Chototel, a `super budget hotel' at $2 a day to open in July

Chototel, a London-based technology start-up, will open its first hotel with 240 rooms spread across 1.5 acres and 75,000 sq ft of constructed area in Nagothane on the Mumbai-Goa highway in July. It will target the large bank of industrial workers, working within a 15-kilometre radius, travelling on the Mumbai-Goa expressway.

Chototel, which comes from the Hindi and Japanese word chotu meaning small and hotel, is a budget hotel. However, it uses technologies such as steel-framed dry construction; closed-loop, off-grid utility systems; microbots and big data processing to manage unmanned operations and billing; and real-time financial and cash technologies to address a resource-poor market.

Chototel uses an innovative construction technology called ‘Light Gauge Steel Framing’ which minimize its carbon footprint by using an environmental-friendly method that eliminates the use of bricks and wood as raw materials. With insulated walls integrated in the building design, thermal conductivity is bettered, leading to a reduction in the need for heating or cooling infrastructure, thereby saving energy. The houses are designed to consume less than a 100 watts of peak load , making it energy efficient.

Each room is 280 square feet and includes a 30 square foot pantry, a 30 square foot bathroom and toilet, a 100 square foot multipurpose room with a cupboard, study-cum-dining area and a sofa-cum-bed. The mezzanine of 80 square feet and designed to sleep two people. Bots are fitted at access points and utility flow points to control and bill services. The room comes with free television and pay-per-use Internet. Customers may hire cycles at a price of Rs. 12/day or Rs. 300/month.

Rents start at $2 a night and surge to a peak of $5 a night, which is an average of $1,000 per year. Rhea Silva, Managing Director and Founder, says, “Our model is based on an average of $3.5. We are uniquely positioned between social rental housing and super-budget hotels.”

The hotel is operated by self-help groups (SHGs) and with the help of technology they sell utilities, such as water, electricity and gas, and services. This revenue is used to operate the hotel, informs Silva.

Silva has raised $3 million for the first pilot. “Chototel is a `super budget hotel’ and an asset heavy business, unlike most of the startups that are currently attracting capital,” says Silva.

Based on current trends in urban migration and income growth, it is estimated that 440 million households - 1.6 billion people, equal to a third of humanity - will occupy crowded, inadequate and unsafe housing by 2025. The estimated cost to address this challenge is $9 - $11 trillion. Chototel hopes to capture a significant stake in this market.

The start-up is in the process of acquiring land in Chakan, Goa and Gujarat for its next round of projects in India. The company aims to build 100,000 rooms in the next five years in the country, said Silva.

Chototel has identified the UK, Nigeria and the UAE for its next phase of development. The company has targeted revenues of $1 million in first full year of operation. It is also planning to raise money to build 100,000 rooms in the next year.