Some changes for Homestay owners in India.
Dear Home/ Homestay Owner,
I am writing to you after hearing the disturbing news yesterday evening of the suspension of operations by Stayzilla. As you all know, stayzilla was a late entrant to the homestay market and had consumed over 30mn USD ~ 200 crores in investor capital. In spite of this, they were not able to sustain the business leading to an abrupt shut down yesterday.
However, we believe this is bad for the overall industry if we continue to operate as if nothing has happened and worse if we celebrate the death of a competitor. At Tripvillas, our endeavour has always been to learn and to improve our own performance and ensure we are delivering the best product and the best commercials to our home owners. As such, it is with great thought that I have penned this down. My team & I are working hard to ensure that whatever we have communicated below goes live as soon as possible.
Firstly, our lessons from the Stayzilla episode:-
1. We as Tripvillas need to be highly capital efficient and deliver the best results without irrational expenses. As you would have seen in the letter by the Stayzilla founder, they spent a large portion of the 200crores entrusted to them by joining the discounting war.
2. When a large company like this shuts down, it takes with it usually money that belongs to the hosts on the platform. It is important that we as Tripvillas move quickly to a model where we ensure that the booking amounts go to the homestay host at the earliest thus reducing the risk of us holding any money with us. This will also improve cash flow of all hosts
3. Lastly, we need to ensure that we offer much better commercials and this can only happen if we simplify our operations and remove ourselves from as many transactions as possible.
Now, we have identified certain key commercial aspects which we want to improve immediately:-
1. We want to ensure that the commission we charge is better than any other OTA. As you all know most OTAs charge a 12–15% commission. Hence we feel we should charge a 10% commission — half of what we currently operate at.
2. We want to ensure that we get money that the customer pays to the homestay owner as quickly as possible. While from inception, we have always paid the host after successful check-in, we believe that today there are a significant number of hosts who we should be able to trust given their history and licenses and the rest should be shown a clear path to where they can become a trusted host. Once this happens, we expect that for 90% of transactions, the money should reach the host as soon as possible with minimal operational work or involvement of our team. This also frees our team to focus on the remaining hosts and the 10% of transactions that fall outside our bounds thus making steady improvements and reducing edge cases.
Key to both of the above is trust on the platform. If we can trust our hosts, we can offer much better commercials and if our customers can trust the hosts, it allows us to increase transactional volume thus allowing us to reduce our commission rate.
For this we need your assistance. First what we are going to do:-
We are announcing today a partnership with Instamojo for all Indian hosts. As part of this partnership all approved hosts can open an account with Instamojo and when this process is complete, customer payments will be routed via Instamojo. Tripvillas will only retain it’s booking fees. As part of this process, money comes directly into your bank account with minimal work from the Tripvillas operations team thus ensuring we can offer much better commercials.
What does it take to get approved:-
We will be coming out with detailed guidelines shortly. However, we expect it will be a combination of a few factors:-
1. That you are a registered homestay with the government authorities which we will verify by documents you upload.
2. The bank account beneficiary and the registered user on Tripvillas is the owner of the property and not an agent.
3. There are a certain number of verified stays which ensure that the property is as claimed and there are minimal refunds and customer satisfaction is maintained. A very low review score will again need to be brought back up to our threshold value to make the homeowner eligible again.
We look forward to working with all our hosts to make this initiative a success and to ensuring that we continue to remain the most effective and cash flow efficient way to make money from your holiday home. We are already making the necessary changes to our technology platform to get this done at the earliest and you will hear from us again shortly on the same.
As always, please feel free to write to me with any feedback or improvements on how we can make Tripvillas the best way for you to generate income from your holiday home / homestay.