[Funding alert] Treebo Hotels raises $6M in new round from Matrix Partners, SAIF Partners, and others

Treebo Hotels — the Bengaluru-based mid-scale hotel startup — on Thursday said it has raised $6 million in a new round of funding from existing investors, including Matrix Partners India, SAIF Partners, Bertelsmann India Investments, and Ward Ferry.

With this funding, the hospitality startup aims to focus on strengthening its defences against the COVID-19 pandemic, which has significantly impacted the travel sector. In a statement, it said the investment would be used to continue building cutting-edge technology products for its business.

In a conversation with YourStory, Sidharth Gupta, Co-founder, Treebo Hotels, said, "For any travel and hospitality company, the ability to survive for the time the crisis continues to play out, and come out on the other side to benefit the spike is important, and that spike is bound to happen. During this long weekend, we saw a big spike, and this will only increase when a vaccine is announced or when the number of cases declines.

"We already were working on a lean cost structure; we had reduced our cost. While we were heading in the right direction in terms of revenue growth, COVID-19 hit. But our work on reducing cash burns earlier worked to our advantage," he added.

In April 2020, Treebo had asked its employees to opt for voluntary resignations while the founders took a 60 percent pay cut. At present, it has a portfolio of over 600 hotels in 100 cities. Before the pandemic, Treebo had reduced cash burn by 80 percent, and is now looking at different revenue moats towards scale.

The latest funds — which is raised after three years — will also be used to build its SaaS product Hotel SuperHero — a hotel management software that Treebo has been selling to independent hotels. "We will now even be looking at the organised hotel chains as our clients. The funding will also aid us in hiring more people on the tech team," Sidharth said.

“While the last few months have been difficult for many companies, it has forced everyone to focus on what truly matters. For Treebo, that is providing world-class technology solutions to its hotel partners to enable them to compete in a post-COVID world,” said Tarun Davda, Managing Director, Matrix India.

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In a statement, the startup also said that it also launched Treebo Hygiene Shield to build strong safety protocols in the face of the pandemic. All operational hotels of the startup are regularly audited on their compliance of COVID-19 related safety standards, and are accordingly given a gold or platinum hygiene shield rating on the website.

Mayank Khanduja, Managing Director at SAIF Partners — one of Treebo’s investors — said, “While it’s true that the travel sector is severely impacted by COVID-19, we believe, this impact is temporary. When people start travelling again, they will look to stay with trusted brands rather than looking for the cheapest alternative or taking a chance with a mom-and-pop hotel. This is where Treebo’s strength lies. They have built a loved brand, which will likely see a spike in customer uptake and revenue once the pandemic recedes." 

Treebo's EBIDTA losses in February 2020 were down to Rs 10 lakh from Rs 5 crore earlier. The startup had been looking for profitability in 2021, but it was delayed due to the pandemic. Treebo, however, is positive that the hospitality industry will soon grow, and it can march towards profitability soon.