Homestays aggregator Stayzilla has halted its operations and is looking to reboot it with a different business model, Stayzilla CEO Yogendra Vasupal has said in a statement.
Citing the reason behind this move, he said, “The travel marketplace does not have local network effects and, therefore, we can’t really take a focused city-by-city approach in terms of matching supply and demand. The demand and supply for homestays was non-existent 18 months back, excluding a few small pockets. As a result, we had to invest extensively in both sides of the marketplace, creating homestays as well as guests who would choose a homestay across the country. We were actually successful at this – we have created 8000 homestays in over 900 towns – but this stretched us thin.”
He said that some of India’s key macro trends further deteriorated Stayzilla’s ability to expand quickly and cost effectively. “India does not have a lot of public goods, often taken for granted in mature markets like logistics, tech savvy suppliers and online user demand. A homestays marketplace needs to invest in educating the market on the concept and even using Internet and not just the product. The costs, both financial and opportunity costs, creep up on you over a period of time and gets rationalised as cost of doing business in India,” added Vasupal.
He also highlighted the role of the discounting based growth, which has been rampant in the travel industry since 2015, in this move.
Started by Vasupal and RupalYogendra in 2006, the company had raised US$15 million in its second round of funding led by by Nexus Venture Partners, with participation from initial investors Matrix Partners. Founded in 2005 as Inasra, and later rebranded as Stayzilla the company had recently tied up with eight state tourism board to promote the homestay concept. The platform had reached 4500 towns with more than 55,000 stay options listed on the website. Vasupal also mentioned that the team was unaware about the decision and had been constantly working on new products and features for the website.
“Looking forward, I see co-operation and specialisation as the mantra for Stayzilla. Our hosts still have a lot of needs that are unmet and problems that are unsolved. That’s something that excites me. I see Stayzilla becoming a hassle-free distribution channel going out to the right audience, wherever they may be. We will look to work closely with both online and offline travel partners to offer the best of Indian homestays to their valued customers. Focusing all our energies on the supply side will allow us to build on our core strength that we have developed over the last 18 months. Specialised solutions such as the concept of ‘Stayzilla Verified Homestays’ excite me in particular. Originally conceived to increase trust, this could serve as the benchmark for the entire nascent and unstructured industry. I believe that the market is at a phase where co-operation among players is going to be the most certain way in which we can create value for all stakeholders involved,” he further said.
New bookings on all Stayzilla platforms are now suspended. Bookings with check-in dates on or before February 28 will be honoured. Any booking with check-in after that date will be cancelled and guests will receive 100 per cent refund.
