Online aggregator for branded budget hotels Treebo raises $6M from Matrix and SAIF

Bangalore-based online startup aggregating budget hotels under a single brand Treebo Hotels has raised $6 million (Rs 38 crore) in its Series A round of funding co-led by Matrix Partners India and SAIF Partners, the company said on Tuesday.

The firm will use these funds for expanding its network of hotels, developing technology and hiring top talent.

The startup was founded in March 2015 by Sidharth Gupta, Rahul Chaudhary and Kadam Jeet Jain.

Before launching this venture, Gupta and Chaudhary worked as vice-presidents at Flipkart-Myntra leading several strategic initiatives for the group and were colleagues at McKinsey & Company before that. Their co-founder and fellow alumnus from IIT Roorkee, Jain comes with nine years of startup experience and until recently was the VP engineering for MyGola, an online travel company that was acquired by MakeMyTrip earlier this year.

Treebo offers a branded chain of affordable hotels to travellers. The company partners with small, standalone hotels and helps them improve their service quality standards and also market themselves more effectively with the use of technology.

"Currently there are upwards of 10 lakh budget hotel rooms in India. But 95 per cent of them are in the unorganised segment. Therefore, despite the availability of online booking options and third-party reviews, the lack of quality assurance continues to be an unsolved problem for travellers in this segment. This is the problem we are focused on solving. We believe there is a huge untapped opportunity in this space and ability to deliver great customer experience will be the key success factor," Treebo Hotels co-founder Sidharth Gupta said.

The company has an inventory of 200 curated rooms across four properties in Bangalore. It plans to scale this to a network of 5,000 rooms across 20 cities in one year.

"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 unorganised 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," said Mayank Khanduja, vice-president, SAIF Partners.

The online branded budget hotel aggregation business is seeing steady activity with Treebo being the third venture to raise venture funding.

Delhi-based Oravel Stays Pvt Ltd, which runs an online marketplace for branded budget hotels OYORooms.com, raised Rs 150 crore ($24 million) in a new investment round led by Greenoaks Capital.

Zostel Hospitality Pvt Ltd, which offers separate booking platforms for branded hostels and budget hotels, is in talks with Tiger Global, among other investors, to raise $10-15 million in a Series A round of funding. It had last year raised angel funding for its hostels business and is currently aggressively expanding its budget hotel business under Zo Rooms brand.

Recently, Royal Orchid Hotels' co-promoter Keshav Baljee floated a similar venture under ZiP Rooms and is aiming to offer 10,000 rooms in over 100 cities by the current year-end.