Treebo raises $6m as India’s hostels get professional
Interest from investors in the Indian accommodation sector shows no sign of slowing down, with Treebo picking up its first funding round – $6 million from SAIF and Matrix Partners India.
The Bangalore-based startup operates a chain of budget hostels under the Treebo brand, but it also works with other properties in the sector on service, distribution, marketing and IT.
A statement said the money raised will be used for “expanding its network of hotels, developing state-of-the-art technology and hiring top talent.”
Treebo has four hotels in Bangalore, providing 200 rooms, available on the site. It hopes to expand this network to 5,000 rooms across 20 cities over the next year.
The backers have experience in the Indian online travel sector. SAIF’s investment include leading OTA MakeMyTrip while Matrix holds a stake in taxi app Ola.
Matrix is also active in the online budget branded hotel aggregation sector. It was an early stage investor in Stayzilla and was part of its $15 million Series B round earlier this year.
Stayzilla’s model is slightly different in that it does not have branded hotels and operates a distribution platform and partner for “alternative” accommodation in India.
OYO Rooms is another well-funded virtual hospitality brand in India. It raised $25 million this March and was reportedly in talks with Softbank for another $100 million.
But the startups face stiff competition from the incumbents – with leading OTAs such as MakeMyTrip also interested in the budget and alternative accommodation sector. One of MakeMyTrip’s corporate goals is to get more hotel inventory onto its market-leading portal.
MakeMyTrip has also invested in Simplotel, another Bangalore-based tech start-up. Simplotel works with individual properties on their web presence, marketing and distribution, offering a similar service to Treebo.
But even with these players – and more – active in the market, there is little sign that it is starting to get crowded. Treebo’s co-founder Sidharth Gupta says there are a million budget hotel rooms in India, 95% of which are “in the unorganized sector.”
That is a lot of fragmentation, and a lot of business for someone with the right technology and sufficient funding to chase.
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