In COVID-19 times, Unilodgers believes it has resilience

While the unprecedented lockdown across the world may have upset the calculations of short term rental company, Airbnb, the situation is completely different for a similarly structured tech platform for university student accommodation, Unilodgers.

"We cater to students who go from one country to another for higher studies. Students will continue to pursue their education. Only their movement may get delayed," Unilodgers CFO Ashish Jain said.

Unilodgers has a collection of over 350,000 student rooms across the world. Most of the student rooms though are in the United Kingdom. Incorporated in the US, Unilodgers has a 100-odd employees, most of them based out of India.

For now, it has not seen any large scale cancellations from students. "Our business is global in nature. In our largest market, sessions begin in July to September. And the general expectation is that things will be normal by then."

Jain believes the main challenge for the company is to tide over the current year. "We expect buoyancy to return to the market after the COVID situation eases. The undercurrents will be in favour of organised student accommodation.”

When asked about the impact on cash flows, he said, "Our cash flows are not dependent on the current level of business." The company raised $9 million in August 2019 and is therefore well-funded for now. Lightspeed Venture Partners and Lumis Partners are invested in the company.

Curiously enough, Jain finds that it is a mixed bag with how landlords are dealing with the rentals for the students who have plans for this coming academic session. "Most of the landlords have taken a view that these are extraordinary circumstances. Some have taken low rents, while others taken a different view."

The company, though, is thinking of paring down costs as the whole business cycle is getting stretched. So while the company expects the revenue to come in, perhaps a little late. In the meantime, the operating expenditure continues. Some items on that front are under the lens.

"For example, one big variable in our business is our marketing spend -- the digital spend to attract students to our website. That is a spend we start scaling up closer to the season. Now that the season has shifted, so we are conserving cash right now." Other than that the company has kept some expected hiring plans in abeyance.

The company is also doubling down in terms of following up on collections. With a majority of its customers overseas, where the COVID situation is far worse than it is in India, there is an effort at collection before the situation deteriorates further.

"Our collection experience (so far) is fine. We are getting regular payments. Our biggest worry at present is how quickly universities will gain the confidence to start the sessions. It would be incorrect to extrapolate this situation forever. Our worst case scenario is a few months of delay. Nothing beyond that," Jain said.

As regards student cancellations, Jain does not see the demand for student accommodation going down. "Currently, a large part of where students stay is in the unorganised sector. After COVID, there will be a heightened sense of hygiene and we see demand shifting to more formal student accommodation," he said.

Time will tell whether the second and third-order impact from the COVID-19 crisis will have any impact on the fundamentals of Unilodgers' business. For now, the team sits pretty and is confident that they will ride out the crises without too much damage.