How to decide the suitability of the system?

Gera, whose startup OxfordCaps follows a model similar to Stanza’s, agrees that compliance is indeed an issue. She says the company works with property owners and developers to sort this out.

Greenfield development

These reasons make it imperative for aggregators to have more PBSA inventory. And since the PBSA supply is limited, the solution is greenfield development—build hostels from scratch.

This is what Maleta has done. IndeCampus has a 150-bed property in Dehradun, Uttarakhand, built with students’ needs in mind. It also has a project coming up in Pune. However, since greenfield development is costly and time-consuming, IndeCampus can’t boast of explosive expansion the way Stanza can.

This is the ultimate decision—scalability or suitability. Stanza’s Dutta falls in the former camp. “I just think it’s (greenfield development) a tough business to scale,” he says. Dutta doesn’t deny the importance of PBSA though. His approach to it, though, is different. Stanza has tied up with developers to build hostels as per its specifications.

Once the property is ready, Stanza manages and operates the asset. Dutta sees a strong similarity to what happened in hotels. Real estate developers built the property, and operators such as Marriott and Hyatt managed it. Aggregators such as Stanza also have little experience in acquiring land, so the model makes sense.

Asset-light, service-heavy

Services will be key for those going the operator route, says Stanza co-founder Sandeep Dalmia. Unlike western markets where a lot of things are self-service, the idea here is enabling hassle-free living for students. This ranges from food to wi-fi to fitness and even transport. For just the food aspect, for example, an entire food and beverage team pores over the menus, deciding what makes sense for each region, and incorporating student feedback.

This extends to community engagement—activities meant to liven up the experience for residents. Stanza, for example, organizes movie screenings, game nights, dance evenings and festive celebrations. It also adds value addition to students’ prospects by organizing industry talks, alumni meets, workshops and internship opportunities.

Technology, meanwhile, allows these businesses to remain responsive on the consumer side and operationally efficient. Stanza, for example, wants to be seen on par with the best hospitality companies. Students can post complaints and feedback on Stanza’s app, with the company able to respond swiftly.

On the back-end, it helps keep things cost-efficient. “We can use data to predict that on a Thursday in a particular facility, how many people will be eating food given a particular menu,” says Dutta. This allows it to limit food wastage to just 10%, compared to 30-40% at most colleges and PGs. This sort of efficiency, says Dutta, gives Stanza one of the best operating cost structures in the market.

Amplifying the demands

BuildSupply’s Nayar, however, believes services alone aren’t enough. Eventually, he argues, services will be commoditized, and while technology will drive cost-efficiency, the property aspect itself is most important. As of now, working with developers to build supply is fine, but as developers see the returns come flooding in with these businesses, they will soon start upping their demands.

He feels that aggregation business is difficult from a management point of view as well- controlling small, scattered properties are operationally taxing. However, Dutta says that Stanza does not get into very small sized properties and would rather look at bigger properties to concentrate demand in a particular cluster.

Nayar also warns that well-heeled companies like OYO—which has mastered the art of aggregation—will also threaten student housing aggregators. OYO has already entered the co-living space through a separate brand called OYO Life and announced it intends to enter student housing. OYO Life’s website, however, only lists co-living properties at present. A detailed questionnaire sent to OYO regarding its plans in the student housing space went unanswered.