Over 330 million households worldwide suffer from some form of housing poverty. If left unaddressed, this could affect a third of the global urban population. Moved by these shocking statistics, 24-year-old hotelier Rhea Silva began building her mini-empire of high-tech affordable accommodation
Urban sprawl and homelessness go hand in hand.
In effort to provide affordable housing for the world’s poorer urbanites, Rhea Silva set up Chototel, the world’s first super-budget residences. The name says it all, formed from the root word “choto” – meaning small in Hindi and Japanese – and, of course, “hotel.”
We speak to Silva on her business aspirations and how she sees this ultra-low-cost business model taking off.
Name: Rhea Silva
Location: 1 Primrose Street, London
Date Launched: 1st December 2015
Number of employees: 50
What does your business do?
We are building accommodation for urban service workers, price out of the private rental sector. A night’s stay in a UK Chototel will cost £5 to £8 per night. At that price point we are able to offer the dignity of clean, safe and affordable accommodation to those priced out by high house prices and soaring rents.
We use innovative technologies, including a closed-loop off-grid utility system and micro-robots to run the hotels with minimal labour and costs.
We are planning pilot projects in India, the UAE and in the UK. Our first project, in Nagothane near Mumbai, opens to guests this month.
Where did the idea for your business come from?
I’ve had experience in running a 250-room hotel and also building affordable housing. The option to merge the two business models offered efficiencies that were unique, in the sense that one could use the low-cost strategies of affordable housing with the service delivery functions of a hotel to serve the poor.
How did you know there was a market for it?
The demand for affordable housing solutions became clear to me whilst living in India and seeing the effects of rapid urbanisation first-hand. I became aware of the enormous scale of the issue and the need for a solution. It is reported that by 2025, 440 million households will be substandard, equal to one-third of urban humanity.
How did you raise funding, and why?
We raised our first $3 million from friends and family. We are currently undergoing a raise of $5 million to fund the Indian pilot. In the 4th quarter we propose to raise $1 million to fund the UAE and UK pilots.
Describe your business model in brief.
Chototel hotels will have two sources of income: the rent – which, in India for example, starts at $2 a night (USD) and can surge to a maximum of $5 – and income generated from utilities (such as the solar panels and water plants) and services, (such as the crèche and community kitchen).
The income generated from the rent will be directly cascaded to investors, while the income generated from the utilities and services will be reserved to pay for the hotel’s maintenance, contingency and employees’ wages.
What was your first big milestone and when did you cross it?
Our first milestone was raising the first tranche of US $3 million, which happened in January this year.
What advice would you give to other entrepreneurs?
Stay positive, stay healthy and never ever ever run out of cash.
Where do you want to be in five years’ time?
In five years, Chototel could potentially be the world’s largest hotel company with at least a million rooms.
If you weren’t an entrepreneur, you would be…
An elephant because they have many different strengths: elephants empathise, elephants travel, elephants are strong yet gentle. What a beautiful way to traverse the earth.
What is your philosophy on business or life, in a nutshell?
Unless you fail, you will never know how to succeed. Failure is a stepping stone and a valuable learning experience. In order to succeed, you need to have a clear, inspiring goal. Real success has to be meaningful and purposeful in order to ensure all stakeholders are inspired to work towards the success of the enterprise.
