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Online Budget Hotels in India: Aggregators to Accumulators

CASE STUDY, E-COMMERCE
ET Cases, 19 Pages

Case Preview

Online Budget Hotels in India: Aggregators to Accumulators

 

In June 2015, Ankita Sheth (Ankita), an avid traveller, based on her horrendous travel experiences earlier, recognized the gap for branded budget accommodations and started Vista Rooms – an online budget hotel – with just four properties in Mumbai, India and later expanded to 50 properties across 3 countries.1

In October 2015, Rakesh Rana, an ex-executive of Cleartrip, too ventured into the short-term budget accommodation category with Comfy Stays Pvt Ltd, an online start-up that aggregates entry-level hotels, guest houses and service apartments. Sidharth Gupta’s (Sidharth) Treebo, Prafulla Mathur’s (Prafulla) Wudstay, Vaibhav Aggarwal’s (Vaibhav) Fabhotels and Keshav Baljee’s (Keshav) Zip Rooms were started during 2014–2016 and operate under the same category.

The advent of sharing economy coupled with internet and technology gave rise to several such Indian start-ups that leveraged on the potential of budget accommodation requirements of travellers in the country. Most of these players, started with a partial-inventory model or franchise model that gave them a rapid scale. But, the glaring minuses of the model, forced them to adopt the full-inventory model, with the hope that it would yield the expected results – overcoming the shortfalls of the partial-inventory model, higher margins and brand visibility...........................


 1 Rajiv Singh, “More Elbow Room”, The Economic Times Magazine, September 25th – October 1st 2016, pg 16

Teaching Note Preview

Online Budget Hotels in India: Aggregators to Accumulators

 

Synopsis

OYO Rooms, Vista Rooms, Comfy Stays, Treebo, Wudstay, Fabhotels, Zip Rooms, etc. were some of the online budget hotels started during 2013-2015. The advent of sharing economy coupled with internet and technology gave rise to several such Indian start-ups to leverage on the potential of budget accommodation requirements of travellers in the country. Most of them started with a partial-inventory model or franchise model that gave them a rapid scale and attracted investors, but soon they were forced to adopt the full-inventory model, with the hope that it would yield the expected results. This case study attempts to introduce the participants to the emerging business models in Indian online budget hotels’ aggregators and analyses the sustainability of the business model.

Prerequisite Conceptual Understanding (PCU)/Before the Classroom Discussion

The students/participants should be asked to read the following:

  • • Business Model
  • • “The Rise of Sharing Economy”, http://www.ey.com/Publication/vwLUAssets/ey-the-rise-ofthe-sharing-economy/$FILE/ey-the-rise-of-the-sharing-economy.pdf, October 2015
  • • “The Future of Internet in India”, http://www.nasscom.in/future-internet-india, 2016
  • • Dr. Nagendra V. Chowdary, “Case View with Ankita Sheth – Online Budget Hotels: Aggregators to Accumulators”, http://www.etcases.com/online-budget-hotels-aggregators-toaccumulators.html, November 2016

 

Case Positioning and Setting

This case study can be used in the MBA/Post-graduate program for the following:

  • E-commerce/Strategy/Entrepreneurship Courses: Business Model – The advent and growing popularity of the online/e-commerce and evolving business models in India

 

Assignment Questions

I. Discuss the business dynamics of the Indian hospitality industry, especially from the viewpoint of key segments and key differentiators.
II.............

Preamble to the Case Analysis

This case study helps understand the Indian hospitality industry from the viewpoint of its segments, competition and differentiators. It helps to analyze the factors contributing to its growth and how online budget hotels emerged. It discusses the business landscape of online business hotels and helps debate on the role of aggregators. While the aggregators of online budget hotels follow partial-inventory model, franchise model and full-inventory model, the participants can compare between them and debate on the sustainability of full-inventory model. The case study analysis was carried out as presented in Exhibit (TN)-I...............

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Abstract

This case study is an attempt to introduce the participants to the emerging business models in Indian online budget hotels’ aggregators. With the advent of sharing economy coupled with entrenched power of technology, several Indian start-ups have embarked on leveraging the potential of accommodation requirements. Most of these players like OYO Rooms, Treebo, Zip Rooms, etc., have started with a partial-inventory model. This model, however, made the going tough, forcing them to adopt the full-inventory model. Having opted for full-inventory model, many of these players are hoping that this strategic shift in the business model would yield the expected results. Will it?


Pedagogical Objectives

  • To have an overview of Indian hospitality industry, especially from the viewpoint of key segments, key players and key differentiators
  • To understand the business landscape of online budget hotels and discuss and debate on the role of aggregators
  • To compare the partial- and full-inventory models of online budget hotels’ aggregators and discuss on the sustainability of full-inventory model in the long-run

Case Positioning and Setting
This case study can be used in the MBA/Post-graduate program for the following:

  • E-commerce/Strategy/Entrepreneurship Courses: Business Model – The advent and growing popularity of the online/e-commerce and evolving business models in India


  • This Case Pack Includes:
    - Abstract
    - Case Study
    - Teaching Note (**ONLY for Academicians)
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