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Indian homestay network “Stayzilla” halts its operation, plans to reboot it with a different business model

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Stayzilla is the largest platform for verified homestays and alternate stays

Bengaluru – Feb 24, 2017. RedNewswire/-

Bengaluru-based home stay aggregators stayzilla ,which is backed by matrix and nexus ventures has suspended its operations and is looking to reboot with a different business model.
Yogendra Vasupal,cofounder, Stayzilla announced his decision via blog on the stayzilla website.

“This has been one of the toughest decisions that I have taken so far but it is the right thing to do. The hardest part is saying goodbye to a perfect team that has accomplished a lot by putting homestays on the map of India.”

“I am the most fortunate to have had such a team on my side at this juncture. Whatever and how much ever I write about them is not going to do justice to their commitment. But try, I must!” he added.

Stayzilla, founded in 2005 by Vasupal, Rupal Yogendra and Sanchit Singhi under the name Inasra, was rebranded as Stayzilla in 2010. Stayzilla had more than 55,000 stay options across 4,500 towns in the country that catered to both homeowners and travellers looking for non-hotel-like stay experiences. It has regional offices in Delhi NCR, Kolkata, Mumbai and Chennai.

Mr. Vasupal attributed the failure of the venture to lack of local networks in the Indian travel market, heavy discount-based growth and the over all macro-economic trends in the country.

“The initial 7 years were all about having negative working capital, positive cash flow and a sustained ability to fund our own growth. Those were the only metrics we tracked. In the last 3–4 years, though, I can honestly state that somewhere I lost my path. I started treasuring GMV, room-nights and other ‘vanity’ metrics instead of the fundamentals of cash flow and working capital,” said Vasupal.
“India does not have a lot of public goods, often taken for granted in mature markets like logistics, tech savvy suppliers and online user demand. A homestays marketplace needs to invest in educating the market on the concept and even using Internet and not just the product. The costs, both financial and opportunity costs, creep up on you over a period of time and gets rationalized as cost of doing business in India,” he added.

Vasupal believes specialization could be the future mantra for Stayzilla.

“Focusing all our energies on the supply side will allow us to build on our core strength that we have developed over the last 18 months. Specialized solutions such as the concept of ‘Stayzilla Verified Homestays’ excite me in particular. Originally conceived to increase trust, this could serve as the benchmark for the entire nascent and unstructured industry,” he said.

Last year it was reported that Stayzilla raised over $13 million in a Series C round of funding from existing investors Matrix Partners and Nexus Ventures. Prior to this, it had raised close to $20 million from the two investors in February 2015

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