OYO Reportedly in Talks to Acquire Rival Treebo Hotels

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.

Treebo Hotels Raises $34M from Ward Ferry, Karst Peak and Current Investors

Treebo Hotels, India’s largest budget hotel chain, has raised $34 million (INR 220 crore) in its Series C funding round led by Hong Kong-based investment firms Ward Ferry Management and Karst Peak Capital. Existing investors, SAIF Partners, Matrix Partners India, and Bertelsmann India Investments also participated in the round.

Founded in 2015, Treebo Hotels is a technology-enabled budget hotel brand with close to 300 franchisees operating exclusively under its brand across more than 50 cities. The company offers high-quality accommodation options to travelers in the Rs 1,000-3,000 per night price range.

Commenting on the fundraise, Sidharth Gupta, co-founder, Treebo Hotels said, “Ward Ferry and Karst Peak are both seasoned investors in the global markets including in the travel and hospitality space. Between them they have invested in hotel chains, cruise ships, OTAs, F&B chains, duty free shops, and several other sub-segments within the space. We are glad that our approach of building a sustainable, long-term business resonated with them. We feel privileged to have them onboard and look forward to leveraging their experience in driving business growth.”

Treebo will invest the fresh funds into enhancing customer experience, building a stronger brand, strengthening its technology team, and expanding its footprint in existing and new cities. It is already the highest-rated hotel chain in this segment as per data from review portals like TripAdvisor and Booking.com

Rahul Chaudhary, co-founder, Treebo Hotels said, “We pioneered the technology-enabled franchise-based model in the budget hospitality segment in India. We have several breakthrough initiatives in the offing to further enhance the experience we offer to our guests, and the value we create for our franchise partners. This new capital will allow us to invest in these endeavours. We are thrilled to receive continued support from new and existing investors.”

Founded in 2015 by ex-Myntra/ McKinsey/ MakeMyTrip executives, Sidharth Gupta, Rahul Chaudhary, and Kadam Jeet Jain, Treebo works with new and existing hotels on a franchise model where Treebo offers its brand name, quality oversight, access to leading vendors, staff training, and sales and marketing expertise to the property, thereby enabling higher revenues for the franchise partner and a superior experience for the customers.

Prior to this round, the company had raised a total of $23M over two rounds from SAIF Partners, Matrix Partners India, and Bertelsmann India Investments.

Treebo Hotels Raises $34M from Ward Ferry, Karst Peak and Current Investors

Treebo Hotels, India’s largest budget hotel chain, has raised $34 million (INR 220 crore) in its Series C funding round led by Hong Kong-based investment firms Ward Ferry Management and Karst Peak Capital. Existing investors, SAIF Partners, Matrix Partners India, and Bertelsmann India Investments also participated in the round.

Founded in 2015, Treebo Hotels is a technology-enabled budget hotel brand with close to 300 franchisees operating exclusively under its brand across more than 50 cities. The company offers high-quality accommodation options to travelers in the Rs 1,000-3,000 per night price range.

Commenting on the fundraise, Sidharth Gupta, co-founder, Treebo Hotels said, “Ward Ferry and Karst Peak are both seasoned investors in the global markets including in the travel and hospitality space. Between them they have invested in hotel chains, cruise ships, OTAs, F&B chains, duty free shops, and several other sub-segments within the space. We are glad that our approach of building a sustainable, long-term business resonated with them. We feel privileged to have them onboard and look forward to leveraging their experience in driving business growth.”

Treebo will invest the fresh funds into enhancing customer experience, building a stronger brand, strengthening its technology team, and expanding its footprint in existing and new cities. It is already the highest-rated hotel chain in this segment as per data from review portals like TripAdvisor and Booking.com

Rahul Chaudhary, co-founder, Treebo Hotels said, “We pioneered the technology-enabled franchise-based model in the budget hospitality segment in India. We have several breakthrough initiatives in the offing to further enhance the experience we offer to our guests, and the value we create for our franchise partners. This new capital will allow us to invest in these endeavours. We are thrilled to receive continued support from new and existing investors.”

Founded in 2015 by ex-Myntra/ McKinsey/ MakeMyTrip executives, Sidharth Gupta, Rahul Chaudhary, and Kadam Jeet Jain, Treebo works with new and existing hotels on a franchise model where Treebo offers its brand name, quality oversight, access to leading vendors, staff training, and sales and marketing expertise to the property, thereby enabling higher revenues for the franchise partner and a superior experience for the customers.

Prior to this round, the company had raised a total of $23M over two rounds from SAIF Partners, Matrix Partners India, and Bertelsmann India Investments.

Matrix Partners-backed Treebo Hotels Raises Rs 112 Cr in Series B Round

Treebo Group of Hotels, the Bengaluru-based technology-enabled chain of budget hotels, has raised Rs 112 Crore in its Series B funding round led by Bertelsmann India Investments (BII), the strategic investment vehicle of the international media company, Bertelsmann. The round also saw participation of existing investors, SAIF Partners and Matrix Partners India.

Pankaj Makkar, Managing Director of Bertelsmann India Investments, said, “Treebo is serving a huge unmet need in the budget travel space - that of reliable and affordable accommodation. Over the last one year, they have maintained razor sharp focus on delivering a great guest experience, and have extensively deployed technology in all parts of their operations to accomplish this objective. We are excited to partner them in a journey towards building the most loved consumer brand in the hospitality space.”

Founded in 2015 by Sidharth Gupta, Rahul Chaudhary, and Kadam Jeet Jain, Treebo currently has 125 hotels in 25 cities across the country in its network, making it the largest hotel chain in the sub 4-star category. The company plans to use the fresh round of funds for furthering its expansion, strengthening its marketing outreach, and reinforcing its technology leadership in the sector.

Rahul Chaudhary, Co-founder, Treebo said, “Bertelsmann is a highly respected name in the venture capital world. They are known for taking a long term view of their investments, and for supporting companies that are building sustainable, value-creating businesses. Further, their vast experience in Media will prove invaluable in helping build the Treebo brand. We couldn’t have asked for a better partner in this journey.”

Treebo offers guaranteed-quality accommodation to travelers in the Rs 1,000-3,000 price range. Its properties come with all essential amenities like clean linen, free Wi-Fi, complimentary breakfast, branded toiletries, and complimentary beverages, among others. On the hotel side, Treebo helps its partner properties drive high occupancies by improving their service standards, and by bringing them under the Treebo brand.

Explaining the model further, Sidharth Gupta, Co-founder, Treebo, said, “We pioneered the tech-enabled franchise model in the budget hotels space in India. We believe partner success is closely linked to guest experience. We have therefore built deep relationships with hotel owners by partnering with them for their full inventory, and not just a few rooms. We invest heavily in technology, analytics, quality control, and staff training to help our hotel partners. It is important for us that each and every one of our partners does well, and not just a few of them. This, we believe, is the key to ensuring a consistent, high-quality experience at all our properties.”

Mayank Khanduja, Principal, SAIF Partners, which was one of the early investors in Treebo, said, “When we first invested in Treebo it was because of the quality of the founding team, and the clarity of their approach. One year later, we are really glad to see the team sticking to the same approach, and seeing success with it. Treebo has become a trusted partner of the hotels it works with, and has shown the way to the industry by building an experience-focused brand, which others would want to emulate.”

Treebo has been at the forefront of innovations in the hospitality space. Recently, the company launched an app, called ‘Bumblebee’, to help hotels manage their day-to-day operations. This app, the first standalone tablet-based property management system seen by this industry, was a big shift away from the conventional desktop-based systems which are time consuming and limited in their functionality. Earlier this year, Treebo launched a unique, crowdsourced mystery audit program called ‘Friends of Treebo’ wherein registered members of this community stay at Treebo properties as its unannounced representatives, and give feedback to the company on their experience to enable quick corrective actions where required.

The latest infusion of funds takes the total capital raised by the company till date to Rs 150 Crore. Investec India was the exclusive financial adviser for the company for this fundraise. Treebo now plans to expand its footprint to more than 60 cities, and quadruple its current inventory from 3,000+ to 12,000+ keys across 450 properties, over the next 12 months. These cities will include a mix of business and leisure destinations. The company also plans to launch new brand extensions along the way, including a mid-scale brand and a leisure brand, while maintaining its core proposition of value-for-money across all these brands.

Tarun Davda, Managing Director, Matrix India, which co-led the first institutional round of funding in the company, said, “With its differentiated partnership model and unwavering focus on delivering a superior customer experience, Treebo has shown a tremendous ability to drive steady scale, and healthy unit economics at the same time. We are proud to see them emerge as the strongest player in this category. We welcome Bertelsmann to this partnership and look forward to building a great company together with the Treebo team.”