Treebo — a budget hotel chain competing against Oyo Rooms, has delisted all of its properties from online travel portals Ibibo and MakeMyTrip. The reason behind the move is said to be high commission rates on both the platforms.
The company, which had listed more than 250 properties on both the platforms, decided to part ways from the largest online travel portal in India last month. While it delisted its properties on MakeMyTrip and Ibibo, it continues to list its hotels on other online travel portals, including Yatra, Booking.com and Expedia.
The news comes at a time when the Nasdaq-listed and Gurgaon-based MakeMyTrip announced that it was gearing up to focus on the budget-hotel segment. With such a move, it is aiming to take on rivals like Treebo, Oyo and FabHotels, which have established presence in the space.
Sidharth Gupta, co-founder of Treebo Hotels said,
It was a decision we mutually arrived at. We had a negotiation to reduce the commission that they charge us for selling our properties on their portal. It is currently much higher than what other domestic or international OTAs charge. Those types of commissions were not sustainable…we took a hard stance for our long term business. We are not working with them anymore.
At the time of the announcement, Rajesh Magow, CEO at MakeMyTrip India, had said,
We are going to leverage the distribution strength that we have as a combined entity, and have come up with a variant of the model that we have in the budget segment.We will go hammer and tongs after this segment.
Usually, online travel portals charges around 12-17 percent commissions. However, Sidharth Gupta says that within just one year, MakeMyTrip had escalated its commission way higher. He has not disclosed the commission rate charged by the portal.
MakeMyTrip – the largest online travel aggregators (OTA) holds about 29 percent market share in India, compared to other online travel operators. It has over 34,000 domestic, and more than 2,50,000 international hotels listed on its platform.
MMT operates two budget-specific segments — Value+, and alternate homestay-focused RightStay, while Ibibo operates budget accommodation platform GoStay.
While both Treebo and FabHotels, along with SoftBank-backed OYO, focus on the budget space, their business models are different. Treebo ties up with hotels for their entire inventory and takes revenue share of 18-25% from owners. On the other hand, FabHotels does not offer accommodations and instead it operates more as a franchisee. It allows to embedded operations of its partner hotels, while having exclusive rights to distribute their inventory.
Founded in 2015 by Sidharth Gupta, Rahul Chaudhary and Kadam Jeet Jain, Treebo is backed by Bertelsmann India Investments, SAIF Partners and Matrix Partners. Its most recent funding round was around $17 million, led by Bertelsmann.
