Inspired by a backpacking trip in Australia, these Deloitte analysts start a chain of hostels in India
Finding a budget hotel for a short stay at any part of the world isn’t much of a challenge anymore, thanks to the different budget hotel aggregators and players in the market today. However, what if you happen to be backpacking? The best bet then would be to choose a hostel. While there are hostels in famous backpacking destinations like Europe and Australia, India too has a growing number of hostels to cater to backpackers and budget travellers, like Zostel, YHAI, International Traveler’s Hostel and Moustache Hostel, among others.
Bringing in an international experience
Joining this slew is Vedanta Wake Up, a budget hostel that was started in 2011 by Rishabh Gupta and Aadil Muscatwala, who were both consultants at Deloitte Consulting and Merrill Lynch in New York and Sydney. The idea of Vedanta Wake Up came to Rishabh and Aadil when they were out on a two-month holiday to Australia in 2009. They stayed at a budget hostel there for $20 per night.
“For the first time, we experienced value for money in a low-segment hotel or hostel. And at that juncture we thought that this concept could potentially be explored in India for the backpacking fraternity—Indian and foreigners as well as the people who can travel and find affordable accommodation,” adds 32-year-old Rishabh.
The idea was to create a place brought the right balance between ensuring affordability and upholding standards. Also, the duo felt that socialising was an important aspect of a hotel or hostel business. They started their first hotel at Fort Kochi.
Working on an asset-light model
The Vedanta Wake Up business model revolves around aggregating, standardising and operating unbranded and under-utilised properties. The team works around basic metrics before they choose a property, gauging its accessibility, attractiveness and safety.
Working on an asset-light model, Vedanta Wake Up claims to make a capex of Rs 45 lakh for every hostel, with an average of 20 to 30 rooms. The team focusses on technology and housekeeping facilities. “We have expanded to 18 properties in Kerala and Tamil Nadu,” says Rishabh.
Vedanta Wake Up, he notes, is tapping into a niche segment that has still not reached saturation, by offering dorm rooms for solo backpackers, college groups, budget travellers.
Expanding the base
They are currently working on expanding their presence across 100 properties in India in the next three years. Apart from evaluating properties for expansion into bigger cities, the team is also looking at untapped markets such as emerging towns and cities, religious destinations and industrial hubs.
“We aim at becoming one of the largest operators of hostels in the country by FY2018 with over 7,300 dorm beds and 1,900 private rooms across 107 properties,” adds Rishabh.
The backpacking space
While not as visible as the budget hotel space that has names like OYO, Treebo or Ziprooms, the budget and social hostel space is nevertheless fast picking up. One of the biggest names in the Indian segment is Zostel. Started in late 2013, Zostel not only raised an angel round of funding last year, but also expanded its base internationally by launching in Vietnam.
Additionally, reports claim Berlin-based Meininger Group of hostels may soon be introduced In India by Cox & Kings.