"I believe in ratings more than reviews; reviews can be a lot of noise": Yogendra Vasupal, Stayzilla

One of the hottest e-commerce segments currently is budget and alternative stays - be it houseboats, home-stays, farm houses or serviced apartments. As a new generation of travellers emerges, there is a massive demand for budget accommodation. Yogendra Vasupal, founder & CEO, Stayzilla, claims that his company has been growing 4X times, year on year. The industry itself is likely to be worth $1.5 billion in the next three years, with at least half of it dominated by home-stays.

There is a shortage of at least one million rooms in the country, Vasupal informs. Keeping pace with this surge in demand, Stayzilla's newest accommodation format is home-stays, Airbnb style. With an initial target of 1,500 rooms, during launch, Stayzilla has already signed up at least 18,000 alternative stays. Vasupal tells us how his company plans to encourage wary Indians to host strangers in their homes. Excerpts:

Edited Excerpts

The key thing is to be comfortable with someone in a public setting, and then comes adjusting at home. Initially, there is some amount of discomfort. But we have seen that, eventually, it changes; to an extent that if people don't host someone they feel something is missing. We are not just looking at giving you a room, but giving you a host. So, if you are an Ayn Rand fan, you can invite only other Rand fans. This lets you get the kind of guests you don't mind becoming friends with.

We cannot curate the interest. We let you - the host - define what kind of specific interest you would like your guests to have. There have been hosts who have offered lessons in carnatic music and baking. It is not always about money, you see. The hosts want to host people for interactions as well. As a matter of fact, one-third of our hosts are retired, senior citizens. These are the people whose children have grown up and live somewhere else. So, they have rooms to spare and lot of time to kill.

One of the reasons is that there are not enough good quality homes in India. In Europe, even before Airbnb, the home-stay concept was popular. Probably 40 per cent of the total space is taken by alternative accommodation in Europe, while the same in USA is relatively new. But, in India, you don't have many options.

What if I tell you that you can select the kind of guests you want, not just on the basis of interest, but parameters like - 'I only want family' or 'I don't want senior citizens', or 'a home which doesn't have liquor shop nearby'? This gives the host a greater amount of control to get used to the idea of what kind of guests are going to come. It also lets you verify the details before accepting someone as a host - you can chat on an app directly. The property listing is actually locked and is shown only when the guests' answers meet your criteria. We also send our personnel with a 60-point check list to understand what kind of host and property it is. It can be about mobile signals, access, road condition etc.

Yes. After every booking we take a rating for hotels. However, we don't display them on the front-end for hotels. Hotels are not like hosts. If you go to a tier III city, you won't have too many options. So, there is no use of reading too much. At the end of the day, you can only expect something very basic.

Our belief is that your platform should match whether a property is right for a user or not. We are a completely managed market place.

Reviews and ratings are useful when you need to find out the really bad and the really good five per cent. Some minimum level of hygiene factors should be there. But, beyond that, especially when you are focussing on mass, you need to be able to match the properties with the guest.

For alternative stays, it is slightly different. There needs to be a clear and transparent system to understand what they have listed themselves to be, is that actually true or not. That's when a rating system helps. I believe in ratings more than reviews; reviews can be a lot of noise.

We are not looking at standardisation. As long as we can find the strength and weakness of every home and send the right kind of guests there, what can be the problem? In this model, a lot of problems arise because of a mismatch between hosts and guests. Our platform is about matching, not about penalising on the basis of what is right for one guest or wrong for another.

We have 35,000 properties across 4,500 locations. We have a clear view of the market and realised there is a huge under-supply of homes in India. Nobody is bothered about fixing it because there is no incentive. A lot of the new players like Oyo and ZO Rooms are investing on standardising, but they are not creating new rooms. You need to create new rooms in the market to be able to beat competition, and when there are more rooms, quality will have to improve for basic survival in the market. The quality problem is a symptom of the disease which is under-supply.

There are two kinds of suppliers. The first are those who were selling rooms before Stayzilla existed, and the second are adding rooms to the market. Both require different strategies to manage. The first is more relationship based, the latter more platform-centric. We have two separate teams to look after each. Our focus now is talking to first-time hosts; because it solves the need gap that exists. So, our recent funding of $20 million will go into this, to expand supply.

We have separate B2B and B2C marketing, but have been planning to merge them. Our communication now will focus on the host. We are also using interest-based targetting, where if you open up a Bob Dylan page, we use that data to talk you on Facebook saying 'meet other Dylan fans by becoming a host on Stayzilla'.

It is Indians all the way. Foreigners are probably just 5 per cent. Over 50 per cent of our customers are from tier II and III cities. Over 80 per cent of our business goes to non-metros. For other players in India, 70 per cent of their business is in metros. I am talking about cities like Kolhapur, Kargil and Shirdi.

Since we started off in South, we have a strong base there. But, in the last two years, we have expanded across India. Right now, about 45 per cent of our properties are in North India.