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Rashmi Pratap | Updated on October 10, 2014

Common rooms. With several backpackers and budget travellers coming to India, these clean hostels are finally filling a major gap in the hospitality industry

The Zostel team has won 14 business plan competitions

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A start-up that is out to prove that, like in the West, clean and friendly hostels can be the accommodation of choice even in India

In the movie Queen, when Rani (played by Kangana Ranaut) is rejected by her fiancé barely two days before the wedding, she heads to Paris and Amsterdam by herself, for her honeymoon. At a hostel in Amsterdam she is aghast when she finds out she has to share a room with three men of different nationalities. But it is here that she eventually gains self-confidence and learns more about herself. The concept of hostels or shared accommodation for travellers might be an unfamiliar one in India. But seven friends have come together to popularise it, elevate the backpacker experience in India and, in the process, build their new business — Zostel.

For starters, they picked Rajasthan — the land of maharajas, palace hotels and sprawling havelis — to set up their first three facilities. Being backpackers themselves, the friends — all graduates of IIT-Bombay and IIM-Calcutta — always knew that India sorely lacked the reasonably priced clean accommodation that was so common and plentiful in the US and Europe.

“Outside India, hotels are expensive and we always stayed in hostels. In India, there are expensive hotels or cheap and dirty guesthouses. There is nothing in between where one can feel homely or get to know the locals. So we thought of trying out the concept,” says Paavan Nanda, one of the co-founders. The others in the start-up are Akhil Malik, Tarun Tiwari, Chetan Singh Chauhan, Abhishek Bhutra, Siddharth Janghu and Dharamveer Singh Chauhan. Using their savings and with help from their families, they opened their first hostel at a property owned by Chauhan’s family in Jodhpur. “We constructed the dormitories, washrooms and the common room, and opened it last year,” says Nanda.

The response was encouraging from the start, and the 25-bed hostel broke even in the first month itself. The founders were able to recover their day-to-day expenses without losing money.

In a country like India, thronged by backpackers and budget travellers (both locals and foreigners), clean hostels was an idea waiting to happen. Not surprisingly, the Zostel team has won in all the 14 business plan competitions it has participated in till date. These include the Wharton India Economic Forum (USA), Richard Ivey School of Business (Canada), Stanford BASES E-Bootcamp (USA), IIM-Calcutta Launchpad and IIT-Bombay Eureka among others.

This well-feted business model is quite simple. It involves taking properties on lease and converting them into air-conditioned dorms with bunk beds, and common rooms with WiFi connectivity, board games and play stations. The major expenses go to rent, utility bills and staff (25 so far) salaries. While accommodation rates range from ₹400 to ₹500 a day, breakfast can be added on for ₹70 more.

The Udaipur facility has a full-fledged restaurant for members. “We plan to have restaurants at all our facilities,” says Nanda. That, in turn, will generate additional revenue.

Zostel’s other facilities are in Jaipur, Varanasi and Agra. Also in the offing is a property at Panaji in Goa. “The plan is to open a new Zostel every 20 days,” says Nanda. His confidence stems from the funding the company recently received — ₹5 crore from Malaysia-based angel investor Presha Paragash. “We are looking to raise more funds,” he adds.

When identifying a new city or property, Zostel’s focus is on location, hygiene, security and culture. “We expand in tourist circuits. Like, say, a traveller who goes to Delhi and Jaipur will also go to Udaipur. So these three areas will be targeted. In terms of sites, we prefer properties within a kilometre’s radius from the city centre,” he says.

After identifying the location, the Zostel team takes the help of property agents to finalise the deal. Currently 65 per cent of the guests are foreigners. The number of Indian members is rising steadily and they include students, young professionals and even couples. While the target audience is the 18-35 age group, Zostel is open to all.

“We welcome everyone who is adventurous and open-minded,” says Nanda.

Looking around at the clean and colourful dorms, the common rooms enlivened with bean bags, cane moodas, carpets and beautiful lamps and lights, the last thing they remind you of is a budget accommodation.



Published on October 03, 2014

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