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U Hostels enters India’s alternate accommodation market with premium hostel concept

Monday, November 20, 2017, 10:00 Hrs  [IST]
P Krishna Kumar | New Delhi

A joint venture company launched by seasoned hotelier, Sudhir Sinha and franchise business expert,  Gaurav Marya, U Hostels, is all set to introduce a novel premium hostel concept into the Indian hospitality and alternate accommodation space. The founders of U Hostels are confident of opening the first U Hostel within a year’s time. Talking to Hospitality Biz, Sinha confirmed that they are currently negotiating properties in Bengaluru, Pune and Gurgaon.

“It’s totally a new concept.  If you look at the hostel accommodation in the country, it is highly fragmented and there is no brand which offers quality and consistency with premium services to customers. Premium hostel segment is a completely missing segment in India, we are looking at filling that vacuum,” he said. As premium product, U Hostels will have “amenities of a hotel and comfort of a service apartment." “Our Hostels will have cafeteria, restaurant, gym, space for cultural events, laundromats, etc.,” Sinha said.

When asked for ideal locations for a U Hostel, Sinha said that places with high footfalls of working community, SEZs, ports, etc. are what suit a U Hostel. “These hostels are not for students,” he clarified.

In order to make the concept working and high on return on investment for investors, Sinha said that a U Hostel will have single bed and multi-bedded rooms which works on a shared space concept. “It’s a highly prevalent concept in Europe. It works well with corporate long stay clients,” he added.

Commenting on the business model, Sinha said that they are open to lease models, minimum guarantee, and mix of managed and franchisee models with investors. He said that they won’t go for pure franchisee model until they have a sizeable number of properties. Sinha informed that they are open for conversion of existing hotels into U Hostels for owners who are not happy with the RoI the current managers are delivering. “We are also talking to builders at few places where they have unsold inventories of apartments. We can take the whole block of apartments and convert into U Hostels,” he added.

While U Hostel founders have set a target of setting up at least 100 premium hostels  in India over the next 10 years, Sinha said that the initial challenge is in getting at least two to three properties and prove that the model can deliver better return of investment than the usual hotels.

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