ZiP Rooms, a brainchild of Royal Orchid Hotels co-promoter Keshav Baljee, aims to offer 10,000 rooms in over 100 cities by the current year-end.
The three-month old company seeks to compete with the likes of Oyo Rooms and Zo Rooms for a slice of the growing budget hotels aggregation space, Baljee, managing director of ZiP Rooms told Techcircle.
So how different is Zip Rooms from its more established peers? For starters, it’s the promoter’s hospitality background.
Keshav is the younger son of Chander Kamal Baljee, founder, chairman & managing director of publicly-listed Royal Orchid Hotels Limited. In April 2011, Baljee founded Spree Hotels And Real Estate Pvt Ltd, a separate entity that manages hotels for third parties.
“We come from the hospitality background but the problem in this space is one of technology and hospitality. I am one of the few computer engineers in the industry who has a hospitality pedigree. I have built and scaled my father’s business from four to 28 hotels today,” said Baljee.
With properties in Pune, Goa, New Delhi, Jaipur, Bangalore and Vadodara, Spree intends to fill the gap between a luxury and a budget hotel. In fact, ZiP Rooms is launched under the Spree Hotels umbrella.
“We are lifting our Spree properties under ZiP, all of Spree properties will eventually come under ZiP,” said Baljee.Unlike its peers, ZiP Rooms is offering rooms on all possible online travel agencies. “We want to attract the maximum number of people on to our service until we create the required traction on our own portal. Although we wish to have all our bookings coming directly through ZiP website, this will continue on for the foreseeable future,” said Baljee.
Zip Rooms’ other differentiator is that will not operate as a rooms-only platform but also focus on food and beverages. The company will add food and beverages to its services over the next six months.
ZiP Rooms has already partnered with 20 hotels. It presently offers 1,100 rooms across Bangalore, New Delhi, Goa, Jaipur, Vadodara, Pune and Hubli. The company plans to launch services in two other cities this month and has five more cities planned for the next month.
“We are trying to be the best budget room aggregator because in the budget category, it’s not necessary to be the cheapest but important to be the most reliable,” said Baljee.
The company wants to have ‘at least a few lakh’ regular users on the pan India basis.
“As and when we have hotel supply in a consistent manner across the country, we will start pushing for customer acquisitions and retention. We are focusing on the supply and standardisation right now. Next quarter, we will focus on revenue growth,” he added.
ZiP Room typically takes 15-30 per cent commission fee on each transaction on the portal. The commission percentage varies from hotel to hotel depending on the location. Room tariff ranges from Rs 1000 to Rs 2500.
Baljee is an alumnus of the Wharton School and the Engineering School-Computer Engineering (both under University of Pennsylvania). He also has an MBA from the Indian School of Business, Hyderabad. Previously, Baljee worked as an investment banker with Lehman Brothers and UBS. He left his position at Lehman Brothers to join his father’s business in 2007 and assumed the position of president & co-promoter of Orchid Hotels.
Zip Rooms competes directly with OYORooms.com, the market leader in the online branded marketplace for budget hotels. OYORooms has raised several rounds of VC funds so far with the latest being a Rs 150 crore ($24 million) round from Greenoaks Capital besides three existing investors Lightspeed Venture Partners, Sequoia Capital and DSG Consumer Partners. Stayzilla, an unbranded budget hotel accommodation booking platform, had raised $15 million in Series B in February this year from Nexus Venture Partners and existing investor Matrix Partners India.
Another venture Zostel does the same with branded hostels for backpackers. Its promoters are also behind budget hospitality chain Zo Rooms. Meanwhile, yet-to-launch online venture for branded budget hotel chain Zen Rooms, co-founded by Via.com’s Vinay Gupta, has raised $1 million from former CEO of Kingfisher Airlines Sanjay Aggarwal and Kaneswaran Avili, former chief commercial officer of SpiceJet.
Even with a number of players around, Baljee believe it is still a nascent industry. “I don’t think the budget room aggregation space is a crowded market because there may be more than 2-3 lakhs hotel rooms in the country. Some people say there are almost 10 lakh hotel rooms in the country in the budget room category. A single player will not be able to solve it for a long time,” he said.
The company is currently in negotiations with potential investors to raise funds for building a mobile app and speeding its expansion plans. The mobile app is expected to release in two months.
According to the Federation of Hotel & Restaurant Associations of India’s (FHRAI) Indian Hotel Industry Survey, the industry needs to add 1,20,000 rooms in the budget and mid-market category, entailing an estimated capital investment of Rs 50,000 crore to achieve the 12th Plan target of 1452 million Domestic Tourist Visits (DTVs) by 2017. The growth prospects of India’s budget room segment is further supported by the fact that domestic travelers – the major targets of budget rooms – are expected to contribute around 84.7 per cent to total tourism revenues by 2024.