In what is said to be a first in Asia, an Indian start up is looking to target the business segment with flexible check-in times at hotels, but not just any hotel! Sally White reports
Asia’s business travellers place the greatest importance on one preference: convenience. To them it is more important than service or even value for money - so says top international consultants McKinsey in its latest report on the continent. India’s MiStay reckons that this is just the market it is catering for as it offers online hotel room bookings by the hour.
This flexible approach to accommodation has been around in Europe and the US for a little while (existing European players include Byhours and DayUse and there is US-based HotelsbyDay). Yet this seems to be the first in Asia.
Customers are those going for convenience of space in which just to turn around. They are businessmen needing to freshen-up or prepare for a meeting, or tourists in transit waiting for a connection and travellers wanting a few hours of sleep. Growth has been fast, overcoming the stigma of rooms-by-the hour as hotels grasp the concept, and it is now in 17 Indian cities and over 100 hotels.
Launched just last year, MiStay has come out of one of India’s major technical hubs, Gurgaon a city just southwest of New Delhi in northern India. Both founders were at India’s Institute of Technology, but Sandeep Jaiswal then went into management consultancy and Pranav Prabhakar to IT development and design.
The idea came, says Sandeep, when he and friends were turned away from a hotel when they’d arrived in the early hours. To the shocked receptionist, this was way beyond standard checking in time (noon)!!! They only got in by paying extra and ended up spending way over the normal rate. That convinced him that the market was ripe for some disruption.
Timing for them has been good, as Indian hotel occupancy has dropped, with last year’s figure of 60% only recently showing improvement. The founders say that they can help hotels increase their RevPAR “by creating a new segment of customer”.
Sandeep Jaiswal likes to expand on the merits of their business model: ”Hotels can sell the same inventory multiple times a day (up to three times). If a room is sold twice or thrice in a day, the hotel can earn more than the full-day tariff…”
And for the customer? “…we are helping the customers reduce their expense by paying only for the time they stay, “he says, adding: “It’s the convenience, flexibility and certainty that we are bringing which is attractive for customers. Instead of waiting long hours at the airport or waiting till noon to check-in to the hotel and compromising with their travel experience, they can book the room for a few hours and pay only for the time stayed.”
MiStay has devised dedicated software for hotels to process this multiple occupancy, which is helping expand their market penetration. India’s hotel booking industry is one of the world’s largest, at $20 billion, so well worth the effort.
Diligent business focus
While tourism is growing at around 7%, according to the World Travel and Tourism Council, MiStay is targeting primarily the business segment. That is quite big enough, estimated at around $12-14 billion, growing at over 7% a year. And business custom is probably better able to accommodate MiStay’s 20% commission than back-packers.
“Going forward, we see direct tie-ups with corporates to manage their employees’ business travel as one of the key customer acquisition channels,” Sandeep told India’s on-line start-up magazine YourStory. To help drive growth MiStay has launched 'MiStay for Business’, a self-booking technology designed especially for corporates.
Doing deals with the country’s hotel sector is time consuming, as India’s Success magazine commented: “The Indian hotel industry is highly fragmented with a large number of small and unorganised players accounting for a lion’s share.”
Yet, at least hotel numbers are growing, according to an article on the Indian hotel industry in the country’s Success Magazine. “A major trend in recent times is the development of the hotel industry in cities other than major metros. As real estate prices have been soaring, setting up and maintaining businesses and hotels in major metros is becoming more expensive, leading to search for other cities entailing lesser costs. Consequently, hotel markets have emerged in cities such as Hyderabad, Pune, and Jaipur. This has led to increase in hotel development activity and expansion of hotel brands within the country.”
Online booking is expanding, too. The percentage of total bookings reached around 25% last year (70% in Europe are booking online, and getting on for 50% in the US).
MiStay says it takes ‘extreme due diligence when partnering with hotels’
What is more, domestic travel is booming, with local tourism generating numbers up last year from 1.4 billion to 1.6 billion. As economic activity soars, executives are travelling more – 11% more last year, it is thought, and spending $33 billion.
Amid all this activity, what differentiates MiStay is its “extreme due diligence when partnering with hotels”. Most of its hotels, it says have a TripAdvisor rating of over four.
And for those who still raise their eyebrows at the by-the-hour concept Sandeep points out that in India once-upon a time “we had to hire a cab for an entire day even if we needed for only a few hours.”
Difficult now to image such a scenario!
MiStay co-founders, CEO Sandeep Jaiswal (left) and CTO Pranav Prabhakar