India’s Treebo Hotels nabs $16.6 mln Series B led by Bertelsmann

Indian budget chain Treebo Group of Hotels raised 112 crore rupees ($16.6 million) in a Series B funding round led by Bertelsmann India Investments, a strategic investment vehicle of international media company Bertelsmann. Existing investors SAIF Partners and Matrix Partners India also participated.

PRESS RELEASE

Bangalore, 22nd July 2016: 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.”

About Bertelsmann India Investments
Bertelsmann India Investments (BII) focuses on series B and C stage investments in pioneering companies in the digital, education, media and services sectors. Since its official launch in 2012, BII has invested in 10+ companies including Saavn (music streaming service), Pepperfry (online furniture marketplace), iNurture (higher education services) and most recently Lendingkart (digital lending platform for SMEs). BII is part of Bertelsmann Investments, which houses the group’s other corporate funds such as BAI (China), BDMI (US and Europe) and BBI (Brazil) and cumulatively has more than 100+ investments. Further information is available at www.biifund.com.

About Bertelsmann
Bertelsmann is a media, services and education company that operates in about 50 countries around the world. It includes the broadcaster RTL Group, the trade book publisher Penguin Random House, the magazine publisher Gruner + Jahr, the music company BMG, the service provider Arvato, the Bertelsmann Printing Group, the Bertelsmann Education Group, and Bertelsmann Investments, an international network of funds. The company has 117,000 employees and generated revenues of €17.1 billion in the 2015 financial year. Bertelsmann stands for creativity and entrepreneurship. This combination promotes first-class media content and innovative service solutions that inspire customers around the world.

About SAIF Partners India
SAIF Partners is a leading venture capital firm with over $4B under management. SAIF provides seed, early, and growth stage capital for emerging companies in India and China. SAIF began partnering with entrepreneurs in India in 2002 and has backed over 40 companies since then including market leaders like MakeMyTrip (NASDAQ listed, online travel), JustDial (NSE listed, online classifieds), PayTM (e-commerce and payments), BookMyShow (events ticketing), and Urban Ladder (home decor e-commerce), PropTiger (online real estate) among others.

About Matrix Partners India
Matrix Partners India is an investment firm with INR 4,500 crore under management. The firm invests in companies targeting the Indian consumer market at the seed, early and early growth stages. The firm has invested in several market leading companies in the consumer technology space including Ola (local transportation), Quikr (online classifieds), Practo (doctor search engine), Stayzilla (short-term accommodations marketplace), Dailyhunt (mobile local language platform), LimeRoad (mobile social commerce marketplace), Housejoy (local services marketplace) and Mswipe (mobile POS) among others. Matrix Partners has a global network of funds investing in the US, China and India with US$ 4B under management. Further information is available at www.matrixpartners.in