Rising travel demand makes hospitality startups in India a hot pick
Hospitality startups across both budget and luxury segments have garnered the interest of investors who are betting big on the post-pandemic trend of staycations and workcations. This comes against the backdrop of branded properties becoming the go-to choice for travellers, driven by factors such people continuing to work from home.
Backpacker hostel brand GoStops, which targets 18- to-35-year-olds looking for affordable accommodation, raised $1 million in July in pre-Series A round led by IAN and Yuj, the family office of Xander Group founder Sid Yog. Bengaluru-based budget hotel chain Treebo Hotels raised $16 million in June in Series D round led by hospitality group Accor.
Demand recovery for the hospitality sector has strengthened after the lockdowns imposed by several states amid the second wave of covid-19 infections, GoStops founder Pankaj Parwanda said.
The world has learned how to deal with covid with a ready playbook that states people tend to travel when the positivity rate is low and stay home when it is high, according to him. This trend is driven by the Gen Z and millennials, who are more mobile than others.
The luxury segment is, on its part, witnessing pent-up travel demand. “Players in this segment are witnessing investor interest as there is immense pent-up demand. As the real estate supply is depressed, it is the best time for any hospitality company to acquire the supply and expand its presence across the country,” Parwanda said.
GoStops, which operates about 20 properties, aims to add 40 more across leisure destinations such as Goa, Mukteshwar, Nainital, Dehradun, Mysore, Lonavala, Matheran, and Panchgani in 12 months.
“Our demand bottomed out in May, but by July our occupancy was 25% higher than the pre-covid levels, which also shows that the gestation period of recovery is declining. At GoStops, there is clear 3X jump in demand from June to July,” Parwanda said.
The investment by Accor in Treebo is part of its broader partnership under which the latter said it will deploy its cloud-based, comprehensive hotel management software, Hotel Superhero, at various Accor hotels across the world.
Treebo, which has 600 hotels in India, is betting big on Hotel Superhero. The software, which helps hotels in property management, point of sale, and other solutions for effective operations, was relaunched in July 2020.
“We will deploy a considerable portion of the funds raised in building and rolling our Hotel Superhero. We also plan to utilize these funds to see our hotels business turn profitable in the next year, subject to there not being another disastrous third wave of covid. We were within striking distance of Ebitda (earnings before interest, taxes, depreciation and amortization) profitability when the pandemic hit, but we hope to be profitable by June 2022,” said Sidharth Gupta, co-founder of Treebo Hotels.
Mumbai-based vacation home rental chain Vista Rooms raised ₹10 crore in funding led by DSG Consumer Partners in January. The company is investing in team building by hiring talent from top hospitality players, activating partners in newer regions, adding 20 properties on a monthly basis, and enhancing the technology product to offer seamless on-boarding for partners and guests.
“We are receiving 60% bookings from the locations that are now open for operations. For us, June and July 2021 are the best months in terms of revenue generation and business compared to other months in 2021. We have even done record sales in these two months. We also aim to build a presence encompassing macro markets in the next four to five months,” said Pranav Maheshwari, co-founder, Vista Rooms.
Guest preferences have changed significantly during the pandemic. People are preferring to stay at secluded low density properties and are willing to go off the beaten track, noted Jaideep Dang, managing director, hotels and hospitality group, South Asia, JLL, a real estate consultancy firm. Luxury rentals, which can be booked online, are also picking up.
This article was first published on livemint.com.