Hostel chain for backpackers Zostel launches its first international hostel in Vietnam

21st Aug 2015
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Zostel, a chain of hostels for backpackers, has established a global base with the launch of its first international hostel at Dalat in Vietnam.


The hostel in Dalat has been established under the Zostel Entrepreneurship Development Programme. Launched in March this year, the programme is designed to aid aspiring entrepreneurs to start their own Zostels with a performance-based seed amount of Rs 10 lakhs. This is the first Zostel to come up from the programme and there are 21 hostels at the development stage.

After this launch in Vietnam, the company plans to expand its presence with a property in Hanoi, the capital of Vietnam.

“We are planning to launch more international properties, including in Nepal and Sri Lanka. By the end of this year, we will launch three unique properties in each location, taking the total number of hostels to 40 across national and international destinations,” says Akhil Malik, Cofounder, Zostel.

He adds that Zostel is following the franchise model, where it allows local partners to do all the investment and the brand takes care of marketing and branding. It charges 15 per cent commission on each booking made from its platform — both app and website — and a monthly marketing fee.

To further enhance the experience of this niche category of travelers, Zostel is also in the process of launching a one-of-its-kind backpacker app. It will tap into the backpacker community to share relevant information for the ecosystem.

In August 2013, Zostel started out its operation with the launch of its first hostel in Jaipur. The company offers travelers rooms at budgets of Rs 500 a day, and offer services like laundry, access to internet, library, board games and other interactive facilities.

Last year, the company had raised angel round of Rs 5 crores from a Malaysia-based angel investor, Presha Paragash. According to reports, Zostel was is in talks, in May, with investment firm Tiger Global to raise up to USD 15 million in a Series-A round of funding, to fuel expansion of its recently-launched, low-budget hotel room-booking service ZO Rooms.

The venture had entered the low budget hotel space with ZO Rooms in April earlier this year.

Interestingly, so far, Zostel is the sole brand name in the space which is providing hostel facility for backpackers. There are small players such as Moustache Hostel, Stops Hostel and Le Pension etc, but no one pose a direct competition to Zostel.

In tour and travel segment, ZO Rooms, Stayzilla, Oyo Rooms, Treebo, Zip Rooms, Wudstay and Awesome Stays are some of the key players which offer accommodations in the budget hotel aggregation segment.

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