Backpacking hotel chain Vedanta Wake Up! to redefine budget travel segment in India

Vedanta Wake Up! – part of Blanket Hospitality Venture, is a chain of luxury backpacking hotel across India. The venture was launched in 2011 by two childhood friends – Aadil Muscatwala and Rishabh Gupta, to target the fast growing budget travel segment in India. The firm addresses the primary concerns of several budget travellers, both Indian and overseas. This segment has been largely ignored by entrepreneurs, investors and corporate and has a large number of unorganized players.

Sharing a deep passion for travelling, the idea of starting organised hostelling in India was sown during a trip to Australia in 2009 that the duo embarked on. The trip lasted for over two months on a measly budget of $20 a night. Since then, the duo has backpacked extensively and has tried to incorporate all the experience and learning of staying at over 100 hostels around the world into the business. With a seed capital of Rs 50 lakh, both the friends launched their first property at Fort Kochi in July 2011. They started with Kerala because of the aggressive promotion and rapid growth of the tourism industry.

Prior to starting their venture, Muscatwala has earlier worked as a Senior Analyst at Merrill Lynch in the Real Estate Investment Banking group in Sydney and with the Mergers and Acquisitions group in New York. On the other hand, Gupta has worked at Deloitte Consulting in New York, where he has advised top tier banks on strategy and execution.

In an interaction with Entrepreneur India, Rishabh Gupta, Founder, Blanket Hospitality Venture (BHV), shares more about the venture, their entrepreneurial journey, and future growth & expansion plans:

Tell us about Vedanta Wake Up! How did the idea to start this venture come into being?

Vedanta Wake Up! is a unique venture that seeks to redefine and disrupt the  Indian hospitality sector by creating a niche that marries affordability with standardisation of product and service. Hostelling allows travellers to be in a safe and secure environment, where they can meet new people, share stories and experiences with complete strangers, make new friendships and learn about different cultures. This isn’t always possible when staying at luxury hotels, where the guests tend to have a completely different motivation for their travels.

A lot of passion has gone into conceptualizing the product and service offerings to adapt to the Indian market. The mission is to enable guests staying at Vedanta Wake Up! to have a socially fulfilling experience. Revenue and profitability are the by-products of a well-run business.

Moreover, activities are organized every day at the properties to enable guests to socialize at no extra cost. These include dinners at restaurants, bar crawls, music & movie nights, board game nights, cycling tours of the city, cooking classes, yoga sessions, etc.

What is your domestic-international tourist mix?

The product has been conceptualised to cater specifically to the needs and sensibilities of the upwardly mobile Indian traveller, who wants to experience a unique product, where he is assured of product and service at affordable prices. Vedanta Wake Up! enjoys a healthy domestic-international tourist mix of 60:40. We have seen a significant increase in the number of Indians staying with us since the time we launched in 2011.

What have been the overall occupancy rate and ARR (Average Room Rate)?

For the CY2014, Vedanta Wake Up! reported ARRs of ~ Rs 500 for dorm beds and Rs 1,500 for private rooms with occupancy of 60-65 per cent. We expect the occupancy rate and ARR to witness an increase for the CY 2015.

What are your growth plans? Do you plan to raise any funds in near future?

What started out as a passion to extend our love for backpacking and hostelling to the Indian traveller, the project has evolved into a venture with clear visibility of scale, non-linear growth and profitability. The scale up plan is to add another 100-150 hostels over the next three years.

With the execution of this scale up plan of adding an inventory of over 15,000 beds, Vedanta Wake Up! is poised to become of the most formidable brands in the Indian budget accommodation space and a dominant force in the world hostelling space. The systems and processes revolving around the execution plan are already in place for this expansion. To roll out this expansion plan, we are looking to raise around Rs 25-30 crore.

Do you find the environment conducive for entrepreneurial culture in India?

Yes, we do find the environment conducive for entrepreneurial activity. Vedanta Wake Up! is different from most new age businesses. There is clear visibility of profitability as the same is proven by all our existing properties.

What is the most valuable lesson learnt from your start-up journey?

When we first discussed the idea of opening backpacking hostels in India, we realized that there was no similar existing product in the market at the time. However, we decided to launch our venture because of the conviction we had in the product. We had backpacked all over the world, and there was no reason why other Indians, like ourselves, would not appreciate a good product. Today, we have become the brand of choice for budget travellers in Kerala and over the next few years, we hope to repeat this success in other states as well.