Leisure Hotels look for alternatives, to diversify into hostels, resitels

Leisure Hotels Group, the Dehradun-based hospitality firm, is diversifying into the hostel and resitel segments as it seeks to unlock the potential in the alternative and long-stay accommodation sectors, even as it executes an expansion plan in its core hotel segment, said a top company executive.

Leisure’s hostel — a low-frill, budget accommodation comprising beds and budget rooms under the Bedz brand — will come up in Rishikesh by the end of this year. 

Aimed at backpackers and long-stay travellers who visit the Himalayan foothill region seeking adventure, wellness or pilgrimage, Bedz will compete with Zostel — one of the largest hostel chains in India, said Vibhas Prasad, director, Leisure Hotels told Business Standard

“India has broken the ground with hostels. But of late, most of the action has shifted to co-working and co-living spaces, and hostels not getting that attention,” said Prasad. The existing hostels in Rishikesh normally charge between Rs 250 and Rs 300 per bed a night, but Leisure is looking to up the ante, he said.

Leisure plans to charge Rs 800-900 for beds per night and Rs 2,000-3,000 for the rooms and create the concept of community living. It will be based on the dynamic pricing model and driven by demand on a particular day. 

“With an attractive food and beverage outlet, it can become a lively place for all those who visit Rishikesh,” said Prasad. The second hostel will come up in Jaipur, but it will follow a franchisee model similar to Zostel’s. 

According to travel portal Booking.com, India is among the fastest-growing markets in terms of addition of alternative accommodation platforms. Of the total 880,000 listings in India, over 140,000 are in the ‘alternative accommodation’ segment, PTI had reported in May 2019, citing a top executive of the company. 

The alternative accommodation segment covers homestays, hostels, apartments, villas, cabins, tree-houses, boats, and bed and breakfast facilities, among others. 

The properties — villas or apartments being developed by Leisure under the resitel concept — will be open for sale and transfer of ownership. The purchaser will get 30 days that could be consumed by him/her or his/her family or friends, in addition to the rent, he or she would enjoy for 15 years as per the lease agreement. 

The buyers of these properties would be high net-worth Indians living the country or abroad and who are keen to own a vacation/second home. It’s not an investor-driven model and there are no assured returns on the property one buys, but the buyer will get a yield of 4 per cent when the property is rented back, said Prasad.

Leisure will be developing resitels at Bhimtal, Nainital, Rishikesh, and Naukuchiatal. It will start construction at a couple of these locations in the next two months.

Meanwhile, the group that currently operates 27 boutique properties with around 875 rooms in India plans to invest Rs 160 crore to add nine properties across the country by end-2021. 

These will include properties in Goa and Greater Noida, as the company aims to spread beyond Uttarakhand. While some of the aforementioned properties are owned by Leisure, a few are jointly owned and managed by the firm and the others are just managed by it across key leisure destinations.

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