Stayzilla to reduce burn rate to turn profitable

Accommodation aggregator Stayzilla has put on hold its fund-raising plans till such time it gets its burn-rate levels down to less than $ 0.5 million a month and improves its margins to get a desired valuation.

Having raised a total of $26 million, from investors such as Matrix Partners and Nexus Capital, since it started its operations in 2007, the focus this year is to first turn EBITA positive by doubling its existing margins.

“We want to take down our burn rate to bring it closer to $0.25 million a month. Today, our margins are closer to 10 per cent, but we are hoping to double it this year. All this time, we were not exactly building the business, but focusing on buying customers, and that has backfired and hurt the ecosystem,” said Yogendra Vasupal, CEO and founder.

Increasing margins will include having more lateral hires than employing freshers from IITs through campus recruitments.

“At this juncture in our business, we need people with years of experience in areas such as product and design. We need senior-level talent and recently hired a Chief Technology Officer and a Product Development Vice-President .”

Stayzilla has already taken on board seasoned professionals from places such as Twitter and Flipkart, and going forward, will continue to focus on lateral hiring rather than resorting to new recruits who need mentoring.

Sharing costs with the State governments of Madhya Pradesh and Uttarakhand in the home-stay segment is also another way it plans to improve margins.

“We will not be spending any money to develop the home-stay ecosystem in those States as there will be shared costs since we have signed MOUs with the governments,” Vasupal added.

Stayzilla expects to generate nearly 80 per cent of its revenues from home stays.

Today, out of the 55,000 listed properties on Stayzilla, 15,000 comprise alternate stays of which home stays form a part.

The balance comprises budget hotels, which is already a mature and evolved segment, he said.

With the entry of Airbnb, the global market leader in home stays, Stayzilla is gearing up for competition.

“Airbnb has been in India for three years, but has not been able to move the needle as India is a different market when it comes to home stays. But we have to gear up as it is going to be competition for us.”