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Zostel Entrepreneurship Development Programme

A never before initiative in any business history where through this presentation, Zostel has gone 'public' with all the information about its business model including detailed financials, standard operating procedures and elaborate case studies about Zostel properties.
Through this initiative, we want entrepreneurial people to come forward and start their own hostels so as to spread the backpacking culture in India while doing what they love. For details: www.zostel.com/beyou

Zostel Entrepreneurship Development Programme

  1. 1. Zostel Entrepreneurship Development Programme www.zostel.com/beyou India’s First Chain of Backpackers’ Hostels CONFIDENTIAL
  2. 2. Zostel Table of Contents Market Overview Global Market – Size and Growth Global Market – Competitive Landscape Indian Market – Competitive Landscape Indian Market – Size and Growth Zostel – Product Description Case Studies Zostel Entrepreneurship Development Program Appendix
  3. 3. Backpackers’ Market Market Definition – Who are backpackers? Backpackers are low-cost leisure travelers with typically the following characteristics: • A preference for budget accommodation • An emphasis on meeting other travellers • An independently organized and flexible travel schedule • Longer, rather than brief, holidays • An emphasis on informal and participatory holiday activities Source: 1. beforeyoubackpack.com; www.holidaysafe.co.uk The concept is pretty popular, especially among young travelers, who move out of their native places for a few months to explore the world. Some of the biggest segments among backpackers are: • Gap year travellers – The ones who take a gap year after college to travel the world • Career breakers – Travellers who are on sabbatical or those who have taken time off their careers to travel the world Backpackers generally rely on internet forums, websites and word of mouth from the community of fellow backpackers for designing their trip itinerary with limited influence of travel agents and other package tour providers.
  4. 4. Zostel Market Overview Global Market – Size and Growth Global Market – Competitive Landscape Indian Market – Competitive Landscape Indian Market – Size and Growth Zostel – Product Description Case Studies Zostel Entrepreneurship Development Program Appendix
  5. 5. Backpackers’ Accommodation Market Size and Growth – Global Market Because of the peculiar requirements, given an option, backpackers prefer to stay at non-traditional and budget-friendly stay options such as hostels, couch-surfing or Air BnB where they get to stay in a social, casual environment and get a chance to interact with fellow backpackers. The backpacker accommodation market is very well developed in Oceana (New Zealand and Australia) and Europe while Asia is also catching up fast with a number of backpacker hostels coming up in South East Asian countries such as Thailand, Vietnam and Malaysia Source: 1. WYSE Travel Confederation, New Horizons III (Sept. 2013) Backpackers with Avg. Daily Expense >$33 40% Average Trip Duration 58 days Total Trip Spend $3,300 1 2 3 Most preferred Stay option Hostels (32%) 4 2013 2007 52 days $2,350 Hostels (31%)28% Key backpacker stats1 The total global market size for youth travel stood at around $183 billion as of 20121
  6. 6. Zostel Market Overview Global Market – Size and Growth Global Market – Competitive Landscape Indian Market – Competitive Landscape Indian Market – Size and Growth Zostel – Product Description Case Studies Zostel Entrepreneurship Development Program Appendix
  7. 7. There is a complete white space in upcoming and rapidly growing backpacker destinations of Asia and South America – target markets for Zostel Backpackers’ Hostel Chains Competitive Landscape – Global Market There is a huge untapped potential for backpackers’ hostels in rapidly growing Asian and South American markets Source: 1. Zostel Research and Analysis A&O Hostels Loki Hostels Plus Hostels Meininger Hostels HighLow Low High Market Growth Reach(#ofHostels) Generator Hostels Equity Point Hostels Nomads Hostels Base Hostels USA Hostels K’s Hostels Lub d Hostels Most of big hostel chains are operating in European and Oceana Market – a market that’s getting saturated fast Note: Bubble Size denotes bed capacity of particular hostel chain Zostel
  8. 8. Zostel Market Overview Global Market – Size and Growth Global Market – Competitive Landscape Indian Market – Competitive Landscape Indian Market – Size and Growth Zostel – Product Description Case Studies Zostel Entrepreneurship Development Program Appendix
  9. 9. Indian Leisure Travel Market Market Size and Growth – India As per various independent reports such as World Travel and Tourism Council, India is one of the fastest growing tourism market in the world – making it a tourism powerhouse in the next decade • At 9% - India’s FTA (foreign tourist arrival) growth rate is already double the global average Source: 1. World Travel and Tourism Council Incredible India1
  10. 10. Zostel Market Overview Global Market – Size and Growth Global Market – Competitive Landscape Indian Market – Competitive Landscape Indian Market – Size and Growth Zostel – Product Description Case Studies Zostel Entrepreneurship Development Program Appendix
  11. 11. Independent units – no cross selling Non-Existent Quite cheap but still expensive than hostel Obscure, off-center locations – difficult to find and commute Major Problem Area Backpackers’ Accommodation Competitive Landscape – India In India, Backpackers have to stay in filthy lodges as that’s the only option fitting their modest budget • Zostel, being India’s first and only world-class backpacking hostel chain is clear market leader filling this gap and is the only major brand in Indian backpacking space ServiceParameters Accomm. Options Youthful Ambience, Branding & Engagement Affordability Location Lodges and Guesthouses Cross-Selling Opportunity Possible only in case of chains Somewhat possible because of chain effect Independent units – no cross selling 1-3 Star Hotels YHAI Hostels Standalone Small Hostels Zostel Hostel Chain Hygiene and Security With presence at various tourist spots, its highly prevalent Very formal – focused on families & business travelers Non-Existent – No innovation in decades of its existence Very much there except lack of brand Strong branding with focus on creating fun, youthful atmosphere Expensive for backpackers Dirt cheap but hardly any facility Very affordable Very affordable Off the center Obscure locations Decent locations but away from main areas Bang at center – amidst the action Pretty Decent Major Problem Area Pretty Good, though security isn’t that great Full focus on hygiene and security of guests Source: Zostel Research and Analysis
  12. 12. Zostel Market Overview Global Market – Size and Growth Global Market – Competitive Landscape Indian Market – Competitive Landscape Indian Market – Size and Growth Zostel – Product Description Case Studies Zostel Entrepreneurship Development Program Appendix Product and Market Presence Milestones Achieved Brand Reach Team
  13. 13. Zostel Product and Market Presence Product Description Footprint in March 2015 Nov’14, 120 Oct’14, 60 Oct’13, 25 Aug’13, 25 Jul’14, 56 Nov’14, 70 Legend (x,y): (Launch Month, # of beds) Leased • One line: Hygienic, Secure & Centrally located acco. at INR 349-499 per bed and INR999 per room • Facilities: Dormitory with bunk beds, common room with entertainment facilities, library, community kitchen • Features: AC, Wi-Fi, Pvt. Lockers, Regular Events • Model: First 7 properties are leased; now expansion via partnerships 50 Beds to 450 Beds (9x) in 7 cities in <6months Sept’14, 75
  14. 14. Zostel Product and Market Presence The First Chain of Backpacker’s Hostels in India providing hygienic, secure and centrally located accommodation at affordable prices
  15. 15. Zostel Market Overview Global Market – Size and Growth Global Market – Competitive Landscape Indian Market – Competitive Landscape Indian Market – Size and Growth Zostel – Product Description Case Studies Zostel Entrepreneurship Development Program Appendix Product and Market Presence Milestones Achieved Brand Reach Team
  16. 16. Zostel Milestones Achieved With presence across 7 cities across 5 states, Zostel Passport programme is used to get discounts in their multiple stays; significantly improving customer loyalty and repetition Approx. 60% of bookings made directly through our website; Strategic usage of Adwords marketing to drive traffic Partnership with youth organizations such as AIESEC; Brand ambassadors in 50+ colleges With domestic and International players - India Someday, Kilroy Travels and travel companies - Virasat, Padharo, Red Panda & Dare the Himalayas Best Internship Ever: Partnered with MTV, Redbull to deliver the biggest campaign for H1 2014; 70K+ applications from pan-India Best Value Leisure Product Award at the Travel & Tourism Fair 2015; HOSCAR for best Hostel in India 54K+ Organic Likes with a reach of 9 million people through FB page; highly active on Quora, Twitter Hostelworld rating: 90%+; Listed on 10+ portals #1 on TripAdvisor for most properties within 2 months Zostel Pan-India Passport Website Booking/ Adwords College Festivals Travel partners Best Campaigns Awards Social Media OTA Listings Tripadvisor
  17. 17. Zostel Market Overview Global Market – Size and Growth Global Market – Competitive Landscape Indian Market – Competitive Landscape Indian Market – Size and Growth Zostel – Product Description Case Studies Zostel Entrepreneurship Development Program Appendix Product and Market Presence Milestones Achieved Brand Reach Team
  18. 18. Zostel Best Internship Ever – Best Campaign for 2014 • Campaign design/Tech/Marketing ensure virality across social media • Cool website & Multiple videos to engage youth • Reach 3L youth from 550 colleges via social, email and traditional print media • Youth centric channels like Times Group, Hindustan Times, Yourstory, Campus Diaries Maximum organic reach 80,000 participants for 4 months Proprietary property of Zostel Pre Launch Promotion: Post Launch Traction: • 80,000 registered Users, 45:55 Women! • 10,00,000 unique visitors, Significant mobile users • 30MM impressions on facebook • Sponsors and Partners - MTV, Redbull, American Tourister, Holiday IQ Best Internship Season 1 – Able to garner sponsorship 15Lakh+ Best Internship Season 2 – to go on Air! Best Campaign of H1 2014 - http://www.socialsamosa.com/2014/07/social-media-campaigns-half- yearly-review-2014/
  19. 19. Zostel Brand Reach Note: All news articles are hyperlinked
  20. 20. Zostel Market Overview Global Market – Size and Growth Global Market – Competitive Landscape Indian Market – Competitive Landscape Indian Market – Size and Growth Zostel – Product Description Case Studies Zostel Entrepreneurship Development Program Appendix Product and Market Presence Milestones Achieved Brand Reach Team
  21. 21. Zostel The Team Dharamveer (IIM Calcutta) Tarun (IIM Calcutta) Akhil (IIM Calcutta) Abhishek (IIT-BHU) Chetan (IIT-BHU) Paavan (IIM Calcutta) Siddharth (MDI, DCE) Technical Head, Recruitment and Marketing Content & Digital Marketing, Operations Business Development, Operations Operations & Property Management Operations & Property Management Investor Relations and Sales Recruitment, Sales and Finance Other team members • Graphic Designer from NIFTs and Technical Team from IITs • Core Team from IIMs, IITs and other best Management and technical Institutes; Experience of working in biggest MNCs of the world • Interns from best colleges across country (IITs, DU, NIFTs, etc) Zostel team is winner of 14/14 Business Plan competitions globally including Wharton India Economic Forum, Richard Ivey Canada, IIT-Bombay Eureka, Launchpad IIM-Calcutta etc.
  22. 22. Zostel Market Overview Global Market – Size and Growth Global Market – Competitive Landscape Indian Market – Competitive Landscape Indian Market – Size and Growth Zostel – Product Description Case Studies Zostel Entrepreneurship Development Program Appendix Zostel Jaipur Zostel Udaipur Zostel Varanasi Zostel Goa
  23. 23. Zostel Jaipur Case Study
  24. 24. Zostel Jaipur Case Study Zostel Jaipur – Overview Property Description  Zostel Jaipur was launched on 20th Oct 2013 in Civil Lines Jaipur in an empty 4 BHK floor taken on 3 year lease  Jaipur property was Zostel’s 2nd pilot property bootstrapped by founders with an initial budget of INR 12.5 lakhs  The premises has one 8-bed mixed dorm, one 6-bed mixed dorm, one 8 bed female only dorm and one 3-bed private room – a total of 27 beds along with 5 showers and 5 western toilets  Zostel Jaipur has one huge common room cum reception and two open hangout areas along with a terrace; the property also houses a community kitchen Ac, ,Fridge, & Washing Machine Beds, Mattresses & Linen Painting and Repairing Common Room Kitchen set-up Front Desk Capex – Breakup (INR lakh, %)  Since the property was empty for a long time, painting and general repair came out to be the biggest expense head at INR 4 lakh  This also included construction of 2 showers and 2 WCs at around 2.5 lakhs  The cost of a bed, mattress & corresponding linen is generally around INR 12 thousand per bed  This translates into INR 3.3 lakhs for 27 beds  At one AC per dorm and one refrigerator for community kitchen, it was our 3rd biggest cost head 4 L (33%) 3.3 L (27%) 1.3 L (11%)2 L (16%) 1 L (8%) 0.6 L (5%) 100% = INR 12.2 lakhs Note: The financials mentioned are approximate
  25. 25. Zostel Jaipur Case Study  Salary, Utilities (electricity and Internet bill) and property rent are the biggest monthly operating expense (opex) for Zostel Jaipur  Zostel Jaipur opex is 1.5-1.7 lakhs/ month  The property employs 1 property manager, 1 front desk staff, 1 full time house keeping staff & a security guard  The property operationally breaks-even at an occupancy of 34% at an avg. revenue/ customer of INR 600/bed night – accomplished within 2 months of launch date Miscell., 24k, (15%) Salary 47k, (28%) Utilities 30k, (18%) Rent 27k, (16%) F&B 30k, (18%) Maintenance 8k (5%) Note: Based on Oct 2014 to Feb 2015 Data 100% = INR 1.66 lakhs Monthly Op-Ex – Breakup (INR, %)  Zostel Jaipur is one of the most profitable property under Zostel brand umbrella  The property invariably earns a revenue between INR 3-4 lakhs with an operating margin of about 40- 50%  Average occupancy of Zostel Jaipur remains at around 75% – fluctuating between 50% in off-season to over 100% in peak season  Pay-back period for the property was 7 months 2.8 2.7 3.8 3.0 2.5 1.6 1.7 1.9 1.6 1.4 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Revenue Op. Expenses Op. Margin 41% 36% 49% 47% 43% Financial Snapshot (INR Lakhs) Operational and Financial Snapshot Note: The financials mentioned are averaged out numbers and may vary slightly
  26. 26.  Zostel Jaipur gets over 40% bookings directly through its website underlining the brand strength of Zostel in backpacking accommodation market  Over 80% tourists comprise foreign backpackers – UK, USA and Australia being the biggest contributors; most of the tourists are in 18-35 year age bracket Zostel Website 41% Other Sources 59% Zostel Jaipur Case Study India 18% UK 18% USA 12% Australia 11% Germany 4% Others 37% Note: Based on Oct 2014 to Feb 2015 Data • Rank 1 out of 228 properties on TripAdvisor within 2 months of launch till date • 163 reviews out of which 134 excellent and 28 very good with just 1 average till date • Awarded HOSCAR 2015 for ‘BEST HOSTEL’ in INDIA • 185 reviews with an overall rating above 90% Awards and Customer Reviews Customer Demographics & Booking Source Customer – By Booking Portal Customer – By Country of Origin Note: The numbers mentioned are averaged out over the period of operation of the property
  27. 27. Zostel Market Overview Global Market – Size and Growth Global Market – Competitive Landscape Indian Market – Competitive Landscape Indian Market – Size and Growth Zostel – Product Description Case Studies Zostel Entrepreneurship Development Program Appendix Zostel Jaipur Zostel Udaipur Zostel Varanasi Zostel Goa
  28. 28. Zostel Udaipur Case Study
  29. 29. Zostel Udaipur Case Study Property Description  Zostel Udaipur was launched on 27th June 2014 at Nav Ghat – located right over lake Pichola and sharing one wall with Udaipur City Palace  Udaipur property was Zostel’s 3rd property (1st post funding) started out at an investment of INR 22.5 lakhs  The premises has one 8-bed mixed dorm , four 6-bed mixed dorms, one 6-bed female only dorm and five 2-bed private room with total capacity of 48 beds  Zostel Udaipur has a huge rooftop restaurant cum common room and a terrace area with arguably the best lake view possible in Udaipur Ac, ,Fridge, & Washing Machine Beds, Mattresses & Linen Painting and Repairing Common Room Kitchen set-up Front Desk Capex – Breakup (INR lakh, %)  The property, although new, had some major issues with plumbing and electrical work, hence, painting and general repair came out to be the biggest expense head at INR 8 lakh  Property already had restaurant furniture and most of the equipment needed for running a restaurant  The cost of a bed, mattress & corresponding linen is generally around INR 12-14 thousand per bed  This translates into INR 7.3 lakhs for 48 beds  Restaurant Kitchen and common room were the other biggest cost heads 8 L (36%) 7.3 L (33%) 0.5 L (2%) 2 L (9%) 3.7 L (16%) 1 L, (4%) Zostel Udaipur – Overview 100% = INR 22.5 lakhs Note: The financials mentioned are approximate
  30. 30. Financial Snapshot (INR Lakhs) Zostel Udaipur Case Study  Salary, F&B (because of restaurant) and property rent are the biggest monthly operating expense (opex) for Zostel Udaipur  Property’s opex is INR 4.3 lakhs/ month  Property employs 1 property manager, 1 front desk staff, 3 house keeping staff, 4 restaurant staff & a security guard  The property operationally breaks-even at an occupancy of 38% at avg. revenue/ customer of INR 850/bed night (due to more private rooms and full fledged rooftop restaurant) – accomplished within 1 month of launch date Miscell., 15k, (4%) Salary 77k, (18%) Utilities 30k, (7%) Rent 150k, (35%) F&B 135k, (32%) Maint. 20k, (5%) Note: Based on Sept. 2014 to Feb 2015 Data 100% = INR 4.3 lakhs Monthly Op-Ex – Breakup (INR , %)  Zostel Udaipur was the first bigger Zostel after Jodhpur and Jaipur pilot projects  The property generally earns a revenue between INR 5-11 lakhs depending on the season with an operating margin of about 40-50%  Average occupancy of Zostel Udaipur remains at around 60% – fluctuating between 50% in off-season to over 100% in peak season  The pay-back period for the property was 7-8 months 3.4 8.2 5.6 10.8 8.0 7.1 3.7 4.4 4.5 4.7 4.4 3.9 Sep/14 Oct/14 Nov/14 Dec/14 Jan/15 Feb/15 Revenue Op. Expenses Op. Margin -14% 48% 55% 45% 48% 20% Operational and Financial Snapshot Note: The financials mentioned are averaged out numbers and may vary slightly
  31. 31.  Zostel Udaipur gets around 50% bookings directly through Zostel website followed by other portals  About 65% guests are foreign backpackers – UK, Australia and USA being the biggest contributors; Zostel Udaipur hosts highest percentage of Indian backpackers among all Zostels Zostel Website 48% Other Sources 52% Zostel Udaipur Case Study India 36% UK 16%Australia 9% USA 6% Germany 4% Others 29% Note: Based on Oct 2014 to Feb 2015 Data • Broke to #1 within 2 months of launch; Currently ranked 4 out of 95 properties on TripAdvisor • 110 reviews out of which 97 are excellent or very good • 100% rating on Hostelbookers • 78 reviews with an overall rating of 88% on HostelWorld Awards and Customer Reviews Customer Demographics & Booking Source Customer – By Booking Portal Customer – By Country of Origin Note: The numbers mentioned are averaged out over the period of operation of the property
  32. 32. Zostel Market Overview Global Market – Size and Growth Global Market – Competitive Landscape Indian Market – Competitive Landscape Indian Market – Size and Growth Zostel – Product Description Case Studies Zostel Entrepreneurship Development Program Appendix Zostel Jaipur Zostel Udaipur Zostel Varanasi Zostel Goa
  33. 33. Zostel Varanasi Case Study
  34. 34. Zostel Varanasi Case Study Property Description  Zostel Varanasi was launched on 15th Oct 2014 at Luxa Road in Varanasi – 10 minutes walk away from Dashwamedh Ghat – the main ghat of Varanasi  Varanasi property was Zostel’s 6th hostel – started out at an investment of around INR 25 lakhs and a set-up period of 2 months  The premises has three 8-bed mixed dorms , four 4-bed mixed dorms, one 4-bed female only dorm and four 2-bed private room with total capacity of 52 beds  Zostel Varanasi has the biggest common room among all Zostels and a huge covered rooftop hangout area with a kitchen Ac, ,Fridge, & Washing Machine Beds, Mattresses & Linen Painting and Repairing Common Room Kitchen set-up Front Desk Capex – Breakup (INR lakh, %)  The property, was an old running hotel and hence had to be majorly worked upon including adding an additional floor and altering some construction  As part of the deal, most of the civil work was done by the owner before handing over the property on lease (9 year)  The cost of a bed, mattress & corresponding linen is generally around INR 12-15 thousand per bed  This translates into INR 7.5 lakhs for 52 beds  Common room (because of construction involved) was the other biggest cost heads for Zostel 8 L (33%) 7.5 L (31%) 0.4 L (2%) 6 L (24%) 2 L (8%) 0.6 L, (2%) Zostel Varanasi – Overview 100% = INR 24.5 lakhs Note: The financials mentioned are approximate
  35. 35. Zostel Varanasi Case Study  Again Salary & Rent constitute nearly two-thirds of the total operating expenditure  Property’s opex is INR 2.8 lakhs/ month  Property employs 1 property manager, 2 front desk staff, 3 house keeping staff & a security guard  The property operationally breaks-even at an occupancy of 30% at an avg. bed price of INR 600/bed (averaged out for private rooms) – accomplished within 2 month of launch date Miscell., 21k, (7%) Salary 92k, (33%) Utilities 23k, (8%)Rent 90k, (32%) F&B 36k, (13%) Maint. 20k, (7%) Note: Based on Nov. 2014 to Feb 2015 Data 100% = INR 2.8 lakhs Monthly Op-Ex – Breakup (INR , %)  Zostel Varanasi was the first Zostel outside our stronghold of North India & Rajasthan  Being a very competitive market with another hostel already holding the top spot, Zostel took 2 months to capture the market and grab the top spot in Varanasi  Average occupancy of Zostel Varanasi has remained at around 65% in last 3 months  Pay-back period for the property is expected to be 12-15 months 1.4 2.6 5.0 3.7 2.8 2.8 2.8 2.6 Nov-14 Dec-14 Jan-15 Feb-15 Revenue Op. Expenses Op. Margin -96% Financial Snapshot (INR Lakhs) Operational and Financial Snapshot -9.7% 44% 26% Note: The financials mentioned are averaged out numbers over last 10 months
  36. 36.  Zostel Varanasi gets 45% bookings directly through our website followed by HostelWorld and other sources  About 85% guests are foreign backpackers – mostly from UK, USA, Australia & China Zostel Website 45% Other Sources 55% Zostel Varanasi Case Study India 15% UK 26% USA 17% Australia 9% China 8% Others 25% Note: Based on Nov 2014 to Feb 2015 Data • Broke into top 3 within 2 months of launch; currently ranked 1 out of 78 properties on TripAdvisor • 115 reviews out of which a whopping 101 are ‘Excellent’ and rest being ‘Very Good’ • 98.7% rating on Hostelbookers • 49 reviews with an exceptional overall rating of 92% on HostelWorld Awards and Customer Reviews Customer Demographics & Booking Source Customer – By Booking Portal Customer – By Country of Origin Note: The numbers mentioned are averaged out over the period of operation of the property
  37. 37. Zostel Market Overview Global Market – Size and Growth Global Market – Competitive Landscape Indian Market – Competitive Landscape Indian Market – Size and Growth Zostel – Product Description Case Studies Zostel Entrepreneurship Development Program Appendix Zostel Jaipur Zostel Udaipur Zostel Varanasi Zostel Goa
  38. 38. Zostel Goa Case Study
  39. 39. Zostel Goa Case Study Property Description  Zostel Goa was launched on 25th Oct 2014 at Candolim Beach – just 2 minutes walk from the beach itself  Goa property was Zostel’s 7th hostel – started out at an investment of around INR 16 lakhs and a had a set-up period of 3 months  The premises has two 8-bed mixed dorms , one 8-bed female only dorm, four 6-bed mixed dorms, one 10 bed non-ac mixed dorm and one 3-bed private room with total capacity of 61 beds Beds, Mattresses & Linen Painting and Repairing Common Room Front Desk Capex – Breakup (INR lakh, %)  The property was built in Portugese Villa-style with open area in front; however, it required addition of a few more bathrooms and WCs  The property was taken on long term lease of 9 years and has scope for adding one more floor  The cost of a bed, mattress & corresponding linen is generally around INR 12-15 thousand per bed  This translates into INR 7.7 lakhs for 61 beds  Since the property was slightly old, painting and repairing formed the another major chunk of initial Capex 5.8L (35%) 7.7 L (47%) 2.5 L (15%) 0.6 L, (4%) Zostel Goa – Overview 100% = INR 16.6 lakhs Note: The financials mentioned are approximate
  40. 40. 3.9 8.0 7.3 5.7 3.3 3.5 3.5 3.3 Nov/14 Dec/14 Jan/15 Feb/15 Revenue Op. Expenses Op. Margin Zostel Goa Case Study  Zostel Goa was supposed to be bigger with an extra floor. However, due to some delays, the construction was pushed to June 2015  Hence, the number of beds decreased but the rent didn’t decrease proportionately – making rent a whopping 44% of Op-Ex  Property employs 1 property manager, 1 front desk staff, 2 house keeping staff & a security guard  Zostel Goa operationally breaks-even at an occupancy of 31% at an avg. bed price of INR 600/bed– accomplished within 1st month of launch Miscell., 10k, (3%) Salary 97k, (29%) Utilities 36k, (11%) Rent 150k, (44%) F&B 18k, (5%) Maint. 28k, (8%) Note: Based on Nov. 2014 to Feb 2015 Data 100% = INR 3.4 lakhs Monthly Op-Ex – Breakup (INR thousand, %)  Goa, being the party capital of India was an obvious choice to start Zostel and to carry on expansion further South  Goa already had a few standalone hostels making it a very tough market to get into  We started Zostel in Goa after great demand from our loyal Zosteler community  Hence, within a month, we were profitable  Expected pay-back period for the property is 10-12 months Financial Snapshot (INR Lakhs) Operational & Financial Snapshot 53% 41% 57% 15% Note: The financials mentioned are averaged out numbers
  41. 41.  Zostel Goa is a unique Zostel being the only one where Indian backpacker influx in more than foreigners  Another major highlight is the fact that more than 50% of the bookings for Zostel Goa are done directly through our website – reducing dependency on other OTAs Zostel Website 56% Other Sources 44% Zostel Goa Case Study India 62% UK 10% USA 6% Australia 3% Others 19% Note: Based on Nov 2014 to Feb 2015 Data • Currently ranked 2 out of 142 properties despite presence of various well established Hostels in the same area • 52 reviews out of which a whopping 48 are ‘Excellent’ and rest 4 being ‘Very Good’ • 94.3% rating on Hostelbookers • 39 reviews with an exceptional overall rating of 93% on HostelWorld Awards and Customer Reviews Customer Demographics & Booking Source Customer – By Booking Portal Customer – By Country of Origin Note: The numbers mentioned are averaged out over the period of operation of the property
  42. 42. Zostel Market Overview Global Market – Size and Growth Global Market – Competitive Landscape Indian Market – Competitive Landscape Indian Market – Size and Growth Zostel – Product Description Zostel Entrepreneurship Development Program Case Studies Appendix Zostel Offerings Deliverables Review Policy
  43. 43. Zostel Offerings Bookey of Benefits  Property management software  Channel manager  Direct booking portal on website and mobile app  Virtual Front Desk  Accounting Tools and Support  Upto INR 10 lakhs of direct financial support  The exact quantum will be based on achieving review targets on TripAdvisor, HostelWorld and our mobile app; details to be discussed in advanced stages  Seamless integration on all online and offline Zostel marketing channels  Listing on over 10 Online Booking Portals  Complete OTA (Online Travel Agents) management by central sales team  Organization level tie-ups with International travel agents and other travel/backpacking focused organizations  Training for Front Desk Staff and property manager  On-site training at existing Zostel properties  On-boarding guidance and supervision  Brand specifications and Zostel vendor list Financial OperationsTechnology Marketing & Sales
  44. 44. Zostel Offerings Core Strengths Market Leaders in Indian Budget Leisure Traveller Market Dynamic & Young Management Team Extremely Quick Implementation Vast Hospitality Knowledge of > 30 years Robust Marketing & Sales Entrepreneurial Zeal 1 2 3 4 5 6
  45. 45. Zostel Offerings Support to Partners 1 2 3 4 5 6 Market Study & Site Evaluation Property Setup Assistance Vendor Sourcing IT & Financial Audit Central/Local Sales/Marketing Hiring/Training 24x7 support
  46. 46. Zostel Offerings The Process 1 2 3 4 5 6 Registration through #beyou campaign Brief Telephonic Conversation with the Prospective Partners Detailed Telephonic Conversation with Shortlisted Prospects Face-to-Face meeting in Delhi & Contract signing Property Selection & On-Boarding On-Going Governance
  47. 47. Zostel Market Overview Global Market – Size and Growth Global Market – Competitive Landscape Indian Market – Competitive Landscape Indian Market – Size and Growth Zostel – Product Description Zostel Entrepreneurship Development Program Case Studies Appendix Zostel Offerings Partner Deliverables FAQs
  48. 48. Partner Deliverables Terms and Conditions Overview Periodic Review System  Zostel is proud to be one of the finest hostel chains – a fact testified by our online reviews and various awards  To maintain the customer trust and high service standards we are associated with, we would be periodically reviewing the customer feedback Ancillary Service Approval  Zostel was set-up with a vision to change the way India is experienced – making travel an affordable, enjoyable and scam free exercise  To ensure that the ancillary services (such as taxi service, ticketing, city tours etc.) offered are genuine and not overpriced, we would want Zostel’s approval before rolling out such a service and continuous review thereafter Zostel Website Booking Fees  Our central team will offer support for all technical, marketing, sales and branding needs  For direct bookings from Zostel website or mobile app, we would charge a 15% commission  However, till the point property operationally breaks-even for first time, the commission is waved off Lock-in – 3 years  We expect a lock-in period of 3 years in lieu of the knowledge transfer and on- going support on various fronts
  49. 49. Zostel Market Overview Global Market – Size and Growth Global Market – Competitive Landscape Indian Market – Competitive Landscape Indian Market – Size and Growth Zostel – Product Description Zostel Entrepreneurship Development Program Case Studies Appendix Zostel Offerings Partner Deliverables FAQs
  50. 50. Zostel FAQs Thank You What is the likely pay back period for the capital invested? Is there any Security Deposit that Zostel will take? Do you currently have detailed operating manuals? Where is the staff training provided? Will someone from Head Office provides assistance to the partner in opening the property? Would IT systems that you presently have be included in the agreement? Do you have a standard agreement? How long is the partnership term for? And is the term renewable? Is there any lock-in period? 7- 15 months No Yes At current Zostels Yes Yes 3 years & Yes Yes , 3 years 1 2 3 4 5 6 7 8
  51. 51. “Twenty years from now you will be more disappointed by the things that you didn't do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover.” Interested in getting on-board ? For further details, please contact: Akhil Malik akhil@zostel.com PH: 07728897593

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