In the last three years, fashion and food start-ups in India have transformed to app-based services to leverage the e-commerce boom. Travel and hospitality is not far behind with online travel aggregators and hotel aggregators such as Makemytrip and Oyo Rooms, respectively, leading the charge. It was this crowded space, that Treebo Hotels, an online hotel-booking platform, entered in June 2015 to digitise hotel bookings and build partner and customer value. But instead of looking at an aggregator model, Treebo went for a brand-driven model. Today it has 150 hotels with 4,000 rooms under its fold.
Sidharth Gupta, along with co-founders Kadam Jeet Jain and Rahul Chaudhary, saw the opportunity in the travel industry where 70% of the market is the budget category. “Hotel industry was the only space that was not touched by technology. We decided to launch Treebo and leverage technology to improve the quality of service by hotels in India,” said Gupta.
Unlike budget hotel aggregators who sell part of a hotel’s inventory, Treebo picks up the entire inventory of the hotel, giving the property a brand name and consequent quality standards, and thus brands itself as a chain of hotels. It works on a franchise model and gives the hotel a minimum guarantee in terms of value which is equivalent to 40% occupancy of the hotel, according to Gupta. “Minimum guarantee gives some comfort to the owner and it is also important to us because it gives us additional control over the hotel business,” he added.
The Bengularu-based hotel brand, which is present in 30 cities, aims to cover 50 cities with 250 hotels by end of December. The new set of cities includes Nashik, Amritsar, Jodhpur and Lucknow. Besides its home turf, Treebo garners maximum business from Pune, Hyderabad and Chennai.
Treebo’s source of income is the commission from hotels. “We work on a revenue share model with the hotel. Whatever business is generated on the property, we take a share of the revenue, which is 18-25% of the top-line generated at the property,” Gupta said.
Treebo manages the online listings of the hotel and as well as revenue generation mechanism of all its properties. It claims that it registers 75-80% occupancy at all its registered hotels, including cancellations. The hotel clocks daily revenue of about R17 lakh if the average room value is pegged at R2,100. By the end of the second quarter of FY17, the company aims to grow its gross booking value by three times, Gupta said.
Currently, Treebo has an average occupancy rate of 3,000-3,500 rooms daily which takes it monthly booking to 90,000-100,000 rooms. Its target audience is split halfway between business and leisure.
In July this year, Treebo mopped up $17 million in Series B funding led by Bertelsmann India Investments. Existing investors Matrix Partners India and SAIF Partners also participated in the funding. The company had raised $6 million in Series A funding in June 2015.
“We will deploy the new funding towards expanding our footprint in the existing cities. Whichever city we launch, we would need manpower to manage the launch and ensure quality standards. So there is upfront investment in building the team even before we launch in the city,” Gupta said. The company would also be making sizeable investments in marketing and technology. It seeks to double its technology team to 80 people.
Treebo is betting heavily on its technology back-end to drive the business ahead. The Treebo app works on four different fronts—property management by the hotel owner, revenue management system, operation management by Treebo employees, and the customer facing platform. The Treebo website is available for bookings but the company will be launching its mobile app for customers by the end of December.
In June, the company had launched Bumblebee, a tablet based property management app for hotel owners to manage check-in, check-out, reservations, billing for F&B and laundry, etc.