PG operators in Hyd’s IT corridor under pressure to perform or lose biz

Hyderabad Family-owned hostels and paying guest accommodation operators in the city had a tough period during the pandemic. Despite business being affected by lockdowns, traditional players operating in the IT corridor had to modernise and digitise their facilities, due to high internal competition rather than the entry of tech-enabled managed-accommodations by startups. 99 per cent of business is yet with the unorganised sector while corporates have been able to garner only one per cent of the business, say PG operators in the IT corridor of Hyderabad.

In Hyderabad’s IT corridor, more than 80 per cent of PG occupants are IT and working professionals, while the rest are students. IT professionals majorly occupy accommodations set up near Gachibowli, Nanakramguda, Vinayakanagar, Indiranagar, and Madhapur among others. Hyderabad has nearly 10,000 hostels and PG’s. The IT corridor has nearly 4,000 PG’s while 700-900 paying guest accommodation operators falling under the jurisdiction of Cyberabad Commissionerate are members of the newly-formed IT Corridor Hostels Association (ITCHA).

“These corporate-run startups entered Hyderabad in 2017-18 after seeing a business opportunity and after raising huge funds from investors. Even now, post Covid, 99 per cent of business is with the unorganised sector and they have been able to gain only one per cent,” Ch Nehru Babu, Director of Atnest Private Limited told Bizz Buzz.

Startups entered the sector to encash on the gaps such as unhygienic conditions, lack of services, unappetizing food and poorly maintained properties in the unorganised sector. However, after facing a rough patch during Covid, the traditional PG operators in the IT Corridor felt the heat to modernise, digitise and operate their facilities on par with the startups.

Nehru Babu, who owns 12 facilities in the IT corridor says, they are affordable than startup-run spaces but modernised and digitised on similar lines. “Our all inclusive service is 20 per cent affordable than corporate one’s. Our facilities have RO plants and solar panels installed. The maintenance and cleaning is done on a daily basis. We resolve complaints immediately and a representative is physically present to assure the problem is taken care of. We follow security guidelines laid by Society of Cyber Security Council which closely works with Cyberabad Commissionerate. And, we have employed cooks to serve home cooked food.”

According to a real estate investment management company the poor conditions of PG homes along with scaling rentals gave birth to the need for quality student housing. Pre-pandemic, many startups ventured into the purpose-built student accommodation sector, and very few have survived to become seasoned players with large portfolios across the country.

RK Varma of RK Group of PG’s and Legal Advisor to ITCHA said, “We face very less competition from these corporates. Now all the PG’s in this area have biometric, modernised facilities, security, furnished on the level of corporate-owned spaces. People move from traditional PG’s to renting of apartments in the need of privacy. These are only five to six per cent of our customers.”

V Maheedhar, Treasurer, ITCHA (IT Corridor Hostels Association) and operator of paying guest accommodations said that during the Covid period he had to shut down four PGs while another four are functional with over 95 per cent occupancy level. He has diversified his business by opening a hotel in the city.

Varma, who owns two PG accommodations for women opposite to DLF in Gachibowli said, “Business was equal to zero during the pandemic. Now it is competitive but not because of these startups but due to the high number of traditional players operating in the IT corridor. If one PG operator charges Rs 9,000 then the other quotes Rs 8,000 for double sharing, including food.”

Competition is tough for PG and hostel operators in IT corridor. They are under pressure to perform or lose business to their competitors. They claim, due to high competition, the operators are not able to increase the accommodation price despite escalation in commodity costs and rental price of the buildings they operate in.