Zostel ‘pressing the accelerator on global growth’, IPO in 3-4 years, says CEO Aviral Gupta

Zostel is set to hit a key milestone this week with the launch of its 100th property, CEO Aviral Gupta told CNBC-TV18 in an exclusive interaction. The backpacker hostel chain, which operates entirely on a franchise-based model, has 29 additional properties slated for launch over the next six months as it accelerates expansion across domestic and international markets.

"We are pressing the accelerator on growth," Gupta said, adding that Zostel recently launched its first international hostel in Phuket, one of its largest so far.

The company plans to go deeper into international markets, with new hostels coming up across Bangkok, Bali, the Philippines, Tokyo, Dubai, Uzbekistan, Kazakhstan, Georgia, and Sri Lanka by 2027.

IPO plans and funding talks

Gupta said Zostel is already profitable at scale and may look at an IPO in the next three to four years. "Profitability is not a concern for us," he said. "We did invest heavily in building synergy brands like Zo House and Zo Trips, which briefly impacted margins, but all of them are now profitable."

Zostel is also in talks with venture capital and private equity firms for a fresh funding round to support its international ambitions.

Founded in 2013, Zostel has grown organically and profitably, Gupta said, mentioning that the company has never spent on marketing. "Our business model has been unit economics positive from day one," he said. "The hostels don't need external capital to grow at an organic pace."

Nearly 80% of Zostel's clientele comes from India, while 20% are international travellers. The chain maintains an average occupancy of 65-70% annually, with metros recording as high as 95% throughout the year.

Zostel's franchise programme has seen strong investor interest, receiving over 8,000 applications with $500 billion worth of investment pledges, though the company selected less than 1% to maintain brand integrity.

"We receive 25-30 new applications every day," Gupta said. "For us, the focus isn't just managing growth but choosing the right partners who align with our identity."

The road ahead

Gupta believes India's backpacking market is still 7-9 years behind Europe and Southeast Asia in maturity and contribution to GDP. "We've barely unlocked 5% of India's hostel market potential," he said, stressing the untapped tourism opportunity.

The company is working with state governments in Andhra Pradesh, Punjab, and the Northeast to develop new destinations and homestay ecosystems.

Beyond Southeast Asia, Zostel aims to enter the US by 2027, with plans to open its first Zo House in Brooklyn, though Gupta said the timeline may depend on trade issues between the US and China that have delayed a partner project.

"Our goal," Gupta summed up, "is to make Zostel a global brand that shapes how young people travel, and do it profitably, sustainably, and with the right partners."Read about our editorial guidelines and ethics policy