Matrix makes a booking with Stayzilla

Stayzilla.com is looking to change that. The start-up, which focuses on internet booking at the lower end of the market, recently received a first institutional round of investment led by Matrix Partners India, which acquired a significant majority stake in the company for undisclosed amount. The transaction follows the $500,000 the business raised from Indian Angel Network in March last year.

Previously known as Inasra.com, Stayzilla differs from competitors such as Makemytrip.com and Yatra.com as it operates only in tier two and tier three cities. By building up a network of one- and two-star hotels outside the top destinations, the company claims to have tapped into as much as 70-80% of India's personal and business travel market.

"If you take out a top eight cities and the top two vacation destinations many hotels are still not online" explains Tarun Davda, vice president at Matrix. "Similar to Ctrip in China, Stayzilla has figured out an innovative way to stimulate demand for these hotels and make sure that demand is met."

Stayzilla maintains an online inventory through its call centre, taking booking requests and then checking availability directly with hotels. This has allowed the website to build an extensive network of more than 6,000 budget hotels.

"It is challenging and it takes time to build the network," says Davda. "But that is where there is an opportunity to become a huge differentiator - by working out a way to work with these hotels it creates a barrier to competitors."

With this latest investment Stayzilla hopes to increase this network to 15,000 hotels. One way the company hopes to achieve this is by exploring online inventory management solutions, whereby hotels without IT infrastructure but in possession o f an internet connection could handle bookings in the cloud.

This is Matrix's first investment in the travel and tourism sector where growth is primarily driven by the country's emerging middle class. However, Davda explains it is not just about leisure travel - a large proportion of inter-city travel between lower tier cities involves education, business and even religion.

"The religious travel segment in India is huge," he adds. "There are certain temples in India's tier two and three destinations that have upwards of 20-30 million visitors every year, so the hotels in these cities are always in demand. Stayzilla is in a good position to further capitalize on this demand."

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• Topics
• South Asia
• Technology
• Consumer
• Venture
• India
• Consumer
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• Matrix Partners