Stayzilla takes on Airbnb in India, launches app for home owners to rent rooms

Stayzilla finds the demand for quality accommodation is not being met by the existing organised industry

Stayzilla, a five-year old marketplace that offers rooms at service apartments and hotels across India, is following the Airbnb concept of engaging with home owners to let their properties for travellers in the country.

The Chennai-based company expects the alternate accommodation space introduced by Airbnb to take off in India over the next few years as more travellers look at affordable and comfortable stays in remote corners of the country. It also plans to open up its business to about 8,000 channel partners, including Zo Rooms, OYO Rooms, Ginger and Treebo.

"We are a marketplace for rooms. Now, we have become booking plus the Airbnb model of working," said Yogendra Vasupal, founder and chief executive officer of Stayzilla.

Stayzilla, which launched its app on Wednesday for home owners to open up their rooms for travellers, finds the demand for quality accommodation is not being met by the existing organised industry.The move is set to increase the competition in the Indian home and hospitality sector where players like Oyo Rooms are already doing a part in organising the largely unroganised unorganised space in India. Airbnb currently has about 5,000 rooms in India. Stayzilla has over 35,000 hotels, lodges and service apartments in its database offering 800,000 rooms across 4,500 towns in India.

One in three of its 300,000 customers are repeat users on its platform. The firm expects gross bookings by March 2016 to grow to $ 12 million (Rs 77 crore). The company had closed March this year at $1.8 million (Rs 11.9 crore).

OYO Rooms, founded by 21-year old Ritesh Agarwal, is expected to be the next disruptor in the segment in India, according to CB Insights.

Explaining about the motive to focus more on alternative stays, Vasupal said this is the right time to focus on this segment because going ahead there is little scope for increasing the number of structured and unstructured stay options in India. Branded hotel chains categorise as the structured stays whereas the unstructured ones include three-star hotels and lodges. "And that's where the room for growth of alternative stays comes in India because that's the only way we can bridge the demand-supply gap in India," he said.

According to India Brand Equity Foundation, tourism in India accounts for 6.8 per cent of the GDP and is the third largest foreign exchange earner for the country. The tourism and hospitality sector's direct contribution to GDP totalled $44.2 billion in 2015 and is growing at a compounded annual growth rate of 10.5 per cent since 2006. The direct contribution of travel and tourism to GDP is expected to grow 7.2 per cent per annum to $ 88.6 billion (2.5 per cent of GDP) by 2025.

Currently, about 80 per cent of Stayzilla's business comes from non-alternative stays whereas only 20 per cent is from alternative stays. Stayzilla expects this become a 50-50 ratio three-four years down the line.

Stayzilla had raised about $25.5 million in total from investors like Indian Angels Network, Matrix Partners and Nexus ventures Partners over the past three years.