With increasing demand for backpacker hostels, how entrepreneur Pallavi Agarwal of goSTOPS is positive amidst the pandemic

Since the launch of its first hostel in Varanasi in 2014, GoStops has expanded its presence across 27 different locations in India and hosted more than 4,00,000 travellers across our 28 properties.

As an intrepid traveller throughout her life, Pallavi Agarwal first experienced a backpacker’s life on a trip to Europe in 2012.

“It wasn’t long after the trip that I realised there was a clear need for pocket-friendly social accommodation catering to the aspirations of the massive youth population in India, which led me to my journey as an entrepreneur,” she says of the pain point behind the venture.

Riding the startup wave, Pallavi, Founder & CEO, goSTOPS, forayed into a segment not so well-established in the hospitality sector using the backpacker hostel model.

“The young Indian traveller deserves the best accommodation experience wherever they go, without having to stretch their budget. Bringing the backpacker hostels concept to India meant that the country’s youth would get access to branded high-quality accommodation that until now was beyond the reach of the Gen-Z. Our unique strategy is focused on millennials and Gen-Zs who are uninhibited in trying out new experiences, are free-spirited, and yet discerning at the same time,” she explains.

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Increasing demand

The pandemic and the subsequent ‘new normal’ resulted in a significant shift in consumer behaviour, spawning new travel trends and practices. As the hospitality industry returns to normalcy, Pallavi says we will witness a huge pent-up demand for travel.

“What we see today is an increasing demand for backpacker hostels with bookings going up by 110 percent since August 2021. We are also seeing a growing number of bookings from solo travellers over the past few months, with individuals weary of the monotony of staying at home and seeking some much needed me-time, by preferring to travel alone. Furthermore, the workcation trend has soared over the past few months,” she says.

Cashing in on these new trends and expectations, goSTOPS has pivoted differently – expanding to new “stunning” locations in India and has recently added new goSTOPS stays in Kerala, Goa, and across prime locations in Uttarakhand such as Rishikesh Lakshman Jhula, Mussoorie, Kasar Devi, Mukteshwar, and Nainital.

Pallavi reveals that compared to last year, there has been a six-fold increase in its ARR.

“We have grown from 700 beds in 2019 to 2,000 beds in October 2021, recording a three-fold increase in size having leveraged the availability of good-quality hotels to our advantage. While the demand has been growing proportionally, we are certain that the RevPAB, (Revenue per available bed), will soon surpass pre-COVID times. We have already tripled the absolute numbers and as per the recent booking trends, our RevPAB is already surpassing October 2019 figures. Since we launched our ‘Work Away From Home’ package in 2020, we are seeing close to a resounding 1,000 percent increase in demand, especially in destinations that are just a short drive away from metros and mini-metros.”

The Diwali festive season also saw a 50-60 percent spike in daily reservations. Owing to the increasing traveller preference and booking requests for offbeat leisure destinations, goSTOPS destinations such as Jaipur, Udaipur, Pushkar and business cities like Mumbai, Amritsar, and Delhi did exceedingly well.

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Experiences to entice new travellers

With an aim to build an ecosystem for young backpackers across the country, the company also onboarded EaseMyTrip in addition to the already available Online Travel Aggregators (OTAs).

“Recently we also kick-started our community management and volunteer programme to bridge the gap between goSTOPS and its community. This programme aims to provide an all-round experience to young, passionate, and responsible travel enthusiasts and volunteers on running and managing a backpacking hostel and creating the most engaging, interactive and memorable experiences for the guests staying across all the goSTOPS properties,” Pallavi adds.

goSTOPS offers accommodation options in social well-equipped 8/6/4 bed AC dormitories as well as minimalistic designed youthful private rooms. In total, 70 percent of goSTOPS inventory consists of dormitories, and 30 percent consists of private rooms.

Each hostel has indoor and outdoor common areas with facilities for recreation, working, socialising with other travellers, playing, or just relaxing. It also has a 24*7 café with a centralised food offering for a standardised food experience to its young guests.

Its recently launched goEXPERIENCES, a new vertical focused on Gen-Z and millennials, provides an array of exciting experiences and adventures across various popular destinations in India. The experiences are curated by goSTOPS’s trekking and travel experts, while offering live booking and distributing them across all channels — website, app, IVR, OTAs.

“We also offer ‘work away from home’ packages that provide the ideal working and living spaces post-lockdown for young travellers and come with all kinds of perks such as high-speed Wi-Fi, dedicated working areas, recreational activities, good cleaning and disinfection practices to ensure travellers have a safe and healthy stay. We also provide ‘group booking’ options for young backpackers travelling with a bunch of friends and looking for pocket friendly shared spaces and accommodations,” she says.

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Towards aggressive growth

On the other side, goSTOPS helps budgeted hotel or guesthouse owners generate higher revenue by leasing and refurbishing their properties and converting them into an exciting goSTOPS youth hostel accommodation and provide them with end-to-end professionally managed operations, insight-based design intelligence, professional sales, marketing and distribution support and best in class technology deployment.

Zostel and The Hosteller are its prime competitors as well as collaborators in the hostel space.

In 2020-2021, goSTOPS raised a round of funding led by 1Crowd Fund and from angel investors including Nitish Mittersain, the founder of Nazara Games. Recently, it raised $ 1 million in Pre-Series A round led by Indian Angel Network and Yuj Ventures, the private investing arm of the family office of Xander Group founder Sid Yog.

The round also saw participation from The Chennai Angels, Chandigarh Angels, Lead Angels, Mumbai Angels Network, LetsVenture as well as goSTOPS’ existing lead investor 1Crowd. KRS Jamwal, Uday Chatterjee, and Mitesh Shah led this round at IAN.

According to Pallavi, the freshly infused funds will be used to grow goSTOPS’ supply over the next 12 months — to invest in marketing, acquire state-of-the-art technology, and building the team. The company also aims to raise $10-12 million by March 2022 and reach a revenue of Rs 1,500 crore by 2027 from its standing Rs 12 crore per annum figures.

Pallavi wants to move forward with a positive outlook even though being part of the shared economy segment, hostels were hit the hardest by the pandemic.

“We have plans to add 60 hostels to our current line-up of 28 by March 2022. By 2027, our goal is to add 75,000 beds and stand at a revenue of about Rs 1,500 crore. We aim to raise $10-12 million by March 2022 and by 2024, we are all set to expand to exotic international locations in Sri Lanka, Nepal, and Southeast Asia,” she says.