Budget hospitality firm Zostel, which initially set aside its expansion plans due to the COVID-19 disruption that shook the hospitality industry, announced that it would be getting big on hyper-local domestic travel.

As reported by ET (1), Dharamveer Singh Chouhan, CEO & Co-founder, said that the chain plans to open 500 new properties over the coming two years, which will be a mix of hostels, homestays, and new products worth Rs 2,500 crore.

Zostel presently has over 60 properties that are a mix of hostels and homestays, and the company plans to raise Rs 10 crore in a funding round from the market.

Chouhan said that there were more than 4k unique individuals who either wanted to invest or offer their properties.

He added,

“We are just connecting everybody together so that the whole system works. We are analyzing land banks across the country where vacation homes and hostels could be created.”

Post-COVID travel to bring more opportunities

Zostel properties generate phenomenal yields. If someone takes franchise on a lease as well and invests, their IRR is over 40%. In fact, the break-even is under 18 months.

Currently, 40% of the Zostel supply is open in India, and revenues stand at 25% of the pre-COVID levels.

The company plans to open up 500 new destinations for short-term travel and the new travel norms that will be showing up post-COVID. Many companies have reduced their office spacing as they give people the freedom to work from anywhere.

With this, over 50-100% of the staff has the freedom to practice remote working, allowing them to work at any destination in the world with great wifi and electricity, even if ts on the top of the hills.

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