Stayzilla shuts shop due to tough market competition

Stayzilla, Chennai-based online hotel room aggregator is shutting down operations as of Friday, CEO and founder Yogendra Vasupal wrote in a blog post. 

One of the earliest hotel room aggregators, the company started in 2005 and raised about $33 million in funding. It had to shut shop owing to tough competition from rivals and tighter business environment, Moneycontrol reported

“I would like to announce today that we would be bringing to a halt the operations of Stayzilla in its current form. This has been one of the toughest decisions that I have taken so far but it is the right thing to do,” Vasupal wrote in his blog post. He added that they would "reboot it with a different business model."

He called the lack of demand and supply for homestays in the country as a reason for the shut down. Vasupal wrote, "The travel marketplace does not have local network effects and, therefore, we can’t really take a focused city-by-city approach in terms of matching supply and demand. The demand and supply for homestays was non-existent 18 months back, excluding a few small pockets."

"As a result, we had to invest extensively in both sides of the marketplace, creating homestays as well as guests who would choose a homestay across the country. We were actually successful at this - we have created 8000 homestays in over 900 towns - but this stretched us thin."

Looking forward, Vasupal said that "I am at a crossroads. I am looking at this as a clean start to get back to the roots I am comfortable with."