Name: Paavan Nanda
Date established: 15 August 2013
1. Describe your business in one sentence.
We are India's first chain of backpacker's hostels offering secure, hygienic, centrally-located and pocket-friendly accommodation for young travellers.
2. How did you come up with the idea for your business?
Since the moment we stepped into graduate school for the CEMS Masters in International Management programme, me and my co-founders wanted to start something of our own. We had always been tossing over ideas that can keep us motivated enough to go to work every morning. Something, that doesn't seem like a job at all.
We realised that a common string that connects all of us is the love for travelling. We have each spent time backpacking across Europe and Asia, and something we had all found glaringly absent in the Indian tourism sector is the concept of backpacker's hostels. A backpacker's hostel is a place where young travellers meet, chill and party together. Owing to the facility of shared dorms, bed rates come off much cheaper than expensive hotel rooms which not only charge a bomb but also tend to ensure their guests stay within the 4 walls.
India is a traveller’s paradise for international travellers and local travellers alike. You can meet so many Indians who have travelled to all corners of the world but have still not explored even half of their own country. One of the major reasons for this is the lack of any great alternatives in the accommodation market. While travelling, you can typically spend 30% of your time and 40% of your budget on the accommodation, and yet none of the existing accommodation options in the market adds anything substantial to the social aspect of travel.
The thought of bringing this concept to India found immediate resonance among the team, and we started working towards it around March 2013. Our own experiences of hostels across the world gave us a good idea to come up with a top class facility that can meet the international standards of security and hygiene that are set by the industry’s western counterparts. Two things that we have been highly confident about from the very start of this venture is our concept and our team.
It’s like delivering something that we always wanted for ourselves while travelling.
3. What have been your key challenges and how have you overcome them?
While we wanted to be operationally sound, as hostels are not a well-known accommodation option in India we also had to spread awareness about our concept.
One problem we have faced is that, apart from hostels being relatively new to India, accommodation – particularly cheap accommodation – in India has gained a bad reputation. Often, cheap rooms do not meet the standards most travellers have come to expect from their experiences in other countries. They can be unhygienic, lack sufficient security and some amenities that are commonly found elsewhere.
Our own experiences of travelling have helped us to tackle this as we each have first-hand knowledge of how hostels typically operate outside of India and the services they provide, and have sought to implement it. We not only endeavour to ensure our hostels meet the basic international standards of affordability, security and cleanliness but they they’re also welcoming, well maintained and comfortable for our guests to stay in.
Additionally, there is a large amount of people who have various misinformed notions about hostels in general. We are putting a great deal of effort into outreach via social media and various other promotional channels to dispel those myths and prepare Indian audience for this kind of concept. We write regular blogs on our website for the purpose of explaining the difference between a hostel and a hotel, or what makes hostels a popular concept among international backpackers, and have racked up a number of very positive reviews on influential travel sites such as Tripadvisor. We have also been active on Facebook, gaining a reach of over 70,000 people in just 3 months.
Taking this one step further we have recently launched 'Zostel Nurture', through which we organize and lead educational tours for school students (aged 16-17). This not only gives them the opportunity to learn more about the country they live in, but introduces them to the idea of hostels in a positive way.
Another problem we have faced is finding the time and the money to get the business up and running. As the majority of the team either have full-time jobs, or are in full-time education it is difficult for us to find the time to talk to each other and develop the business. There is no immediate solution for this, but having a strong, organised team who are all dedicated to the business helps.
We wanted Zostel to be a self-funded idea, which has been very difficult at times as some of us have student loans to repay. We’ve had to operate on a shoestring budget but have been helped by our friends and families who have all donated money to our venture.
4. How have you funded your start-up?
As we are entirely self-funded we’ve been entirely bootstrapping the project until now. Building hostels is a capital intensive project and we had so much faith in our concept that we didn't shy away from putting all our savings behind our venture. Being really honest with you, funding our business school education at the same time as finding enough money to put behind our start-up was a pretty difficult task which couldn't have been achieved without the support of our families and friends. To meet the ends we had done everything from taking education loans, to pinging friends on Facebook for $100 donations.
Going forward, we need some capital for our expansion plans and are looking for some loan options until we get an investor who wants to join in our exciting ride. Someone, who brings in more than the money and can probably help us organize and channel our energy in the right direction. We are experimenting, making mistakes, moving fast and evolving. One of the reasons we wanted to avoid any external funding initially is that it gave us a lot more freedom to try out our ideas, be stupid, and be allowed to make mistakes.
5. How do you market your business?
As mentioned, being the first player the onus lies on us to educate the market with our concept. We have tried to been really exhaustive in terms of our presence across various channels. We are fairly active on social media with a strong presence on Facebook, Twitter, Quora, etc. Tripadvisor gives us a 'Five Star' rating and puts us in the 'Top four places to stay' in all the cities where we are present. We are present in all hostel and hotel booking websites such as Hostelworld.com, Hostelbookers.com, AirBnB, etc. Apart from that we are working quite extensively on various traditional channels as well. We are in the process building a good network among travel agents and dealers. Through the process of recruitment and campus activities, we are conducting promotion among young college and school going segment.
6. What is it like running a small business in India?
Well, it's a tricky question. I don't think I would call us a small business because we have really high aspirations, and somehow fairly confident towards achieving them based on the traction gained so far. We have already opened two properties in a three month period, and would start another four over the next eight months. I think India is a land of opportunity – especially if you have the masses on your side. It's like a huge chunk of target segment that initially has some inertia, but once you convince them about your concept, there is no looking back. This is why rather than just promoting our specific properties, we have aimed at building a robust umbrella brand and have tried to educate people about the concept.
7. How well are Indian entrepreneurs supported by the government?
Frankly speaking, we haven't really seen much opportunity to seek support from the government so far. We have focused mainly on creating an identity as an enterprise. Going forward, we have some plans to garner monetary, promotion-related and other relevant help from this channel but I would like to refrain myself from throwing more light on it at the moment.
8. What are your plans for the future?
The plan is to move fast, but cautiously. We are consolidating the learning from our two hostels and formally documenting it, so that we can use it to grow faster and meet the aim of starting four new hostels in the coming eight months. We are also working towards a solid IT infrastructure, whether it be about our internal processes or our interaction with guests and vendors. Apart from lodging we are also exploring end-to-end tour planning.
One of our newer initiatives is 'Zostel Getaway' through which we organise and lead expeditions for our guests. So far, we’ve successfully organized multiple trips, including a seven day trek for 50 students from IIM Calcutta. Another initiative we’ve launched is 'Zostel Nurture', through which we organize educational tours for school children, and have already serviced three schools. Having said that, we feel that our core business is going to be lodging, and we would strive to go pan-India in the next couple of years.
9. If you started again, is there anything you'd do differently?
We are pretty happy with the way things have shaped up so far. Of course, when you start a venture there are points where you feel that you should have done more contingency planning to avoid this issue, or that problem, but things can never be completely flawless in the initial stages. As long as one is a quick learner and a good observer, he or she can always make it work.
10. What advice would you give to entrepreneurs based on your business experience so far?
I don't think we have yet reached a stage where we can give advice to anyone. All I can say is that it's been a really exciting journey so far. From the day we started our entire perspective has changed. There is so much to learn, so much to experiment with and so many mistakes to commit every day. If you like the idea of having a nice white canvas and responsibly painting it with the colours that you like, without being answerable to anyone, I think you must start with something. The important thing is to take the first step, and things find their own way from there.
11. Which Indian entrepreneur inspires you and why?
There have been a good number of inspirational entrepreneurs in India. I personally quite like the Tata Group. Being one of the oldest industrialists in India, they have built a really strong credibility and high service standards. I feel that more than just being a good businessman, one needs to have ones core values in place. Also, along with the commercial side, there should be some thought given towards the social aspect of one's business.