Published on : Friday, September 1, 2017
Treebo Hotels representing one of the most prominent members of the emerging budget hotel networks has just cracked a $34 million deal in Series C Round.
This new deal was led by Karst Peak Capital and Ward Ferry Management that are two Hong Kong PE firms that have witnessed participation from existing investors SAIF Partners, Bertelsman India Investments and Matrix Partners India. Prior to this deal, two-year-old Treebo was capable of raising as much as $23 million including its $17 million Series B round last year.
Startups like OYO and Treebo that had raised more than $250 million from investors like Sequoia and Softbank have been coming up to offer a technology-enabled response to the complication of vastly differing quality of hotels all across India.
They have proposed a standard for visitors including bedding that is clean, clean linen, free WiFi and many more facilities for a price range of 1,000 to 3,000 INR or approximately $15 to $50 per night.
Furthermore, they would even utilize a mobile app as a virtual concierge service system that would assist with the check-in, orders, answer questions and more.
The central aim of the idea is to set standards where none of them actually exist in reality. While that might not be sounding very impressive in the Western context, anyone who has travelled in India or other portions of Asia would be able to achieve the peace of mind that these guarantees can offer.
Treebo also claims to provide about 300 hotels including more than 6,000 rooms in over 50 cities in India.
Rahul Chaudhury who is the co-founder told the media last year that the country of India presents large opportunities that can be easily dealt with. He has been estimating that budget hotels represent 65% of the national hotel market implying that about $15 to $20 billion is spent every year in this sector.
Treebo currently operates a full franchise model that means that it works with an exclusive strategy with the owners of hotels to offer the best branding, customer acquisition channels, management software and more. In exchange, it takes a revenue cut that can be as high as 40%.
OYO and others operate partial inventory, permitting certain rooms at a hotel to be available through other platforms.
But then, they have started to move in the same direction as Treebo. Earlier this year OYO had mentioned that it had 30,000 rooms under full inventory. But then, it is yet to be clear as to what portion its total reach constitutes.
Tree also declared that it is planning to utilize its fresh capital to work on customer experience and improve it to a large extent as well as improving their marketing policies.
This year, it has started using television advertising, thanks to Irrfan Khan, a high-profile actor who has been roped in for this purpose.