Well-backed homestay site Stayzilla shuts down after 12 years

Less than a year after trousering $13 million in investment, Stayzilla has closed the curtains on its platform for homestays in India.

CEO and co-founder Yogendra Vasupal says the company will “reboot” with a different business model after halting its current operations.

The site gave five days notice that any booking after the 28 February would be cancelled and guests refunded.

Founded in 2005, Stayzilla was created with a vision to connect travellers with homestays across the country via a single platform, essentially riding what many believed was a burgeoning desire for budget and alternative accommodation by travellers in India.

By 2017 it had 8,000 homestays on the books.

The $13 million raise (in three tranches) last year from Matrix Partners India and Nexus followed an undisclosed Series A round in 2013 and a $15-20 million Series B in 2015.

In the inevitable and lengthy post on Medium, Vasupal says the team will go despite his plans to rebuild the company under a different guise.

He adds:

“I see Stayzilla becoming a hassle-free distribution channel going out to the right audience, wherever they may be. We will look to work closely with both online and offline travel partners to offer the best of Indian homestays to their valued customers.”

“Focusing all our energies on the supply side will allow us to build on our core strength that we have developed over the last 18 months.

“I believe that the market is at a phase where co-operation among players is going to be the most certain way in which we can create value for all stakeholders involved.”

As for the reasons for the closure, Vasupal says a number factors played a part.

The company was “stretched thin” by its growth into 900 towns in the country, he says, with investment needed to match supply with demand, and vice versa.

He also blames wider macro trends in India such as tech logistics.

“A homestays marketplace needs to invest in educating the market on the concept and even using internet and not just the product.

“The costs, both financial and opportunity costs, creep up on you over a period of time and gets rationalized as cost of doing business in India.”

Vasupal also concedes that he focused too much on so-called “vanity metrics” such as room-nights and gross merchandise volume instead of cash flow and working capital.

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Kevin May

About the Writer :: Kevin May

Kevin May was a co-founder and member of the editorial team from September 2009 to June 2017.





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  1. christopher

    yes they focused on creating rooms but not on selling rooms.


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