Offering luxury on a budget

The travel and tourism industry in India is on a roll and there has been a substantial increase in the number of travellers over the past five years. This has also lead to an increase in demand for quality hotel rooms. However, in the backdrop of this boom, the dream of a middleclass traveller of staying in luxury hotels was seen as a business opportunity and has been turned into a lucrative model by Puneet Gupta in the form of icanstay.com. 

Puneet, an MBA in finance and marketing, had earlier founded an IT company to provide solutions to the Indian Oil Corporation Limited, Fortune 500 company and customers in the US  and UK. Based on the hidden deal concept, icanstay.com acquires unsold perishable room inventory from luxury hotels and offers them at Rs 2,999 to people who aspire to stay in luxury space, but are unable to do so because of high prices. Puneet shares his journey of exploring a new business model for his start-up: 

The inspiration

As per HVS report, the branded hotel industry in India currently has 1.25 lakh rooms on offer and on an average 38 per cent of these go unsold daily. At an average, revenue rate of Rs 5,800 per room, this translates into lost revenue opportunity of over Rs 10,000 crore for these hotels. And with less than 2 per cent of Indians having stay in a luxury hotel, there is a huge middle-class population with an aspiration to stay in a luxury hotel. This was the starting point for this venture. I thought of developing a business model that gave such an opportunity to everyone. 

The concept 

We are a market place to bring the vacant rooms with the hotels and customers who wish to utilise these rooms on a same platform. Icanstay.com is a unique product where we are offering stay in a luxury hotel at a fixed price around the year. The fixed price is for stay across India, so its ‘One India One Price’ for luxury hotels across cities. And it’s at an all affordable price of Rs 2,999 (Incl. GST).The user has to just buy an open voucher, which is valid for stay in a luxury hotel across the country and has 11-month validity. The open voucher is easily refundable. 

Challenges

Initially the hotels were reluctant on two counts —  firstly, brand dilution and second low price. For brand dilution, we successfully explained that the hotel name is disclosed only after the user redeems the voucher so we are safeguarding hotel’s interest here. As far as low price goes, we are offering them revenue for the rooms which otherwise are going to remain vacant. Hotels also know that each vacant room has a daily cost, so we help them recover that and add further revenue besides bringing in a new set of customers without any cannibalisation.

Other major challenges were of hiring and financial aspects but with an interesting concept and good traction from customers, we have been able to hire experienced resources in hotel contracting, operations and sales.

The response

The response has been very encouraging. We have sold more than 5,000 vouchers till date and we have seen a repeat customer of 28 per cent i.e. users who have bought a voucher have come back and bought another voucher. We have 75 partner hotels in 28 cities and will expand to 50 cities by January, 2018. 

Future plans 

By March 2018, we are targeting 250 partner hotels in 60 cities. We are planning to go international in countries that offer ‘Visa on Arrival’ to Indians.

A word of advise

Be sure of what you are getting into and do a lot of homework.

Hire a good team.

Stay lean

— As told to Geetu Vaid