2015 was a pivotal year for alternative stays in India and a significant development was growing acceptance of online payment wallets

In 2015, EyeforTravel predicted that while B2C plays in online travel may be becoming saturated in the West there was still plenty of opportunity in Asia Pacific and other emerging markets.

That prediction proved correct in India, specifically in the market for budget alternative stays. In a country where such accommodation has been severely lacking there has been growing demand from local and international travellers alike.

Tapping into this fragmented, yet fast growing market, are firms like Stayzilla, OYO rooms and RoomnHouse. They have understood that with domestic and international tourist numbers on the rise, there is huge opportunity for expansion and growth in a country where there is a shortfall of around 100,000 rooms.

One rising star is Ritesh Agarwal, the founder and CEO of OYO Rooms. He recently made the Forbes list of entrepreneurs under 30 and has developed a network of 2,200 small hotels in 100 cities across India. Another is Yogendra Vasupal, the founder of Stayzilla who in 2015 proved truth in his prediction that “we have not even scratched the proverbial tip of the giant stay market in India”.

In a catch up with Vasupal this month, he told EyeforTravel that Stayzilla went from booking 2,500 room nights a day to 10,000 in 2015.

An approach that helped the firm grow its business in 2015 included encouraging hosts to open additional rooms in their homes or second homes. This strategy helped create 7,000 additional room nights a month at a reasonable price – an important factor in India where many people still travel to a budget.

“Our focus since January 2015 was on improving the quality of our rooms rather than spending time and attention just on hotel rooms,” Vasupal says. 

Online poised for take off

So if 2008 was the year flight bookings took off, then 2015 will be remembered as the first year for the alternate stay booking segment in India, says Vasupal.

However, while that growth is happening both online and offline, Vasupal believes that online bookings present a real opportunity. That is being helped by the promised expansion of Internet access (and rising mobile phone usage) to India’s predominantly rural population. By 2019 there are expected to be 320 million internet users in India, according to Euromonitor.

Going forward then, Vasupal predicts that almost 35% of alternate stay bookings will be made online and by December 2016, that figure will have reached 50%.  

A significant development of 2016 [in India] was the emergence and acceptance of payment wallets.

Another helpful push in this direction comes with a mobile flavour. In 2015, 11 companies in India, including Airtel and Vodafone, were granted licences for banking transactions such as deposits and payments. This could give a further boost to bringing India’s unbanked online.

Already, says Vasupal, a significant development of 2016 was the emergence and acceptance of payment wallets.

“This has changed the online payment scene to a great extent as more and more Indian consumers are now making online payments which in turn has helped the online travel and stay booking industry immensely,” Vasupal says.

Another development in 2016, he says, was the willingness of homeowners to move to an online platform.

To find out about more opportunities in India join us this month at The Smart Traveller – Digital Strategies in Asia or later this year at EyeforTravel Asia Summit 2016