Funding

Treebo raises $34 mn in Series C funding led by Ward Ferry and Karst Peak

Sindhu Kashyap
30th Aug 2017
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The tech-backed budget hotel chain will use new funds to enhance customer experience, build its brand, strengthen its tech team, and expand its footprint in existing and new cities.

Over the past two years, budget hotel chain Treebo has been experimenting to ensure a better customer experience. Apart from brand building, focus on technology and market expansion, Treebo is now aiming to take its customer experience game further up.

With the vitamin C jinx finally breaking, it may soon be a reality.

After fintech company Capital Float and Mukesh Bansal and Ankit Nagori’s Curefit, budget-hotel tech company Treebo has raised Series C funding of $34 million led by Hong-Kong based investment firms Ward Ferry Management and Karst Peak Capital. Existing investors SAIF Partners, Bertelsmann India Investments and Matrix Partners also participated in the round.


The focus: building budget hotels

Founded in 2015, Treebo had earlier raised a capital of $23 million from SAIF Partners, Matrix Partners and Bertelsmann in two rounds of funding. With this additional infusion of funds, the total amount of funding that the Bengaluru-based budget hotel brand has raised is $57 million.

Speaking of the main purpose of this fund raise, Sidharth Gupta, Co-founder, Treebo Hotels, says, “In the past two years Treebo has grown and transformed into what it is and our focus will remain on building budget hotels. One of the biggest focus areas of this fundraiser will be to ensure a better customer service experience at our hotels. We’ve been experimenting with different models in pockets of cities like Bengaluru where our hotel density is higher. We intend to expand that to other cities.”

Enhancing the customer experience

Citing an example of one of their experiments, Sidharth explains that over the past two years the team realised that breakfast is a key driver of customer experience at their hotels. While it is difficult to control food taste and quality in different locations, the team believes that it is possible to maintain a fairly good quality standardised food service experience.

“For this, we have opened central kitchens from where food can be delivered to hotels. Central kitchens ensure that the food is hygienically prepared and distributed to different hotels. Currently, we have tried this in parts of Bengaluru and have seen a positive impact,” Sidharth explains.

However, with the number of different food operators and players in the market, wouldn’t it be simpler for Treebo to tie up with one of them? Answering this question, Sidharth says current players in the market have primarily been focused on lunch and dinner offerings, while the budget hotel experience is about the free breakfast.

“Also, we aren’t doing this as a separate revenue generation model for is it is about controlling the experience of the breakfast buffet at the hotel our customers stay. The cost is generally borne by hotel partners, and it is important that we give them something that is easy and economical. A centralised kitchen does that,” Sidharth adds.

Apart from food, another issue that the team is looking at is Wifi. Working with different technology partners, the Treebo team has developed different technology solutions, both hardware and software, for Wifi. This has helped improve signal strength at their properties, enhancing Wifi connectivity and speed.

“We are doing this on an experimental basis in cities like Bengaluru. The additional infusion of funds will help scale these to our different properties and locations,” Sidharth says.

Strengthening and scaling up

Currently operational in over 53 cities across India, Treebo plans to use this fresh infusion of capital for brand building, expanding its geographical footprint and strengthening its technology team.

Rahul Chaudhary, Co-founder, Treebo Hotels, adds that being one of the first players to break into the technology-enabled franchise-based budget hotel model, the fund raise will help them create a “better overall experience and ensure better tech strength” for their hotel partners.

A $20-billion market, the budget hotel segment has been abuzz with activity. This year, interestingly, even aggregators like OYO Rooms came up with their version of branded hotel properties that follow a full-stack model, OYO Town House.

Tarun Davda, Managing Director, Matrix Partners, India, says that as an early investor at Treebo they have seen the company grow and create a niche in the market. He adds that Treebo, with its differentiated model, has been able to drive value to its hotel partners by ensuring higher occupancy.

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