzilla’s competitors but for Vasupal’s startup they account only for 13%.
“The remaining 87% come from tier2 and tier3 – the nooks and crannies of India.”
Tier 2 towns and cities have populations lower than 500 000, tier 3, less than 100 000.
But what is India like for tech in general?
“In India most of the companies are focusing on the internet of things because that will allow us to leapfrog.”
As a company though, the Indian homestay startup wants to focus on personalisation.
“My pet peeve has to be the way that many services today are still too standardized and that’s one of the reasons why we entered the concierge service – so that our customer’s experience is down to their personal habits and attributes.”
And where is the best place in India to achieve this?
“Bangalore is the best places for startups – we’re from Chennai but we’ve had to set up offices there.”
Bangalore does seem to have that edge over other major cities in the country, but inside knowledge like that won’t stop you from success in this market.
“You don’t have to be Indian to see potential here; there are a wealth of opportunities and every industry here has masses of room for change, growth and innovation.”