Zostel - The one with the Flashback of Hostel memories

Anamika Mahapatra Anamika Mahapatra
Sep 4, 2021 10 min read
Zostel - The one with the Flashback of Hostel memories

Do you enjoy traveling? Is your top priority safety and sanitation? You've found your ideal hotel, but is it out of your budget? In this scenario, you might consider staying in a Dharamshala, but their surroundings aren't appealing. They do have a lot of rules so you may be wondering if it's worth it to spend the money.

In light of this predicament, the concept of a "hostel for backpackers" was established. It's similar to what we have currently in terms of hostels (assuming you are still in college and have come from outstation). There are shared rooms, a common dining room, and a variety of enjoyable activities and games with no or little constraints. In a nutshell, a youthful euphoria has persisted.

Solo travel and backpacking have become popular in this new era. We can now quickly learn about new places and obtain useful information by reading blogs or social media updates.

A startup called Zostel has a similar concept. It is the first hostel chain-based startup in India.

About Zostel
Zostel โ€“ Latest News
Zostel โ€“ History
Zostel โ€“ Mission and Vision
Zostel โ€“ Tagline and Logo
Zostel โ€“ Products and Services
Zostel โ€“ Business Model
Zostel โ€“ Revenue Model
Zostel โ€“ Challenges
Zostel โ€“ Funding
Zostel โ€“ What makes it unique?
Zostel โ€“ Competitors
FAQ

About Zostel

Zostel is like a hostel that provides a home environment with all of the necessary conveniences at an affordable price. Budget travelers, particularly those aged 18 to 40, can find safe, hygienic, and affordable lodging at Zostel.

They have air-conditioned dorms, both mixed and female-only, where rooms may be booked at a competitive price of 500 per night. It has an actual house with beds, a shared space with gaming, a spot for campfires, open mics, and other activities where they may socialize.

Every Zostel is unique since local aspects are taken into consideration when constructing the ideal city-centric Zostel. The founders have considered the importance of safety and comfort while attempting to maintain the vibe joyful and cool. Zostel seeks to deliver great enjoyment to travelers rather than just a place to sleep.

Startup Name Zostel Hospitality Pvt. Ltd
Headquarter Zostel HQ, 4th Floor, The Circle Work, Huda City
Centre, Gurgaon, India
Operating Status Active
IPO Status Private
Sector Hostel, Tourism, Backpacker Tourism
Founders Akhil Malik, Dharmveer Singh Chouhan, Paavan Nanda, Tarun Tiwari, Chetan Singh Chauhan, Siddharth Janghu, Abhishek Bhutra
Founded 2013
Total Funding $1 Million
Last Funding Type Venture - Series Unknown
Key People Dharamveer Singh Chouhan (Chief Executive Officer), Aviral Gupta (Chief Strategy Officer), Chetan Singh Chahuhan (Chief Operating Officer)
Key Products Zostel Hostels, Zostel Homes, Zostel Escape, Trusted by Zostel
Website zostel.com

Zostel โ€“ Latest News

08 March 2021

Zostel, a hostel startup, alleges it has triumphed over OYO, however, the hospitality unicorn has denied such allegations, claiming that indeed Arbitration Tribunal has given Zostel no particular settlement in place of acquiring a stake in OYO.

3 October 2020

Zostel Hospitality Pvt. Ltd, which runs two franchises: Zo Rooms, an affordable hotel business, and Zostel, a travelers' hostel network, has appealed to its clients to acquire INR 10 crore in fundraising at a pre-money worth of INR 75 crore. The startup has asked its clientele to become angel investors and contribute ranging from INR 5 lakh and INR 1 crore to the Zostel hostel brand.

10 August 2020

Zostel is investing heavily in local tourism, with plans to establish 500 more properties in the next two years. Zostel presently operates 60 hostels and guesthouses across the globe. The firm is soliciting funds from the market for Rs 10 crore.

Zostel โ€“ History

Whenever people from engineering and management backgrounds collaborate on any project, it leads to the greatest innovation of all time. Zostel, a hostel for backpackers was a huge success since most of us were waiting for this idea to be explored.

We've all seen the film "Queen" and agree that something similar should happen in our country. So, for you adventurous vacationers, Zostel provides the same thrilling experience.

On the occasion of Independence day 2013, Dharamveer Chauhan and his six buddies founded this exciting startup called "Zostel". Their goal is to assist travelers to enjoy exploring Indian towns. It wasn't just for backpackers, but also professionals and visitors. Seven pals came up with the idea of combining hostels and today's Gen Z.

Zostel created homes with facilities and afterward equipped them to offer an atmosphere they have never been a part of with a limited budget of Rs 50 lakhs, participating in several B-school contests, and generating revenue through bootstrapping. Jodhpur developed the 1st Zostel, accompanied by Jaipur.

This company, which began with the hostel concept, is no longer limited to that notion but has evolved into a trailblazing travel solution company. It now operates in 37 cities across India and China, with over 200 hostels.

Zostel โ€“ Mission and Vision

The firm was established to encourage people to travel as a part of their lifestyle. They intend to contribute to the promotion of travel by building a reliable, enjoyable image and involving local people in the effort.

They strive for a basic, adaptable hotel and hostel brand with a great understanding of visitors, the latest trends, and the required confidence, that has garnered them an unconventional status in the travel sector.

With a simple approach, they hope to ensure that travelers simply pay for the features that they genuinely require and desire. They provide their clients with budget-friendly lodging in the heart of the city, with a strong emphasis on rates and comfort.

Zostel Logo
Zostel Logo

โ€œLive it Nowโ€, as the tagline suggests, Zostel is for intrepid adventurers. Throughout your stay, you will meet people who have had interesting and intriguing travel experiences.

During your trips, you seek peace. You get everything in one place, including well-furnished dorms, tasty foodstuffs, a private kitchen for cooking enthusiasts, game spaces, WIFI connectivity, and absolute coziness.


How Does Trivago Make Money? | Trivago Business Model, Growth And Statistics
Trivago is a hotel search platform, whose main focus is to reopen the way travelers compare and search for hotels online. Read more about Trivago business model, trivago SWOT analysis!!

Zostel โ€“ Products

Allow me to describe their products to you:

Zostel Hostel

Zostel Hostel is the company's main product. It may be found in most tourist destinations. Initially, the majority of Zostel's properties were owned by the company. Then it devised a franchising strategy.

Zostel X

It is a service that allows you to stay in a private home. Instead of being in the heart of the city, they are found on the outskirts. It is mostly suitable for groups of visitors or families. It is a privately owned property that is rented out.

Zostel Escape

It was created to provide guests with authentic local services. Only locals provide the services, allowing travelers to go beyond the typical tourist attractions.

Zozo Bus: Zostel provides a Zozo bus service, which allows travelers to travel on a budget. It's a 12- or 13-seater bus that brings you to pre-determined destinations.

OTA (Trusted by Zostel): As a brand, Zostel has consistently provided excellent service to its visitors, making it a reliable location to stay. Inquiries are coming in from places where Zostel does not have a hostel. In situations like these, Zostel has partnerships with local hostels, allowing it to provide OTA services.

Zo rooms: Zo Rooms is a Zostel subsidiary. Its like OYO, a hotel aggregator.

Zostel โ€“ Business Model

You may have heard about Zostel's services, but its primary business model is franchise-based. Zostel came up with a unique project to assist and inspire imaginative minds who aspire to be entrepreneurs and escape from the chains of mundane existence.

Zostel will guide you in the process of opening your own Zostel at a place of your preference through this project. The choice of location and the ideal property to operate is based on your skills, belief, and viability. Zostel will help you with the setup, branding, marketing, and operations aspects of your franchise.

Based on the value of the building, the location, and your accord with the landlord, your Zostel franchise might cost roughly 30 lakh rupees. It will not be funded by Zostel but the periodic monetary incentive will be provided based on the performance of your Zostel compared to others.

Traveling is a kind of relaxation for all of us. But the fear of staying in filthy rooms makes our trip a bit less fun. Considering that, Zostel wanted to change the way we Indians have traveled and it has made its goal to deliver the best services throughout our staycation. They've done so by forming a powerful network of backpackers and entrepreneurs capable of ushering in a change.

In 2019, Zostel offered OTA, which allows them to earn a fee of 10% to 15% on each transaction. Both Zo rooms and Zostel work on a commission basis.


How to start a Hotel Business
There are many places, cities, beaches, mountains, valleys, monuments, malls and hill stations to experience in our country. And tourists would obviously look for an accommodation while theyโ€™re here. And this gives an ample amount of opportunities to the hotel industry to operate in and make a handsโ€ฆ

Zostel โ€“ Revenue Model

Franchise Fees

This is usually paid in one single payment after the franchise contract is signed. INR 2,00,000, including taxes, is charged by Zostel. Their commissions and monthly fees begin once the business is fully operational.

Depending on the operational ranking, they charge a flexible fee of 18-24 percent of the lodging income. They also don't charge fees on meal and refreshment revenues or any other supplementary income of the business.

Royalty Fees

In certain franchises, the franchisor offers a franchisee special power to sell the firm's merchandise locally in exchange for royalties. These royalties are usually calculated annually or quarterly as a proportion of the franchisee's gross sales revenue. This recurring fee allows Zostel to offset the expenses of continuous benefits offered to its franchisees while still generating a return from its operations.

Site Assistance Fees

Site assistance fees, also known as a set-up charges, are charged to the franchisee by the franchisor, Zostel, for assistance in locating and establishing a crucial site. They provide some support in venue selection and formation, but the franchisee is normally in charge of the ultimate choice, which is up to the permission of the parent firm. They opt to reimburse these expenses as part of the franchise fee.

Ongoing Services

Zostel offers assistance to its franchisees, such as staffing a service center for scheduling bookings and building and operating an app that can be utilized to improve efficiency at all franchisees. For them, it serves as a supplementary income source.

Marketing

To reach a wider audience and assist each franchisee in becoming more profitable, Zostel invests in domestic or foreign promotional activities. As a result, profitability is increased and more funds are allocated to royalties.

Zostel โ€“ Challenges

Controversial journey

When Zostel introduced Zo Rooms, hotel aggregator company OYO rooms filed a lawsuit accusing Zostel of deception i.e. data theft. OYO took the case to court, which was soon resolved.

Following that, OYO rooms were in talks to acquire Zo rooms. OYO spent a long period looking into the documents of Zo rooms for acquisition purposes but ultimately opted not to buy them.

In return, Zo rooms filed a data theft lawsuit against OYO rooms, believing that OYO may utilize their information in the future. This acquisition battle went for 3 years and eventually, Zo rooms claimed victory over that.

Vulnerable industry

Zostel is entirely devoted to tourism. Micro and macro incidents have the greatest impact on the tourism business. Take, for example, the pandemic that wreaked havoc on the tourism economy. As a result, Zostel's vulnerability will always be a challenge.

The mentality of people

Since Zostel provides cheap accommodation, people might think their services might be poor as well. The traditional concept of hostels being mostly for students hasnโ€™t changed yet so it might take a while for people to get acquainted with this new idea.


MakeMyTrip Success Story - Founder | Business Model | Revenue
MakeMyTrip has established its dominance in the Indian travel-tech segment. Read on to know more about MakeMyTripโ€™s success story, business model, funding.

Zostel โ€“ Funding

Zostel received $1 million in funding in 2014. Recently, funds were raised on 25th July 2018 in a Venture series unknown round. Zostel's recent investors are Orios Venture Partners and Presha Paragraph.

Date Stage Amount Lead Investor
May 13, 2014 Venture Round $1M Presha Pargash
July 25, 2018 Venture Round Orios Venture Partners

Zostel โ€“ What makes it unique?

The services offered by Zostel are similar to those offered by hotels, yet the experience is unique. In hotels, you may not have the opportunity to interact with other visitors, but at Zostel, rooms are shared, so you may connect with your roomies and learn more about their adventure.

The majority of Zostel's are set up in natural settings. In this sort of environment, tourists feel more at ease and may openly converse.

So, the ultimate goal is to connect more individuals and provide them a memorable experience while staying within their comfort bubble.

Zostel โ€“ Competitors

Traditional low-cost hotels have long been a threat to Zostel, but the number of local hostels and homestays is fast growing. In India, there are over ten hostel chains with a national presence, posing a direct threat to Zostel.

The top 2 competitors of Zostel are:

Backpacker Panda

Backpacker Panda is a young, energetic firm with a vision of becoming a data-driven firm and revolutionizing the way Indians travel. The hostel brand has eight zones all over India, and its mantra of hygiene is often kept in mind.

Roadhouse hostel

Ambarish Raghuvanshi established it in November 2014. It operates in India from five different locations.

Final thoughts

In India, Zostel pioneered the backpacker hostel lifestyle. Zostel became a popular alternative for backpackers due to its unique strategy and high-quality services. Zostel's services and experiences are unrivaled in their magnificent settings. As a result, they are a well-known hostel chain among travelers in India.

FAQ

What is the concept of Zostel?

The concept of a Zostel is that its is a hostel for backpackers. In Zostel there are shared rooms a common dining room, and a variety of enjoyable activities.

Who is the founder of Zostel?

Akhil Malik, Dharmveer Singh Chouhan, Paavan Nanda, Tarun Tiwari, Chetan Singh Chauhan, Siddharth Janghu, Abhishek Bhutra are the founders of Zostel.

Did Oyo acquire Zostel?

No, Oyo was in talks to acquire Zostel but later opted not to acquire them.

Must have tools for startups - Recommended by StartupTalky

Subscribe to StartupTalky

Get the latest insights delivered to you right in your inbox

Great! Next, complete checkout for full access to StartupTalky.
Welcome back! You've successfully signed in.
You've successfully subscribed to StartupTalky.
Success! Your account is fully activated, you now have access to all content.
Success! Your billing info has been updated.
Your billing was not updated.
Grow your Skills and advance your career with LinkedIn Learning ->