How Stayzilla has got more than 15,000 stays in 1100+ cities listed?

In 2006, Yogendra’s love for code made him take the tough decision to drop out of college. He didn’t connect with things taught at school, and always had the drive to build something.

He along with his backbencher friends at college, Sachit Singhi and Rupal Surana (who didn’t dropout), believed that the fragmented ‘stay’ market could be brought online and made structured. It was 2005-06, when India was going through the Internet revolution but still wasn't quite internet savvy as today.

This Chennai-based startup was started in 2005-06 under the name of Inasra.com but then they rebranded it to StayZilla - stay in every ‘zilla’ (district) -- in 2010.

“In 2005, we were thinking about launching either a marketplace for real estate or aggregation of accommodations across hotels in India. Though ultimately we concurred on accommodation aggregation and launched Inasra,” says Sachit.

Challenges

During the initial days, Stayzilla met with unique challenges as booked accommodations by consumers were not available at the time of check in.

To overcome this challenge, the team introduced double checks with the hoteliers so that bookings would be available when customers arrived. To eliminate this pain-point, the team introduced predictive algorithms, tweaking processes and optimizing supply chain management via seamless integration between Stayzilla and its accommodation partners.

Looking for a budget stay in India has always been a very tedious task for travelers and tourists. It becomes more complex when you have to visit tier II or tier III towns where not many lodges or hotels have online presence and the major OTAs or marketplaces don't have them listed.

The thing about Stayzilla that needs to be appreciated is its relentless focus on tier II towns. They want to ensure that travelers can easily search and choose thousands of affordable hotels across India.

As of today, it has more than 15,000 stays listed in a network of more than 1100 cities in India. They clock more than 500 bookings per day.

Matrix Connection

Yogendra’s ‘I am the best computer engineer in the country who hasn't graduated’ impressed Avnish Bajaj, MD, Matrix Partners, to pursue Series A funding in Stayzilla.

Avnish Bajaj, Co-founder and Managing Director, Matrix Partners India, has previous experience in starting an online marketplace with Baazee.com. Baazee.com was acquired by eBay.

Related read: Avnish Bajaj shares the secrets to scale online marketplaces in India

Avnish states,

Stayzilla team’s perseverance to seed the ‘stays’ market without losing their focus and getting distracted to other sectors – air, train or bus ticketing -- speaks for their intent. The team has grown really well over the years with their listings and has extensively expanded across geographies.

Echoing the fact that it’s good to have an ‘entrepreneur-turned-investor’, Yogendra shared,

It’s not how much you raise but from whom you raise. When we were in talks with Matrix Partners for our funding, their analysts traveled in various tier II towns in India to understand the market. This shows their commitment towards their investments. Avnish along with his team has helped us a lot in scaling from time to time. It’s great to have someone on board who understands both the psyche of an entrepreneur and investor at the same time to give feedback for improvement.

Prior to raising funds from Matrix Partners, Stayzilla had raised half a million USD from Indian Angel Network for minority stakes.

The team had been running bootstrapped with savings of founders for almost 5-6 years now. This was accompanied with their early days profitability that gave them a great stable support.

Building a marketplace in 2010 when e-commerce itself was very naïve in India is a commendable task for which Yogendra and team needs to be admired.

Marketplaces in India

Starting a two-sided marketplace is becoming incredibly challenging with the growing competition in India. We have marketplaces like Quikr, OLX, eBay, Snapdeal and now Flipkart and Amazon also going the marketplace way here in India.

Most marketplaces face the ‘chicken-and-egg’ problem while scaling as interactions between buyers and sellers increase. Less buyers – more sellers or more buyers – less sellers is a classic economics example of supply and demand.

Growing mobile user-base is definitely helping marketplaces gain users, which also highlights the fact that localisation is becoming a prime differentiator.