Zolo Stays Reckons to Turnaround Existing PG Accommodation Market in India
BW Hotelier spoke to Nikhil Sikri, Co-founder and CEO of Zolo Stays - an online platform for finding PG accommodation and hostel, to know more about their business model, key customer base and varied product offerings.
WITH THE booming economy in India over the past years, there are several multinational companies which have opened their satellite offices across the length and breadth of the country. Key cities such as Mumbai, Delhi, Bangalore, Kolkata followed by Pune, Chennai, Gurugram, etc., have been on the radar for a multitude of these businesses now. Alongside to teach and train students by providing Degrees and Post-graduation programmes in various disciplines, many reputed Institutes have built their block in these cities too. With the supply of infrastructure in place, there arises a demand of Human Resource for various activities to these cities from neighbouring cities and states.
But, until recently, to leave the hometown and move out to these metro or Tier-I cities in the search of a hostel with good amenities, furnishings, proximity to workplace/institutes, and entertainment in vicinity, has been a troublesome task in India, considering the soaring costs that accommodation poses for these prospective tenants. Perceiving this gap and to cater to the needs of long-haul tenants seeking affordable accommodation, Zolo Stays was founded in 2015. BW Hotelier spoke to Nikhil Sikri, Co-founder and CEO of Zolo Stays - an online platform for finding PG accommodation and hostel, to know more about their business model, key customer base and varied product offerings. Details…
What void did you perceive that existed in the alternate accommodation/ Co-living spaces in India that led to the founding of Zolo Stays?
Nikhil Sikri: We (Akhil, Sneha and I) were looking for a fundamental problem to solve. Something that has a profound impact on people’s lives and whose remedy would have a positive effect. While doing our research on the PG market, we saw that the quality of supply that existed was substandard. All industries are driven by demand and supply. There is no dearth of demand in the accommodation space. People want economic solutions to their accommodation issues. They don’t want to pay large deposits, pay for furnishings, they can’t commit as they don’t know for how long they will be in a city.
We perceived this gap and saw it as a viable opportunity for us to explore. We wanted to change how living as a fundamental solution was working. Whether one is in a flat or in a PG, there are several allied issues that have to be handled on a day-to-day basis like getting a faulty shower repaired, managing food, housekeeping, etc. We saw these issues as a pain point and wanted to address it. This is how Zolo was founded. Zolo is fun, flexible, and functional and aims to provide a hassle-free living. We are not solely a platform: we are a platform plus an operator.
Since you initially had a different business model and industry on focus, why did you switch to housing as a sector to focus upon?
NS: Prior to this, we founded Augbrain. This used AI in education. The other two co-founders, Akhil and Sneha, were earlier working in the education sector and we were trying to figure out how human minds function. There were too many things which we eventually could not explain to schools. So, we shelved the product. The biggest takeaway was to identify a market with a problem that we could solve with an immediate solution, with a more direct and tangible impact.
So, we decided to move to housing. Within the sector, we looked at various business models. We wanted to work on something like affordable pricing impacting those who most need it. In an affordable play, we looked at various systems.
During our research, we came upon to the problem of accommodation for young professionals and students. That’s where we realised there was a need to improve the quality of services being offered. Generally, in these PGs, the quality of the service is poor as there are very few incentives for the suppliers to up their game. We realised that something had to be done because it was not an optimal way of living for so many people. The market size and the problem size were the two reasons why we chose this. We could see the problem was huge and was impacting lakhs of people.
Please throw light on the business model applied at Zolo Stays.
NS: Zolo works as a connector, a 2-sided platform with property owners on one side and prospective tenants on the other. We acquire properties from the builders and owners, and suitably equip them in order to ensure a pleasant living experience. We are also an online platform for guests and residents to view and choose properties. Our aim is to ensure our tenants enjoy a hassle-free living space with a happy, friendly community and standardised services.
While our revenue model is solely based on the rents received by our tenants, our high-service standards and an early mover advantage in the market has clearly helped us stay afloat and keep going in what is becoming a busy space now. Our model offers a win-win-win scenario: for the builder, the tenant, and us.
Which cities are you currently operational in India? Please don light on the various formats including Zolo Select, Zolo Standard, etc., that you offer to the diverse client portfolio.
NS: We are currently present in six cities viz. Bangalore, Chennai, Hyderabad, Kota, Pune, and Delhi-NCR. There are two kinds of properties/models - Zolo Standard and Zolo Select.
Zolo Standard is basically a small standalone building with 60-80 rooms (G+4 to G+6). It doesn’t have added amenities like swimming pool, basketball or tennis court, gym, home theatre, etc. Zolo Select are towers of large builders, where one has all the other amenities.
What is the age-group that Zolo caters to through these formats in different cities? What aspects like strategic location, entertainment, other amenities, etc., do you consider before agreeing to a contract with builders for managing the buildings?
NS: The age group that we cater to is 20-30. Majority of our audience comprises single professionals or students who are opting for a hassle-free lifestyle and an enlivening community at our Zolo Standard properties. While our Select segment is an upgrade, they are usually taken by bachelors or married people who are living away from home—mostly for work and need a superior living experience. We have 40% people who are above the age of 40 in our Zolo Selects.
Our customer base changes with every city and the considerations/parameters before acquiring any properties are mostly based on the markets. We try and spread our properties between the most active locations in a city —one that witnesses high footfalls as they offer viable entertainment/ F&B options, work and education hubs as well as popular residential areas.
What promotional activities and marketing initiatives are you taking to further increase the brand penetration into newer markets?
NS: Our target audience today functions out of their phones. To gauge their attention, we’re trying to engage in and expand our social media reach and digital presence. A lot of emphasis is being placed on SEO and Google ads to target our core audience. It’s a never-ending and ever-changing process. We’re learning on the go.
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