Banker and entrepreneur join hands to build 14 Square a platform for serviced apartments
If you're a jetsetter and used to living out of a suitcase most days of the week, then the idea of serviced rooms and apartments may not be new to you. However, the concept is still quite new in India.
Being business travellers, both Gaurang Chandarana and Prashant were used to staying at different destinations both in India and abroad. But what struck them as odd was the fact that India rarely had the quality of the type of servicing as seen in professional serviced apartments abroad.
Initial ideation and research
The duo approached corporates as they were the first ones to embrace the concept of serviced accomodation. They explained to them what the actual product offering should be. The response turned out to be very encouraging.
Gaurang and Prashant did their market research and gathered data from India and abroad. They found that the serviced apartment industry is in the early stage in India and there is a great shortage of rooms. Globally, there are close to 7,00,000 apartments. In India, the industry is not even tracked separately. There are an estimated 25,000 apartments and 50,000 rooms in India, primarily in the unorganised sector.
The expected additional requirement for branded rooms in this segment in the next few years is estimated to be over 1,00,000 rooms. "All this prompted us to quickly work on a pilot and surprisingly, sales started even before our company got incorporated, “says Prashant. This gave birth to 14 Square.
Serviced apartments as a stay segment in India is primarily driven by small, local players. While there are some organised branded players, they operate in the higher segments.
Prashant says with 14Square, they were trying to create an organised offering in a highly unorganised, mid-market segment.
"We work with small local players and use a collaborative approach to organise and standardise apartments and services, reach out to customers and yet keep the idea of a branded offering in this space. In short, we seek to be the equivalent of an average person’s Marriott, Westin or Novotel,” he adds.
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The founding team
Prashant and Gaurang met at an incubator forum four years ago in Pune. Since then they've been friends and decided to work together on something in the service industry. They did some outsourcing work for a real estate portal and also set up a real estate wealth management advisory.
"In early 2014, while discussing our interest in the hospitality sector, a friend suggested we look at serviced apartments as a concept. We did our groundwork, ideated, brainstormed and roped in an international design and brand consultant, “says Gaurang.
The company was incorporated in late 2014 and started sales by December with two employees as shared resources from another business.
The biggest challenges have been related to the last mile. Here, the local players have a different mindset and the underlying inventory, i.e., the real estate space, is not evolved to understand the opportunity.
Building the team
Prashant is a commerce grad and has done his PG from XLRI. He has had years of experience in the areas of property legal services in the UK. He was also the operations head of the property legal KPO for WNS in India. Additionally, he had set up a funded venture in the UK. He thereafter set up his own legal KPO in Bengaluru in 2002. This is still running and managed by his brother.
Gaurang is an MMS with over 14 years of experience in the banking and finance industry. He has worked in reputed organisations in senior levels and headed large portfolios. His areas of expertise are related to banking, mortgages and risk management.
"Our design and brand consultant is Shailaja Shah, founder/creative director of Integrated Design Works. She is a graduate from NID with a post graduation from Parsons NYC with over 12 years of experience," adds Gaurang.
The other employees are from diverse backgrounds with between one and three years of experience in customer service, hospitality and operations.
The organisation believes in a delivery-based culture and not a time-based one.
Traction and growth
The team claims that it’s been doubling its room night sales, quarter on quarter, and in the next four to five months intends start hitting 100 room nights a day with around 200 branded, captive rooms. In terms of geography, the company started with Pune and is now in 10 cities – Kolkata, Delhi-NCR, Ahmedabad, Mumbai, Pune, Bengaluru, Chennai, Hyderabad, and Kochi. "We are currently utilising network partners (local players), but as we grow our team we plan to have more self-owned branded rooms, “says Prashant.
Funding and future
14 Square raised an amount of Rs 35,00,000 through four individual investors at the ideation, pre-revenue and early-revenue stage. It is in the process of closing its bridge funding of around Rs 3.25 crores soon.
In the short term, the team is focussed on accelerating the business and laying the foundation for a large business. It intends to add 10,000 own branded rooms in 30 cities on an asset-light model (not aggregation) in 24 months through a combination of management contracts, franchising and other similar arrangements.
The booking engine and back-end system is undergoing a revamp. "We have managed to increase sales with minimalistic technology till date and have been able to capture our tech requirements for the complete overhaul of this technology," adds Prashant.