BUSINESS ENTREPRENEURSHIP

AND MANAGEMENT
PROJECT REPORT
StayZilla.com- A Comprehensive Analysis of growing
e-commerce market in India

Simmi (72071)
Shoaib Chaudhary (72123)
Submitted To:
Mr. Aakash Punit
Cluster Innovation Centre- University of Delhi

Page 1

Preface
This report documents the work of analysis of work flow,
marketing strategy, of a small enterprise STAYZILLA and
various services provided by it. The report first shall give an
overview of the company, challenges faced in its initial days,
success of the company and funding sources of the company.
And suggestions from our end to the company for its better
marketing.
We have tried our best to keep report simple yet technically
correct. We hope that we succeed in our attempt.

Acknowledgment
Completion of this Project was a combined effort, and it received a lot of help
from our teachers, our peers and web.
Cluster Innovation Centre University of Delhi

Wed like to thank:

Mr. Aakash Punit, who helped us completing this project and provided her
crucial inputs from time to time, not only did he guide us timely
about our project but listening to his discussions and advices during classes
evoked a considerable interest in us towards lateral thinking, innovation,
design, product development and market analysis.
Further, wed like to appreciate mutual effort we gave individually.
Simmi, Shoaib Chaudhary (05-12-2014)

Cluster Innovation Centre University of Delhi

Content

Introduction
Work Network
Work Flow
Funding Sources
Marketing Strategy
Challenges Faced
Achievements
Future Plans
Suggestions From Our End
References

Cluster Innovation Centre University of Delhi

Introduction
Starting an Internet business back in 2005-06 wasnt the same as it is today; it was
considered impossible back then. In early 2006, Yogendra, a college dropout, understood
that his passion for code would lead him to glory. Along with his backbencher friends at
college, Sachit Singhi and Rupal Surana (who didnt dropout), he believed that the
fragmented stay market could be structured and brought online.
It was 2005-06, when India was going through the Internet revolution but still wasnt
quite internet savvy as today.
This Chennai-based startup was started under the name of Inasra.com
but then the founders rebranded it to StayZilla stay in every zilla
(district) in 2010. Today, you see StayZilla branding across all major
airports either in form of ad banners or luggage tags. In 2005, the trio
was thinking about launching either a marketplace for real estate or
aggregation of accommodations across hotels in India, but they finally
concurred on accommodation aggregation and launched Inasra, today
known as StayZilla.

Why StayZilla?
Stayzilla matches consumer needs with the relevant property through their understanding
of this segment, presence of self learning algorithms which predict inventory status
across towns and assist properties to optimize prices and concierge services.
The thing about Stayzilla that needs to be appreciated is its relentless focus on tier II and
tier III towns. They want to ensure that travellers can easily search and choose thousands
of affordable hotels across India.

Cluster Innovation Centre University of Delhi

Work Network
This Company was started in July 2005 with name Inasra Technologies in Chennai.
Within a year, it had signed contracts with 300 hotels in various cities.
And by 2007, this had reached a network of 800 hotels across 150 cities.
In 2010 this hotel-booking site was rebranded with name StayZilla.com with a network of
over 12,000 ultra-low budget hotels in 1000+ cities across India.
As per August 2014 StayZilla.com has a network of 18,000+ stays, which includes guest
houses, hostels, hotels, resorts, and lodges, listed on their website.These stays are spread
over 1200+ cities across India. On an average, the team is clocking 3000+ room queries
per day and has almost 1000+ bookings successfully accomplished daily. Where room
ranges from Rs. 250 to Rs. 60,000.
Currently this company has a man power of around 300 employees. And head office of
the company is located in Chennai.

Cluster Innovation Centre University of Delhi

Work Flow

How StayZilla works?

Customer visits the web portal, checks for the required booking if available then
provide the necessary details and make booking and pays for that booking.
Web portal after confirming twice at the destination node assure the customer
about booking and provide the details of booking to the customer (e.g. booking
no., PNR No.).
Finally customer visits the destination node.
Stayzilla keeps 18-25 per cent of the booking cost received from the customer as its fee.

Cluster Innovation Centre University of Delhi

Funding Sources
In the early stages this business was self-funded.
But Stayzillas business model is largely market driven. As a result, it has to keep
alternating its focus between demand and supply. Thus, after spending the initial years
focusing on supply, and building an inventory of 3,000 properties, the company sought
external funding to improve the demand side of its business.
As a result of which they have received two rounds of funding:
$0.5 million from the Indian Angel Network (May 2012)
A funding from Matrix Partners in October 2013.
The company expands its recent round of funding towards marketing and brand building;
technology infrastructure upgrades; website enhancements and hiring the right talent.

Cluster Innovation Centre University of Delhi

Marketing Strategy
In 2005, the venture focuses exclusively on budget room bookings.
They leveraged on two aspects: The increasing penetration of online hotel bookings (Today,
though just one per cent of the bookings happen online, as more
and more people rent out their properties online, it will grow to
40 per cent in the next five years).

The rapid emergence of budget hotels in Tier II and Tier III cities
in India.

But by 2007, the venture realised the opportunity in home stays,

lodges and guest houses, and therefore the venture included these too,
in its inventory.

Stayzilla is competing with other OTAs (online travel agencies) such as

Makemytrip and Yatra, which offer an entire gamut of services (hotel
and flight bookings) because of its unique marketing strategy which
includes the following two trends: Flight travellers opt for budget hotels
Word of mouth is the strongest marketing tool to influence
budget travel decision

At present this ventures marketing strategy exclusively focuses on the

Cluster Innovation Centre University of Delhi

following three things with inclusion of the previous ones: Technology - They have proprietary machine learning algorithms
that forecast available inventory across our entire hotel portfolio
thereby pre-empting sold-out scenarios.
People They have a crack team of associates who know the
ground realities of each location and have established a strong
rapport and relationship with the hotels.

Processes They follow a process that allows us to seamlessly

liaise and co-ordinate between the customer and hotel partner.

Challenges Faced
During the initial days, Stayzilla met with unique challenges as booked accommodations
by consumers were not available at the time of check in. To overcome this challenge, the
team introduced double checks with the hoteliers so that bookings would be available
when customers arrived.
They faced the regular operational and infrastructural challenges which any Indian
ecommerce company faced at that time that was low penetration of online booking, and
Indian users had not even begun booking flight tickets online in a big way. They knew
that online hotel booking would take a few years to catch on.
Another challenge we faced was bringing Tier 2 and 3 hotel owners online.

The other Challenges faced by the venture: Rebranding: The initial name of the website Inasra.com was
a handicap. The brand name had no recall, and customers did not
get used to it. The start-up, therefore, decided to approach a
Cluster Innovation Centre University of Delhi

10

creative ad agency for rebranding and out came Stayzilla.com.

Zilla has the connotation of something big (from Godzilla, of
course) and that has already been leveraged by the browsermaker Mozilla. The name also refers to the word zilla which
means district in India.

Financial crisis: In 2010, the financial crisis delayed Inasras

plans yet again. Timing is everything in the hotel industry. If you
take any developed market, ticketing of flights, trains and buses
were first offered online. When they stabilised, hotels and
packages came up. Thats because in the hotel industry,
customer maturity takes time. They expected that 2010 would be
the right time for the hotel industry to go online and wanted to
position themselves as the largest player in the accommodation
market. However, the next three years will see the market
soaring.

Achievements
Since inception, the venture has done business of around Rs 30 crore, of which, 70 per
cent was done in 2013.
Initially the venture started with a network of 300 stays only in one state (Tamilnadu).But
as of the network of the venture has grows to 18k+ stays in more than 1200 cities across
India.
They are clocking more than 1000 bookings per day successfully which was just 20-30
per day in the starting days of the venture because of low penetration of online booking.
The venture expanded its man power to 300 people which was just 3 people in the
starting of venture.
Initially the venture was self-funded, but at present the venture has two funding partners: Indian Angel Network (it is a network which invest in early stage businesses
which have potential to create disproportionate value).
Matrix Partners (it is an investment company primarily targeting the Indian
market).
Cluster Innovation Centre University of Delhi

11

Cluster Innovation Centre University of Delhi

12

Future Plans
In the coming year, the venture will expand its geographical coverage and scale its supply
more by expanding to at least 20,000 hotels across India. And in the next five years, the
venture Stayzilla.com aims to sign up 1,00,000 properties on its platform and build a
sustainable leadership position as an online travel agency for budget hotels booking
segment in India.
They will also focus on aggressive marketing campaigns to increase their brand
awareness and website footfalls.
The venture will also focus Technology infrastructural upgrades and product
enhancements.
Additionally, the venture is also planning to expand to international markets.
Currently the venture has around 300 employees, but the venture is planning to increase
the no of employees up to 500 in the coming year.

Cluster Innovation Centre University of Delhi

13

Suggestions from Our End

They should provide Annual membership for frequent customers so that lump sum
can be collected at the beginning of membership and hence it gives them more
opportunities to explore their business.
They should start some Customer target package schemes and location specific
packages depending upon the need of customers, like a package for trimester, an
year etc.
An option should be provided to customers by which they can design their own
packages according to their travel needs.
All the above three methods are suggested just to increase the number o customers
who are willing to give the lump sum at a single time.
They should provide online travel coupons to make the market more aware of their
existence.
Trust building: to allure more customers they need to build a strong trust in
existing customer set. Attract market by providing regular and attractive offers.

References
http://www.entrepreneurindia.com/interview/start-up/techpreneur/Serving-the-ValueBudget-Segment-242/
http://www.stayzilla.com/aboutus.php#aboutus?main
http://paulwriter.com/stayzilla-com-identifies-interesting-travel-trends/
http://www.coolavenues.com/company-updates/chennai-based-stayzilla.com-gets-ianinvestment
http://www.businessworld.in/news/business/corporate/bharat-online/1490737/page1.html

Cluster Innovation Centre University of Delhi

14

http://www.matrixpartners.in/press_detail.php?id=71
http://www.thesmartceo.in/starting-up/bringing-budget-hotels-online.html

Cluster Innovation Centre University of Delhi