Budget hotel chains are fast coming up across India, and investors aren’t too shy to pump in decent capital into this emerging market segment. Treebo Hotels, a tech-enabled hotel chain, similar to the more popular Oyo Rooms, has raised a $6 million round co-led by Matrix Partners in India and SAIF.
Founded in 2015 by Sidharth Gupta, Rahul Chaudhary, and Kadam Jeet Jain as Zipotel, the chain has since been re-branded as Treebo Hotels. Similar in concept to its bigger rival Oyo Rooms, Treebo aims at providing quality, yet affordable stay to those who are always on the go. Treebo, like others in this market, aim to organise India’s hugely scattered $20 Billion hotel industry.
The company partners with small and standalone hotels to help them improve their service quality standards and also market themselves more effectively. While the company’s commission structure is unknown, it is speculated to be charging around 20%-2% commission per booking.
Its founders – Sidharth and Rahul worked as Vice-Presidents at Flipkart-Myntra and were leading several strategic initiatives for the group before starting off this venture. Another co-founder of the company, Kadam Jeet Jain is the ex-VP Engineering of MyGola.
In a short span of just two months, Treebo claims to have created an inventory of over 200 “carefully curated” rooms in Bangalore. The company is now planning to increase its inventory to over 5,000 rooms across 20 cities.
Sidharth Gupta, co-founder of Treebo, said,
Despite the availability of online booking options and third party reviews, the lack of quality assurance continues to be an unsolved problem for the traveller in this segment. This is the problem we are focused on solving.
Mayank Khanduja, Vice-President, SAIF Partners, said,
The budget hotel segment in India will continue to experience strong growth driven by growth in both business and leisure travel. The model adopted by Treebo has already seen tremendous success in China, which until a decade back was an unorganized market similar to what we see in India today. We are confident that Treebo can emulate that success in India and unlock immense value by solving a genuine problem faced by travellers today.
In the space of budget hotel rooms, Treebo Hotels will compete with Thiel Fellow Oyo Rooms, and Zostel operated controversial budget hotel chain, ZO Rooms. Oyo Rooms recently raised around $25 million from Sequoia Capital and others.