Budget hospitality chain Treebo Hotels has raised $6 million (about Rs 44 crore) in fresh funding led by its existing set of investors – Matrix Partners India, SAIF Partners, Ward Ferry and Bertelsmann India, the Bengaluru-headquartered company announced on Thursday.
The latest round of financing comes more than three years after Treebo raised $34 million in its Series C funding round from Hong Kong-based hedge funds Ward Ferry Management and Karst Peak Capital. In June, the company was also reported to have raised Rs 22.5 crore from Bertelsmann BV, SAIF Partners, and Matrix Partners.
Treebo, which operates 600-plus hotels, spread across more than 100 cities in the country, competes with the likes of SoftBank-backed Oyo Hotels & Homes and Fabhotels. The company will use the proceeds to further ramp up its technology product suite, with a focus on its SaaS business, Hotel Superhero, it said in a statement.
The company had stated that the SaaS business, which was launched last year, planned to monetise the same by selling or licensing the technology to other independent hotels and hotel chains.
“Before the pandemic unfolded, Treebo had a strong growth trajectory and we were well on our way to hit EBITDA profitability within this calendar year. Our EBITDA loss in February, for example, was under Rs 10 lakh – an improvement of 95% on a year-on-year basis. While Covid has delayed our breakeven timeline, we are confident about the long-term prospects of the business and once things get better, I am confident we will resume our march towards profitability,” Sidharth Gupta, co-founder of Treebo, said
Globally, the travel and hospitality industry has been among the hardest hit by the ongoing pandemic, with recovery to pre Covid-19 levels expected to take place by 2023 only, according to a report published by global consultancy McKinsey.
“While it’s true that the travel sector is severely impacted by Covid, we believe this impact is temporary. When people start traveling 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,” Mayank Khanduja, managing director at SAIF Partners, one of Treebo’s investors, said.
Treebo reported revenue of Rs 77 crore for the financial year 2018-19, a 63% jump from the previous fiscal. It recorded net loss of Rs 118 crore for FY 2019, according to documents accessed by business intelligence platform Tofler.