If you've backpacked a bit, you'd know that Booking.com is like the holy grail for booking a hostel. Be it any country, you're likely to get a great budget hostel, all on the back of a thorough listing process and a delightful community of travellers who review the properties. But if you are look for hostels in India, your search is likely to go in vain. Why? Because India doesn't have those hostels. This is what Zostel, an initiative by a bunch of young well-travelled entrepreneurs intends to change. They built a backpacker hostel in Jaipur, set unit economics and then quickly grew to expand to 8 more cities. In the process, they also raised a round of funding. Yes, they are making money and could have grown that way but with funding, comes in the rocket fuel to scale.
"Our intention has always been to encourage more youngsters in India to travel," says Dharamveer Singh Chouhan, one of the many co-founders. Running 8 hostels, the team at Zostel realized the need to find a way to scale up quickly. Step in- Zostel Entrepreneurship Development Programme (#BeYou). This is Zostel’s incubation programme for promoting entrepreneurship with a performance based seed incentive of upto INR 10 lakhs. It is meant for those people who want to start a Zostel of their own. The company will be providing full support w.r.t. marketing, sales, branding, staff training and technology to the selected individuals and would not charge any brand fees or royalty in lieu of the brand name and the support. "All we want from our partners is to maintain a certain level of service standard. If someone is able to perform as per the high service standards established by Zostel’s current properties, Zostel team will provide all the support needed to run the business," says Akhil Malik, co-founder of Zostel.
An honest move, Zostel has decided to go ‘public’ with all the information about its business and operations . This includes some sensitive business information like Capital expenditure requirements and breakup of the same on per bed basis for setting up a backpacker hoste, Operational expenditure requirements, revenue, expenses and profit margin of the company as well as occupancy clocked in last 8 months, etc. This is a pleasant development when it comes to transparency. Previously, venture funded company Frrole decided to make every detail like founder's salary and equity, etc public. Zostel has also shared a 50-slide PowerPoint research deck on its website which talks about the backpacker hostel market in India and abroad in detail.
Talking about the reason behind this move, Akhil says, "We want to promote entrepreneurship among those who are passionate deep down but are somehow stuck in various other boring spheres of life. It's for those who want to run their own business but due to lack of idea/team/experience are unable to do so." From the business point of view, Zostel’s vision is to be a global backpacking brand. They want to cover the Indian market in next 6 months and move on to South Asian and other markets outside India where dynamics are similar to ultimately become a global backpacking brand. And for realizing this vision, opening up the brand is very crucial. The company is also looking to raise a series A round to boost their growth. If things go on well, Zostel will be a huge chain of hostels (some owned, some co-owned, some not) but will be handling all the booking and controls the experience. Here is an infographic the company shared with all the data they have collected over time and would be helpful to any hostel owner: