Zostel: Passion for travel

Zostel (www.zostel.com)

Past life

When seven management and engineering graduates team up to pursue an idea, the result is expected to have a resonance. But Zostel, a budget backpackers’ hostel chain, proved to be an instant hit—primarily because the concept it is based on was waiting to be explored in this country for a while.

On Independence Day 2013, seven men, aged 23-26 and good friends, launched what is India’s first chain of budget backpackers’ hostels. Dharamveer Singh Chouhan, Paavan Nanda, Akhil Malik and Tarun Tiwari from the Indian Institute of Management, Calcutta, Chetan Singh Chauhan and Abhishek Bhutra from the Indian Institute of Technology (Banaras Hindu University), Varanasi, and Siddharth Janghu from the Management Development Institute, Gurgaon, who did a stint with JPMorgan, were figuring out possible start-up ventures while working at their day jobs (mostly in the information technology sector or as business consultants) when they came up with the plan for Zostel.

Having started with three cities in Rajasthan (Jodhpur, Jaipur and Udaipur), Zostel will be opening branches in Agra, Varanasi, Goa and New Delhi by the end of this year. While the outlets in Rajasthan can host up to 110 visitors, all three combined, the ones that are coming up will each have 70-150 beds.

Eureka moment

Zostel aims to provide safe, clean and cheap accommodation to budget travellers, especially in the 18-35 age group. Each outlet has air-conditioned dormitories, both mixed and female-only, where beds can be rented for as little as ₹ 500 per night. Lodgers have access to private lockers, free Wi-Fi, and a common room where they can interact with one another. They can also avail themselves of the complimentary breakfast and laundry services. While aiming to keep the ambience fun and cool, the founders have paid attention to issues of safety and comfort. “We have been ranked No.1 in Jaipur by TripAdvisor (the world’s largest travel website company),” says Nanda. “Our reputation is attested to by the fact that we have plenty of solo female travellers staying with us.”

Genesis

Over the last one year, they have participated in 14 such competitions—including the ones run by the Richard Ivey School of Business, Canada, Indian Institute of Technology, Bombay, in Powai, and the Wharton India Economic Forum B-Plan contest—and won each one. They made ₹ 40-50 lakh, all of which was used to grow the business. Malaysia-based angel investor Presha Paragash also pitched in with ₹ 5 crore

The first choice of venue was Jodhpur because Chouhan’s family, based in the city, was already in the hospitality business. “Given the support system, it felt like a safe bet,” says Nanda. “Soon we figured out that most tourists were coming to Jodhpur via Jaipur, so we opened the second outlet there.” Future expansion plans will be targeted at more such inter-connected circuits: at the Golden Triangle of tourism, Jaipur-Agra-Delhi, for instance.

The properties Zostel operates out of are all rented. These buildings are furnished with beds and other furniture, and the decor is tweaked to reflect the kind of relaxed and chilled-out atmosphere that would appeal to young travellers. In all, it may cost anything from a few lakhs to a crore to set up a place, depending on its capacity and location.

Reality check

“Our venture lies at the crossroads of hospitality and real estate,” says Nanda. “One is a sophisticated field, the other is considered dirty.” As fresh graduates, they had difficulty sourcing deals, negotiating prices of properties, and working out plans to expand to other parts of the country. Unlike technology start-ups, which may be operated on a virtual platform, there is a lot of “brick-and-mortar” work to running a hostel chain. “We had to keep the price ceiling in mind,” says Nanda. “So the operational economics had to be worked out meticulously.”

Secret sauce

Although each of the founders specializes in specific areas (operations, finance, media relations, and so on), they do not have hard and fast roles, each willing to fill in for the other if the need arises. The seven members keep moving among the locations where they have hostels, or where these are coming up.

Instead of being just a pad to crash in, Zostel aims to provide a holistic experience to travellers. The atmosphere is designed to be fun and cool. The company website, www.zostel. com, is introduced by a lanky cartoon character with spiky hair called Zobu, who answers all the frequently-asked questions and takes visitors on a virtual tour of the hostels.

Boarders are encouraged to congregrate in the common rooms, which are equipped with PlayStations, board games, card games and several other modes of recreation. There are bonfires and music in the evening. The Zostel staff also helps travellers join guided tours of the cities they are in, book tickets to places they may be going on to, even plan their itinerary for excursions in neighbouring regions.

During the Jaipur Literature Festival, the Jaipur outlet is in tremendous demand. “People are even willing to sleep in the common room,” says Nanda. “We make a special effort during that week to inform lodgers of the various events in the city.”

Plan B

There is no Plan B. The founders want to adapt this model to different locations and make it work.