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Japan’s popular pod hotel concept makes a debut in India, set to disrupt budget stay

Jul 3, 2018 by The Passage Team
Japan’s popular pod hotel concept makes a debut in India, set to disrupt budget stay

By Durba Ghosh

The capsule-sized hotel concept that percolated into India from Japan and Singapore will soon find its way to airports and railway stations. Urbanpod, India’s first and only pod hotel company is partnering with contractors who have won government projects from airport and railway authorities, to set up pod hotels on a revenue-share model.

The one-year-old startup, which currently operates only in Mumbai, plans to open one more touch point in Mumbai and then expand to other major metros such as Bangalore and Delhi. The company is also looking at exploring religious destinations such as Shirdi to set up franchises. While the company is looking at taking the franchise route for expansion, for airports and railways the company will have to work with government certified contractors who win the tenders.

“We are currently working on a metro location, and an airport. We will set up the pods in the near vicinity of airport, while in railways we are targeting the retiring rooms. IRCTC has been very forthcoming in this regard. We took our concept to them and they got us in touch with the contractors,” Hiren Gandhi, co-founder and director of Urbanpod said.

The startup currently operates a 9,500 sq ft space with 140 pods, accommodating 150 people, in Mumbai’s Andheri area. It has serviced close to 10,000 customers since its inception a year ago. The company plans to expand rapidly and is targeting to set up 800 pods at 6-7 locations in next two years.

“We will tackle the cash burn by opting for a franchise with minimum return guarantee till it breaks even; post that we will go for 75% revenue share model. A single pod hotel of 5,000 to 12,000 sq ft space will attract investment of about Rs 5-15 crore, depending on the locality,” Gandhi says. The company is also targeting to partner with real estate owners to explore IT-parks and business-hubs to introduce the concept.

Besides franchises, the company is also tapping private equity firms, venture capitalists and HNI investors to raise an additional Rs 20-25 crore soon. The company is currently in talks with potential investors, and expects to close the round in next six months.

“We are raising funds for expansion, brand-building, technology innovation, and talent-acquisition. We also have other off-shoot models that we want to explore. We want to take the concept of pod hotels pan-India,” Gandhi says.

Urbanpod, founded by Shalabh Mittal and Hiren Gandhi in 2017, borrows the concept from a similar chain in Singapore. The concept, however, percolates from Japan’s popular capsule hotels started in 1970s. It has gradually become a global trend.

Like its predecessors, Urbanpod stays true to the concept with pods built in 50-90 sq ft space with smart connectivity tools inside. The startup, however, has improvised to fit the Indian market. To start, Urbanpod has dedicated 18 only-women pods with attached bathrooms. It also has suite pods with queen size beds and room to walk around.

According to Gandhi, Urbanpod will fill the demand gap for clean and hygienic accommodation at cheap prices. Urbanpod has priced its pods at an average Rs 2,000 per night. In comparison, budget hotels in Mumbai, including OYO, offer rooms in the range of Rs 2,000 to Rs 4,000. Backpacker hostels in Mumbai cost much cheaper than Urbanpod with tariffs ranging from Rs 600 to Rs 1,000.

Rates for a pod in Singapore, on the other hand, are priced at about $20 to $55 a night, cheaper than the average three-star hotels that cost over USD 150 a night. A backpackers' hostel will cost about $40 to $100, depending on location.

“We feel our pricing is apt. We have hit the rock bottom to offer the cheapest possible. From here on it will only go upwards, depending on growth and demand,” Gandhi explains.

The Passage Team

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