CASE VIEW WITH ANKITA SHETH

ONLINE BUDGET HOTELS: AGGREGATORS TO

ACCUMULATORS
Ankita Sheth is a
passionate 33-year-old
entrepreneur with 8 years of
experience with both
startups and established
Ankita companies. She did her Post
Co-Fou Sheth, graduation from Mumbai
nder, V
ista Ro
oms Educational Trust (MET) and
has worked with
organizations such as Stanton
Chase (Global Executive
Search firm) and Boston
Analytics (Analytics firm). She
also started her own venture,
Providence World, which was
an executive search firm with
clientele such as KAV & Co
Mondelez, Boston Analytics,
Jardin Lylod Thompson etc.
She also did a short stint
with The United Nations,
New York & Grand Haytt,
Mumbai.
Ankita had successfully
executed the Mumbai
operations of Oyo Rooms as
the head of acquisitions and
she was part of the core
team and had played a
pivotal role in its success. A
culturally strong woman with
hardbound ideals, she was an
innate part of India Against
Corruption campaign and
has also played an active role
in Anna Hazares Movement.
She is also an active member
of a NGO- Young Volunteer
Organization (YVO).

Interviewed
by
Dr. Nagendra V. Chowdary
Ankita Sheth, Co-founder, Vista Rooms, is your unassuming women
entrepreneur at the helm of one of South Asias fastest growing Ref. ECOMM-1-0009B
November 2016
ONLINE BUDGET HOTEL AGGREGATOR.When not actively pursuing
social causes, she travels to capture newer locations and properties for
Vista Rooms.
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 Interview with Ankita Sheth Online Budget Hotels: Aggregators to Accumulators

Online Budget Hotels: Aggregators to Accumulators

Ankita Sheth

Indian Hospitality Industry

1. How did technology change the Indian hospitality industrys supply-side capabilities?
The Indian hospitality industry relied heavily on manual inventory and rate control, which
led to considerable time and resource wastage, overbooking and inconsistent rates across
online websites. With technology, hotels are able to automate online inventory and rate
management. Hotels can target a larger online market with fewer employees. This gives
them the bandwidth to focus on improving quality, customer experience and maximizing
revenue. In addition, reviews that are transparent to future customers mean that hotels
can no longer hide quality and service issues.

2. How do you think the online segment would affect the competitive fortunes of the
brick-and-mortar segment of Indian hospitality industry?
To stay competitive, brick-and-mortar hotels need to focus on online visibility, customer
satisfaction and rate competitiveness. The online segment has disrupted the sense of
complacency enjoyed by established players. By working with companies such as Vista
Rooms, mid-range hotels can now provide services, manage customers and online reach
on par with four-star and five-star hotels without the inhibiting cost of adding technology
and employees skilled in revenue and reputation management.

THIS GIVES THEM THE BANDWIDTH TO

FOCUS ON IMPROVING QUALITY,
CUSTOMER EXPERIENCE AND

MAXIMIZING REVENUE.

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Online Budget Hotels: Aggregators to Accumulators Interview with Ankita Sheth

3. Certain companies, like FabHotels, operate on a franchisee model. How is this model
different from inventory model?
A franchisee model is one where the chain operates the hotel, making all the day-to-day
decisions on behalf of the owner including the hotel operations. The owner is also forced
to replace the hotels brand name with the chains. With the inventory model, the hotel is
free to use their brand name for the inventory not provided to the chain. Also, in the
inventory model the chain does not interfere with the operation of the hotel which the
owners are free to do as they please.

4. Difference between OYO Rooms and ONLINE BUDGET ROOM AGGREGATORS?

OYO Rooms along with Vista Rooms was one of the first budget room aggregators in India.
The model differed from the Online Travel Agency (OTA) model used by companies such
as MakeMyTrip and Goibibo by curating the budget hotels under a single brand rather than
just providing a platform for hotels to list rooms as done by the OTAs. OTAs leave the
customer to decide the quality of the hotels based on pictures and reviews whereas budget
rooms aggregators take the onus on themselves and their brand standardizing the
customer stay no matter what hotel they chose.

BUDGET ROOMS AGGREGATORS TAKE

THE ONUS ON THEMSELVES AND THEIR
BRAND STANDARDIZING THE
CUSTOMER STAY NO MATTER WHAT
HOTEL THEY CHOSE.

5. What is the difference between Partial-inventory model and Full-inventory model?
In the Partial-inventory model the hotel allows only a part of its inventory (rooms available
for sale at the hotel) to be sold by the aggregators and sells the remaining themselves. In
comparison, the Full-inventory model allows the aggregators to manage sales for all the
rooms available in the hotel.

6. What are the major costs in a full-inventory model, including customer acquisition
costs?
The costs associated with the full inventory model are the same as the partial inventory
model. Only the approach is more focused.

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 Interview with Ankita Sheth Online Budget Hotels: Aggregators to Accumulators

7. One of the biggest concerns/issues in a full-inventory model is to standardize the

service. While product can be standardized using capital, how to standardize the
services?
Services can be standardized with a clear vision and consistently implementing that vision
across the board. At Vista Rooms, we believe that every customer has different needs,
which should be met. So providing personalized attention and experience to each customer
is something that permeates from our website all the way to the actual stay. A budget
price does not have to mean a budget experience.

8. How would the branding work in case of full-inventory model for the online budget
hotels aggregators and the principal property owners?
Branding can be done in two ways replacing the existing hotel brand with that of the
chain or co-branding the hotel brand with the chain.

A BUDGET PRICE DOES NOT HAVE TO

MEAN A BUDGET EXPERIENCE.

9. With the new business model, can the online budget hotel aggregators make money?
Would they be still the aggregators? How can they make money out of operating
hotels, which requires different capabilities?
Generating revenue will always be a direct result of generating sales for hotels, be it
Partial-inventory or Full-inventory. Chains will still focus on aggregating hotels under the
umbrella of a single brand and corresponding standardized services. Standardizing the
quality of the hotel does not mean operating the hotel. The operations will still be under
the purview of the hotel as long as quality standards are maintained. The hotel will focus
on the core competency increasing reach and standardizing end-to-end experience.

10. With the Partial-inventory model, would these ventures be successful?

With the Partial-inventory model, hotels were in fear of losing sales, of the inventory still
held by the hotel to well-funded aggregators heavy discounting something Vista Rooms
never did, as it diluted the perceived value of the hotel in the long term. Now the aggregators
cannot rely on discounting to generate sales. Hotels and aggregators have to work together
to generate sales and customer satisfaction.

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Online Budget Hotels: Aggregators to Accumulators Interview with Ankita Sheth

11. How does a Full-inventory model operate? How do you describe the Full-inventory-
based business model?
The Full-inventory model gives Vista Rooms a chance to fully display its capabilities in
generating customers and online reach for hotels. Aggregators can no longer hide behind
the guise of discounts.

12. What are the Critical Success Factors (CSFs) of a Full-inventory model?
Average Room Rate (ARR)
Increase in Monthly Revenue
Customer Satisfaction Ratings

NOW, GUESTS ARE GUARANTEED THE

ROOM THEY BOOKED WHEREAS
EARLIER SOMETIMES HAD TO BE
TURNED AWAY. ALONG WITH THIS,
THE HOTEL AND AGGREGATORS CAN
WORK TOGETHER TO A COMMON
VISION OF QUALITY.

13. Experience is a critical element in having repeated customers, the customers referring
to other potential customers, customers sharing positive feedback on their personal
and professional networks. How do you think, the Full-inventory model can ensure a
higher-order customer experience and therefore all the other expected derivatives of
the same?
A key part of the Full-inventory model is managing the hotels online reputation, aggregators
earlier did not have the freedom to do this or were limited to the Partial-inventory that was
managed by them which did not give a true picture. Another problem that Full-inventory
model solves is overbooking. Now, guests are guaranteed the room they booked whereas
earlier sometimes had to be turned away. Along with this, the hotel and aggregators can
work together to a common vision of quality.

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 Interview with Ankita Sheth Online Budget Hotels: Aggregators to Accumulators

14. Given that a hotels room is a perishable product, like an airlines seat, what are the
pricing strategies adopted to maximize the revenue per available room.
Multiple strategies can be used such as early booking deals, last minute deals, promotions,
social media campaigns seasonal rate changes, etc. An important factor is competitor
pricing that hotels did not keenly follow earlier, but with aggregators mining large amounts
of pricing data the hotel can be priced to maximize revenue and occupancy.

15. What do you think would be the role of technology in improving the intended
Customer Value Proposition (CVP) of online budget hotels inventory model?
Technology will play a key factor. Connecting with the customer before arrival, reducing
the time taken by the customer to find the hotel, managing complaints and requests and
finally reducing customer request resolution time, technology will be the backbone of
creating value for customers. Earlier hotels would engage with the customer only once
they reached the hotel whereas with technology we can provide services proactively even
before the customer reaches the hotel.

THE IMPACT WOULD BE EVEN MORE

PRONOUNCED AS CEMENTING THE
ONLINE REPUTATION OF THESE
PROPERTIES WOULD BE A KEYSTONE
FOR FUTURE MANAGEMENT.

16. As of now, the aggregation is happening in the budget segment of hotel industry. Do
you see the same being extended to other segments mid-range, premium, super
premium and the real/exclusive properties?
Aggregation may not be able to extend to existing chains, however, premium/super premium
boutique hotels and vacation rentals would greatly benefit in the same way. The impact
would be even more pronounced as cementing the online reputation of these properties
would be a keystone for future management. Again, reaching customers can be done more
effectively by aggregating these properties.

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Online Budget Hotels: Aggregators to Accumulators Interview with Ankita Sheth

About Vista Rooms

17. Can you share your background and the trigger for you to get into this segment of
Indian hospitality industry?
An avid traveler, I have had many horrendous travel experiences. Prior to every holiday, I
would spend hours researching on the place, the accommodations, etc. but would still
land up having bad experiences staying at budget hotels. We (Pranav, Amit and I) started
researching and travelling a lot to smaller towns of India, as we believed that Tier-II and
Tier-III cities offered below par services. We took train rides, overnight buses and car rides
to inspect and audit potential partner properties.

18. When did you start Vista Rooms and what has been the progress thus far?
We started with four properties in Mumbai and have now scaled to 1000+ properties across
150+ cities. We are now operating in three countries and are operationally profitable on
every booking.

THERE WILL BE MULTIPLE BRANDS

THAT WILL CO-EXIST HENCE
COMPETITION WILL PRIMARILY FOCUS
ON DIFFERENTIATION IN TERMS OF
SERVICE.

19. You shifted to Full-inventory model around July 2016. What model were you following
earlier and why did you shift to Full-inventory model?
At our inception, we had started with four properties with full sales management model.
As we wanted to scale across multiple cities quite rapidly, we shifted our focus to tying up
with more properties, managing sales for partial inventory.
Now that we have built, a sizeable number of inventory across multiple cities, we have
refocused our team on managing complete sales for select properties. On average, we
have seen the occupancy at these fully-managed properties increasing by over 10% in the
3 months itself. We work on a fixed fee plus revenue share, which can range from 20%
30% of total revenue.

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 Interview with Ankita Sheth Online Budget Hotels: Aggregators to Accumulators

20. How do you define competition in Indian hospitality industry and who would you
rate as the biggest competitor for Vista Rooms?
The mid-and budget-hotel industry is really fragmented. There will be multiple brands that
will co-exist hence competition will primarily focus on differentiation in terms of service.
I think every player is a competitor in the industry. A boutique/individual property owner
has the advantage of delivering personalized, unique experience as compared to a
standardized but relatively bland experience at branded hotel chains. The customer has so
many options now that one has to constantly personalize and improvise experiences for
guests.

21. What is your vision for Vista Rooms and how do you propose to prepare Vista Rooms
for achieving that vision?
Our vision is to be a trusted brand for stays across Asia. Trust builds with experience and
we are working relentlessly to collaborate with passionate small property owners in
delivering personalized yet standardized stays to customers.

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