Post raising massive $1 billion recently, India’s budget hotel startup OYO is reportedly in talks to acquire Treebo Hotels, a rival firm also into affordable accommodation segment and headquartered in Bangalore, reported Business Standard citing sources privy to the development.
According to the report, while the acquisition would allow OYO to expand as well as to get an access to talent, for Treebo it will bring growth capital.
Notably, Matrix Partners and SAIF Partners are common investors in both OYO and Treebo.
If this acquisition deal goes through then this will be be the second-biggest deal in the domestic online travel market just after acquisition of ibibo by MakeMyTrip in 2016.
Founded in 2015, by Kadam Jeet Jain, Rahul Chaudhary and Sidharth Gupta, Treebo operates about 10,000 rooms across 400 properties in the country. The brand’s scale is pretty small compared to the scale OYO has managed to achieve with large funds. OYO operates about 8,700 properties in India with a strength of over 164,000 rooms. The numbers continue to expand month after month.
In October, it was also speculated that Treebo and FabHotels — an another budget hotel brand — may merge together to have a better scale and stand the growing competition from OYO. Both Treebo and FabHotels have been trying to raise funds in recent months without making much headway. FabHotels, which counts Goldman Sachs as an investor, has raised $35 million till date with last fund raise of $25 million happened in July 2017.
Treebo, which had recently acquired travel startup Events High in May this year, has raised a total of $57 million in funding over four rounds, according to data by Crunchbase. Beside Matrix and Saif, it counts Bertelsmann India Investments, Karst Peak Capital and Hong Kong-based investment firm Ward Ferry Management as its investors.
OYO, on other hand, has acquired three companies to date, with most recent one being of Weddingz in August of this year. Oyo began with one hotel in Gurgaon and has grown to 125,000 rooms in India, where it says it’s tripling year-over-year in terms of transactions. In China, where it began operations last November, it has expanded to 171 cities with 87,000 rooms. It is now in over 350 cities with 211,000 rooms.