Business strategy design for expansion of zostel

Abstract

Indian tourism industry is growing at a significant rate and the supply-demand gap in budget accommodation is very evident. India’s tourism competitive index scores low with an average score of 4/7 across parameters such as hygiene and infrastructure. India ranks 52 of 141 countries but safety scores are much worse off at rank 1291 . Additionally, there is a dearth of 150,000 rooms for budget travelers. As more travelers are looking for affordable and safe accommodation, there is need for budget and mid-market hotels. In addition, there is a growing population of travelers in India who are planning their own itinerary by relying on internet and word of mouth, instead of completely outsourcing the task to travel agents. For them too, procuring reliable, economical and traveler friendly accommodation is a challenge. In India, there was no concept of backpackers’ hostel, one which has been quite popular in Europe, US, Australia and more recently even in Hong Kong, Malaysia and other parts of South East Asia. Dharamveer (cofounder, Zostel) recognized this gap in the tourism industry and used it as an opportunity to make the first move. He started Zostel with the idea of providing a travel platform for the youth that provides not only secure and hygienic accommodation, but is well located and cheap. It targets the passionate and solo travelers who are eager for new experiences. With this motto, Zostel started its operations by establishing first hostel in Jodhpur in August, 2013 and then, quickly expanded to Jaipur. Since then, Zostel has expanded its geographic footprint to cover 16 cities.