‘Covid made holiday homes mainstream’
2 min read 28 Jul 2023, 11:13 PM ISTThe Mumbai-based company, which raised ₹19 crore in pre-Series A round from venture capital firm Sixth Sense Ventures in 2018, turned profitable in 2023, following the post-covid demand revival.
PremiumNew Delhi: SaffronStays, which operates in the holiday homes monetization sector with 290 properties on its listings platform, is planning to expand across the north and south India.
The company’s co-founder Devendra Parulekar said that there is a significant untapped market in India, with around 10,000 luxury holiday homes requiring effective inventory management solutions.
SaffronStays said it has seen a surge in demand for its top-tier properties, consistently maintaining 35-40% occupancy rates, or 120-150 days every year.
While it has so far focussed on Maharashtra, the company is planning to establish a stronger presence in Goa in the second half of this year.
“Anything above 40% occupancy is not healthy because it is then considered over utilization of an asset. We are comfortable with 30-40% since it is a home at the end of the day, and should not be fully commercialized," he added.
The Mumbai-based company, which raised ₹9 crore in pre-Series A round from venture capital firm Sixth Sense Ventures in 2018, turned profitable in 2023, following the post-covid demand revival.
At present, 236 properties are live, and 54 more are being exclusively branded and marketed by the platform, the company said. About two years ago, it had about 125 properties. Apart from direct bookings, around 35% of its business comes from online travel agencies and other distribution channels like Booking.com, Makemytrip and Airbnb. The company competes with the likes of Lohono Stays and StayVista. Its average booking size is around ₹35,000 and average duration of stays is 1.75 room nights per booking or family.
In FY22, it had posted revenues of ₹30 crore, and in FY23 it was up at ₹44.5 crore. It expects to clock 60% rise this fiscal year to ₹70-73 crore, Parulekar said. “We are seeing unlocking of land and people are building more holiday homes because they can see a return on investment if they are able to give out their homes on rent when they don’t use the property. A vacation home can offer up to 5% annual returns to owner," he added.
Parulekar said in most cases, home owners get about 40% in profit and have similar investment in running the property. “The best thing covid did for us was to make this type of holiday more mainstream."
“In the next five years, we will be a ₹500 crore gross revenue entity with 1,200-1,300 homes," he added.
The company also tied up with Marriott Bonvoy this week to be part of a global members programme where its points can be used to book homestays.
The trend that the company has observed is that the travellers looking to stay in these homes especially when they fall in the luxury category since most such travellers are HNI customers.
Conversely, if the quality of the home is not so good, then the demand for it also goes down. Its luxury category, for instance, had an occupancy of 34% in the month of June, as compared to its one step below category, which saw only a 20% occupancy average.
Alternative accommodations have been a growing segment. While companies don’t actively track it as a segment since it is staggered, according to a recent report by online travel agency Booking.com, in the first half of 2023, along with hotels, alternative accommodations (resorts, guest houses, homestays, hostels, apartments, villas, etc.) were the most popular choices of stay.
