Stayzilla was an early Indian homestay business that raised $33.5 million but ultimately failed. It provided an online platform for homestays and hotels with over 15,000 listings. However, it struggled with a lack of local networks, poor infrastructure, and changing market dynamics. It also lacked focus, proper cash flow management, fundraising abilities, and had issues with mismanagement, legal support, customer service, and unskilled employees. To revive the business, it needed improvements in finance, HR, technology, legal support, and marketing, with a focus on customers, social media presence, branding, and improved website/app. Effective communication and meeting investor demands could also help arrange necessary funding.

1. STAYZILLA- A CASE STUDY
Fareha Anwar
Iqra Nizam
Hira Nizam

2. HISTORY
Stayzilla was a successful homestay network in India and it raised $33.5 million in
funding. Yogendra Vasupal, the founder, launched the company, under the name
Inasra Technologies, in 2005, along with his wife Rupal Yogendra and college
batchmate Sachit Singhi. He then changed the name to Stayzilla in 2010, because the
owner wanted to expand his services in all the cities and Zillas (Districts) in India.
The company was an early Airbnb business type that provided an online platform in
which homestays, ‘alternative stays’, as well as hotels could be listed. Stayzilla had
over 15000 stays in about 1100 cities across the country and in 2013 it reached the
500 bookings in a day milestone.

3. WHY STAYZILLA FAILED?
These are the following reasons:
 Lack of effective local network in Indian cities (which in simple terms meant
suffering losses and subsidizing till business picks up)
Poor infrastructure support for startups (lack of logistics, tech savvy suppliers, and
online user demand).
The apparent dynamics of the travel sector had changed in India, which led to cut-
throat competition and they were unable to cope up.
The internet was not a familiar space, and so, hosting the service completely on the
internet was a gamble then.
 Lack of communication among stakeholders completely ruined the goodwill of the
company in the existing market.

4.  Founders completely lost their focus midway of functioning due to improper
planning and execution.
 Lack of focus on cash flow, which led to draining of cash.
 Unable to raise funds and inadequate strategies.
 Mismanagement and an incompetent legal team.
 Unreceptive customer service.
 Unskilled employees.

5. BUSINESS MODULE FOR REVIVAL
Firstly, there should be stability of aim and missions. Any company starts with a single aim to
achieve. If the founder members, themselves cannot define the purpose, missions and the long
term-goals then what can they expect their future outcome to be?
As Stayzilla lacked in certain domains, here are some modifications that it could use :
FINANCE DEPARTMENT
As India is a discount driven country, so this department will use profitable retail discounting
techniques to attract the customers.
As the founders were earlier focusing on GMV( Gross Merchandise Value) instead of losses at
P&L level. So there should be proficient use of the capital i.e., there must always be more cash
inflow than the outflow. We should use the money for the benefit of the company and its
employees.

6. .  HR DEPARTMENT
This department should hire efficient marketing team as they’re lacking in advertising
skills,
It could provide and spent money on good Customer care service.
 TECH. DEPARTMENT
Development of a better App and user-friendly website.
Catchy logo and punch line along with better graphics.
 LEGAL TEAM
Founders lacked the good legal support, skilled legal team should have been
appointed to deal with judicial situations.

7. . MARKETING DEPARTMENT
As according to the Stayzilla story, they were a lack of local network connections. It’s
essential to put the right people on the jobs and also to make connections with the
right type of people while making a deal.
Outsourcing from efficient advertising firm and increase awareness among target
customers.
We could have taken CSR initiative by collaborating with Local-Government to grab
the attention of potential customers.
Google affiliated Ads. So that we can attract customers from different google
platforms such as YouTube.

8. BUSINESS STRATEGIES
 Customer-focused business model- The customer service was really bad and as a
result they lost customers trust, so to overcome that problem, an improvised plan
with a better customer care can be introduced. Even the basic necessity of customer
satisfaction was not fulfilled.
 This the first step that startups are built on, i.e., solving problems for the audience.
Mismanagements in customer service led to a very bad experiences for the users.
 Complaints regarding confirmation of bookings yet resort records show no
bookings and deducting the number of services not available to customers but no
refunds at the same time.
 Better Social Media Presence- Emphasis on engaging on social media, and doing
catchy ads to retain customers’ attention, could make our short-films or web-series to
attract audience.

9. .
 India is a key strategic market for hotel aggregators globally so we could have
started investing resources (in branding and marketing). Stayzilla could look at
directing a large part of its investments towards raising brand awareness as it looks
to maintain high growth across domestic, inbound and outbound business in the
country.
 Stayzilla can sign a memorandum of understanding with the Tourism Ministry of
States as the official alternative accommodation partner for the state as it looks to
further penetrate the brand and expand its network of homestays in India.
 Commercial partnership, Stayzilla could provide skill development workshops for
hosts on hospitality standards, jointly conducted by startups with good brand name.

10. .
We could have sponsored some events to get publicity.
 Improvisation of Website & App- The app and the website wasn't user-friendly so
modifications like allowing consumers to share their experiences, file their
grievances etc. and additional features like writing a blog related to travelling and
sharing their pictures by the tech department in the same could have helped gain
more audience and engagement in their website/app
 The final nail on the coffin was the founder being arrested due to which customers
totally lost their trust in them. The case was weak and could have been in their favor
if their legal team was efficient.
 Investors lost trust in start up due to lack of communication from their side and
monotonous loss in the startup. So, effectively communicating and meeting the
demands of the investors can arrange for the required fund for the company.