Micro-hospitality start-up Saffron Stays is targeting family offices to raise $7 million from institutional investors by the end of the year to scale up its operations.

Acquisition

After being bootstrapped, the three-year-old start-up, which rents out property owned by celebrities and HNIs as vacation homes, is also eyeing an overseas foray by acquiring similar companiesin South-East Asia. Deven Parulekar, Founder, Saffron Stays, said: “We are open to acquiring vacation-ownership companies in South-East Asia as there is demand from India from vacation homes in this region. There has to be brand fit, and ideally we are seeking out vacation-ownership companies that have at east 15-20 homes with them. In India we would be scaling up the number of homes from 50 to 125 this year, and expect to have 1,000 homes in the next seven years.” Claiming to be a profitable venture, Saffron Stays currently has a revenue of ₹5 crore, of which, 25 per cent is attributed as profits.

“We would look at raising Series A by the end of the year to raise about $7 million as we want to scale up the number of homes. It is difficult to expand easily in this business as there are manpower challenges with the need to recruit local staff to manage the homes,” he said.

Saffron Stay claims its current valuation is at about ₹60 crore, which is almost 12 times its revenue.

“We are seeking investments from family offices as they would be the right of investors for business,” he said.

Saffron Stays gets almost 80 per cent of its bookings through its own site, and less than 10 per cent comes from other sites such as airbnb.

Globally there has already been consolidation in this space with airbnb acquiring vacation home company Luxury retreats.com and the Accor Group buying out Onefine stay.com.

“We may look at a sale about a decade from now as internationally there is already consolidation in the vacation ownership category,” he added.

However, GST is likely to take toll on the category, as it has been clubbed with 5 star hotels at 28 per cent. With average rates at ₹7,520 for a night, it may find it difficult to compete with global companies based in Europe, the United States and China.

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