AK Gupta started Prakash Kutir Bed and Breakfast, a bed and breakfast (BnB) service, at his home in Hauz Khas, Delhi, just before the Commonwealth Games in 2010. It was not a success. Most foreign tourists preferred the four- and five-star hotels, while visitors from other parts of India flocked to the cheaper ones in Paharganj and Karol Bagh.
When Indian visitors did arrive, there was mutual disenchantment - he was unhappy with them and they with him. "Indians make no distinction between a home stay and a hotel and expect a 24-hour service," he says.
Most of the 400-odd people who got licences to run BnB services during the Games suffered the same fate. Two-and-a-half years ago, Gupta listed Prakash Kutir on global accommodation finder Airbnb. Since then, his guests have all been foreigners who want a glimpse of the Indian culture. He doesn't entertain Indians.
Airbnb is among a clutch of companies giving rise to the sharing economy in many parts globally. It encompasses home stays, shared accommodation, using personal vehicles as cabs, renting out personal products for short and long periods, etc. In her book What's Mine Is Yours: the Rise of Collaborative Consumption, Rachel Botsman defines the sharing economy as "a phenomenon where people participate in organised sharing, bartering, trading, renting, swapping and collectives to get the same pleasures of ownership with reduced personal cost and burden and lower environmental impact". In India, however, attempts at creating a sharing model has invariably run into problems. In cars, homes or even others, entrepreneurs have had to abandon the sharing economy model. And some proponents abroad do not even offer the option here.
Started in August 2008, Airbnb lists over 600,000 properties across 192 countries and is likely to be valued at $20 billion in a forthcoming funding round, but remains lukewarm in India. Airbnb provides a platform for prospective hosts and guests to connect with each other. Both shared and private accommodation - single rooms as well as complete houses - can be booked through its site which requires the traveller to send a request to the host and await his reply. It opened in India in mid-2012, and its performance can be gauged from the fact that its India head Amarpreet Bajaj ignored BT's repeated interview requests. (Neither does Airbnb provide any India-specific numbers.) Mohit Srivastava, former Airbnb Managing Director for the Indian subcontinent and the United Arab Emirates, says cryptically: "Consumer expectations for short stays are very different from those in long-stay accommodation. Travel is a lifetime experience and there are many more emotions attached to it."
Home stays ought to be attractive since many of them cost as little as Rs 1,000 a night while even budget hotels charge around Rs 2,500. But it speaks volumes that other companies which sought to emulate Airbnb have changed track. One such is Gurgaon-based OYO Rooms - formerly called Oravel Stays - which focused on home stays when it began in 2012, but has since shifted to conventional hotels, forging links with 115 hotels across the country offering 1,400 rooms.
CEO Ritesh Agarwal, all of 21, spells out the expectations Srivastava referred to. "When I book a room, I should get instant confirmation and the price should be predictable. When I land in a city, I should be able to locate or call the hotel easily. The hotel should meet my standards relating to temperature, cleanliness, room service and ease of check in. When I check out, I should be able to pay by credit card." Only half in jest, he adds: "I should have the right to shout at the person who serves me breakfast." Since home stays often do not satisfy these conditions, Indians have not been enamoured by them. Following its change of strategy, OYO Rooms, in its last funding round in March this year, raised $24 million, led by Greenoaks Capital.
Again, home stay hosts often lay down conditions that hotels do not. Some want only vegetarians, or teetotallers, or families - no single travellers - as guests. North Indian hosts are sometimes uncomfortable with South Indian guests and vice versa. "Often, Indians don't want a side business interfering with their daily lives," says Yogendra Vasupal, CEO, Stayzilla.com, which lists 20,000 'properties', both hotels and home stays. Travellers, too, do not like having to seek the host's permission to stay, given that they will be paying for it. They also want help of all kinds which home stay owners are not equipped to provide. "We manage the traveller's experience end-to-end, deciding the right properties to stay in through a filtering process, acting as concierge on call, checking everything, etc.," Vasupal adds. Stayzilla recently raised $20 million in PE funding led by Nexus Ventures.
Cab aggregators , too, have tweaked their strategy in India. In the West, the most popular model and the best known among them, Uber - valued at $18 billion in its last round of funding in 2014 - is that of peer-to-peer ride sharing, or private car owners registering with the company and offering rides - for a price - whenever they find it convenient. In India, the only car owners who register with Uber are those who drive for a living. "We don't do peer-to-peer in India," says Gagan Bhatia, MD, Uber, Delhi. "It is still sharing because an Uber driver can work with multiples taxi companies if he chooses. He can also choose when to be online on the system and when not." He also notes how Uber has been empowering its drivers. "We have a vehicle financing scheme to enable drivers to buy cars at cheap rates," he says. "In effect, we are turning drivers into small businessmen. Next to the US, India is where we have financed the largest number of cars."
'When I book a room, I should get instant confirmation and the price should be predictable,' says RITESH AGARWAL, CEO, OYO Rooms. (Photo: Shekhar Ghosh)
Given Indian conditions - the high cost of car ownership, the poorly maintained, chaotic roads - organised carpooling ought to have had great potential. But all the local start-ups which have tried it, such as SharedCab in Mumbai, started in October 2012, MoveInSync (earlier called in RideInSync) and Cubito in Bangalore, begun in 2009 and 2012 respectively, have moved on to offering employee transport solutions to companies. The latest entrants are Tripda from Germany, with services in 11 other countries, which entered last November, and BlaBlaCar from France, with services in 12, which came in this January. "It is puzzling why none of the start-ups in this field have taken off so far," says Samir Kumar, MD at VC firm Inventus Capital which has invested in MoveInSync. "Perhaps, it is because of the kind of society we are. Or maybe we need much more technology and higher quality apps."
What about hiring out goods? In her book, Botsman estimates the global peer-to-peer sharing or rental industry at more than $26 billion. Companies like Zilok in France and Erento in Germany have made a huge success of it; New York-based RenttheRunway, which helps people rent designer dresses for a specified period, was valued at over $220 million in its last funding round when it raised $60 million. In India, the industry is still very nascent.
Among those trying is Bangalore-based Rentongo, begun in 2012, which puts people looking to hire things like furniture, home appliances, bikes and adventure gear in touch with small vendors or individuals who want to rent them out. "The going has been tough," says founder Nikhil Chhabra, an Indian Institute of Management, Kolkata graduate. "The industry is very small. People are sceptical about sharing." If renter and hirer are located far apart, the deal also involves high transportation costs - a further disincentive. Chhabra even sought advice from Erento CEO Rob Paterson, but it has not made the going easier.
Engineering graduate Saran Shivarajan, who started the Kochi-based Kindset in 2013 to share books - and had hoped to move on to other products - has already given up. "Often the value of the product does not justify the time and effort spent in renting it. Many feel buying outright through e-commerce is a better option when products are delivered at their doorstep." Shivarajan plans to provide an online platform for making donations instead. "Philanthropy is a much better established concept in India than sharing," he adds.
'Paying guest and shared accommodation are picking up because young people are leaving their hometowns early and rentals in big cities are becoming unaffordable for them,' says PANKHURI SRIVASTAVA, Co-founder and Chief Marketing Officer, Grabhouse. (Photo: Nilotpal Baruah)
Safety, especially in shared cabs, became a huge concern after the alleged rape of a woman passenger by an Uber car driver in Delhi last December. Uber remains banned due to regulatory challenges in several global cities, including Fukuoka in south-west Japan and Thailand. Some of its specific services like UberPOP are banned in Germany and France. In India, the Uber's services along with those of other app-based taxi-services like Ola are banned until they obtain the radio-taxi licenses. The company has roped in US background screener First Advantage to verify the credentials and backgrounds of all its Indian drivers, realising that both driving licences and police verification reports can be faked or manipulated in India. It has also made all cabs registered with it install an SOS button which can connect passengers to the nearest police station as well as the mobile app Safetipin which assigns safety scores to city locations. Starting with a pilot project in India, Safetipin will also be provided in cities like Colombian capital Bogota and Kenyan capital Nairobi.
Some others are using social media for basic profile checks. Tripda only accepts passengers with Facebook accounts so that those sharing rides can check one another's profile information. It verifies email addresses and mobile numbers of drivers and passengers. It also has a 'women only' carpool service with women drivers. But people can lie while setting up their profiles and most players agree there is no foolproof background check available.
Ray of Hope
Still, share economy proponents have not given up and are banking on the fact that 65 per cent of India's population is below 35. "The younger people are, the easier it is to change the way they do things," says Pedro Meduna, Global CEO, Tripda. "With the highly developed tech scenario in India, the sharing economy has a lot of potential." And in fact, the long-term accommodation sharing segment - as distinct from short-term home stay - where young people predominantly are involved, is showing some hopeful signs. An example is Bangalore-based start-up Grabhouse, started in July 2013, which lists paying guest accommodation and apartment sharing opportunities in the cities of Bangalore, Mumbai, Pune and Hyderabad. It has 58,000 properties listed, adds around 900 new ones a day, and gets about 1,000 to 1,200 daily enquiries.
'In the west, people have no hang-ups about driving others around. That is unthinkable in India,' says GAGAN BHATIA, MD, Uber, Delhi. (Photo: Vivan Mehra)