Stayzilla halts operations, will come back with ‘different business model’

Online marketplace providing homestays, Stayzilla has suspended its operations and will reboot "with a different business model", co-founder and chief executive Yogendra Vasupal announced in a blog post.

Though all new bookings on Stayzilla website and app have now been suspended, however bookings with check-in dates on or before 28th February 2017 will be honoured and all bookings post the date will be cancelled with 100 percent refund to the guests.

Stayzilla began its journey in 2007 offering budget hotel stays but then shifted to homestays and alternative stay segment towards the latter half of 2015.

Vasupal also elucidated upon their apparent failure saying that the travel marketplace does not have local network effects, due to which they can't take a focused city-by-city approach in terms of matching supply and demand.

"As a result, we had to invest extensively in both sides of the marketplace, creating homestays as well as guests who would choose a homestay across the country. We were actually successful at this - we have created 8000 homestays in over 900 towns - but this stretched us thin," he said.

"This was further exacerbated by the discounting based growth rampant in the travel industry since 2015. Forced to match prices, we could not even recoup what we put in, necessitating very large capital requirement simply to sustain growth," he added.

The startup that was previously headquartered in Chennai and had recently consolidated its product and engineering teams in Bangalore had raised a total of around $33 million in funding from investors like Nexus Venture Partners and Matrix Partners.