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Budget Beds With Veg Buffets At India's Byke Resorts

Middle-class leisure tourism in India is taking off. And Anil Patodia, managing director and CEO of Byke Hospitality, is after that market with nine properties across resort and religious destinations from Goa in the west to Jaipur in the north.

He’s carved out a clearly defined niche for Byke: budget hotels in the $50-per-night category that are nice, clean and strictly vegetarian. The model has paid off. Revenues at the Mumbai company have grown at a 42% clip over the last three years, hitting $30 million for fiscal 2015. Profits rose nearly sevenfold to hit $3.2 million in the same period.

This earned a spot on FORBES ASIA’s Best Under a Billion list last year, and the trajectory is continuing. “Byke has a healthy balance sheet with near zero-debt status,” says Neeta Khilnani, research analyst at Mumbai’s Ventura Securities. “It has an asset-light business model with seven of the nine resorts operating on a lease basis.”

 That last part is key. Patodia, who turns 47 this month, argues that if you have to buy large hotel properties you’ll never make money because of land costs. So he came up with a lease model: Scout for distressed budget hotels in leading tourism destinations, take them on long-term leases, renovate them at a low cost and then run them under the Byke brand. Lease costs for a resort, Patodia figures, are roughly 15% of revenues. So big capital isn’t needed for expanding. That’s important in a growing sector. Spurred by rising disposable incomes, domestic travel spending is expected to hit $128 billion in 2020–up from $89 billion in 2015.