India sets the standard for branded budget hotelsNews / DistributionBy Martin Cowen | August 30, 2015Share This article was originally published on India's online travel market continues to evolve, with an entirely new sector having emerged over the past year or so - online aggregated budget accommodation providers.The premise is simple and includes elements of the franchise model which dominated the hotel industry, particularly in the US, before the internet came along. Indian budget hotel owners can rebrand their properties, commit to providing a standard level of service and allow distribution to be managed centrally.The market leaders, if the level of investment is the deciding factor, are OYO Rooms and Zo Rooms.Both are at the Series B stage - OYO picked up another $100 million at the start of this month, bringing its total raised to $125 million. Around the same time that Zo reportedly received a $30 million Series B injection coming quickly after a similarly unconfirmed $15m Series A.Elsewhere Treebo, which is looking at aggregating hostels under a single brand and platform, raised $6 million in June.Vista Rooms is another startup entering the space, and its rapid growth is a sign of how dynamic the market is. It was set up this April and has already built up a portfolio of 450 Vista-branded properties in a matter of months.It latest funding round - confirmed but an undisclosed amount - will be used to expand its presence in smaller cities and to invest in technology.Pranav Maheshwari is one of the three co-founders of the business and is Vista's chief technology officer. He told Tnooz that technology was one of its key pitches when talking to owners and looking to persuade them to sign up with Vista rather than one of its rivals. "Most hoteliers don't understand how to digitally enable their business. They struggle with online bookings, automated check in and checkout never mind the situation around managing reviews. We talk with our partners on a constant basis and believe we can make a difference. It's not just about the price."Share this quote Vista allows its member hotels to manage inventory via an extranet, echoing the way in which OTAs such as booking.com was able to sign up loads of independent properties in Europe. But Vista and the other aggregators want to standardise the offer so that customers will have a consistent experience across all the brand's properties.Vista is partnering with hotel management company Burgeon Hotels & Resorts to offer hoteliers advice on delivering a Vista Rooms experience.Back on the tech side, Vista has a B2B partnership with leading OTAs such as Cleartrip, MakeMyTrip and goibibo, as well as offline agents - offering a wider reach. It promotes www.stayvista.com via social media and digital marketing channels.It is also working on a property management system for hotels with up to 25 rooms which will be offered as part of the package. Provisionally called "Room Controller" it will help hotels control inventory, automate email confirmations and SMS alerts and other basic property management functions.Mobile is a driving force for many of the economic changes happening in India, although Maheshwari offered a word of caution around the quality of the mobile signal in the smaller cities it was targeting."In the major cities there is no problem in terms of the speed of the mobile connection, but in the tier 2/tier 3 cities there might be some issues. For sure, in eighteen months to two years things will be better but for now we are relying on a web connection for our hotels."Maheshwari does not think that this segment of the market is anywhere near saturation, despite the flurry of activity. "The market is huge," he insisted. "We think there are around 150,000 properties in India which could move over to this branded sector. The major players have got say 2,500 between them so we've just scratched the surface."One possible headwind for the aggregated accommodation sector is that maybe not all hotel owners want to be part of a chain. This references the difference between Europe - where most hotels are independent - and the US - where chains dominate.The budget hotel sector generally is quite buoyant in India - Stayzilla is a startup which specialises in alternative stays, not necessarily the branded properties offered by OYO and Vista. It talks about homestays, houseboats and hostels and picked up $15 million Series B funding this February.And Yatra.com has joined the conversation this week, saying that despite all the fuss about the branded sector, it has the biggest selection of budget properties with more than 40,000 three-star and below properties on its books. It wants to get this number up to 60,000 by the end of the year.The emergence of this concept over the past few months highlights the massive potential that exists within the hotel space in India. Vista Rooms' primary market is Indian domestic travellers but over time the idea of a chain of branded budget accommodations - where guests know exactly what they will get - could appeal to inbound travellers as well.But as Maheshwari noted, the surface has only been scratched and, as the investors will no doubt have noticed, the idea will scale quite nicely, providing the hotel owners buy in.