When you are a budget traveller, you do not want to spend too much in a room you’ll barely spend time in. Yet, if you spend below Rs 2000 on your hotel room, you can’t escape the anxiety that every budget traveller experiences before and during her trip.
Chances are the bed sheets will have stains on them, the towels will be worn out, the staff will be rude, the bathroom will be smelly and unclean, and even worse, the place may not even be safe.
These are the same anxieties that IIT Roorkee alumni, Sidharth Gupta, Rahul Chaudhary, and Kadam Jeet Jain had personally experienced on multiple occasions during their travels.
Sensing the need to cater this segment and providing the customers a sense of surety about the quality of product, the trio founded Treebo with the mission of providing a budget-traveller the best value for money by building budget hotel brand.
“While addressing the consumer’s need for a reliable experience, we are also parallely addressing the hotel owner’s need for maximum utilisation of his asset. Running a hotel is a fixed cost business. If you are able to differentiate your offering from those of your peers - by offering better quality and by being part of a known brand like Treebo - you can significantly improve occupancy and earn much more every month,” said Sidharth Gupta.
Entrepreneur India caught up with Sidharth Gupta, Co-founder, Treebo to know more about the startup business model, his entrepreneurial journey and what is his vision for 2016.
Startup work on a technology-enabled franchise model where new and existing hotels take their brand’s franchise and become its part. “Our hotel partners manage the day-to-day operations of the property as per our standards such that customers get a great experience. On the other hand we take the responsibility for generating sales for the property. Thus it is a win-win situation. We extensively use technology in all aspects of our business whether it is revenue management or quality control,” explained Sidharth Gupta.
Funding Rolling In
Recently, Treebo has raised $6 million in Series-A funding co-led by Matrix Partners India and SAIF Partners. “There are three things that matter the most to any investor - a market with a large potential, a high calibre team, and an effective and sustainable business model. In our case all three were true. Secondly, as co-founders we bring in a set of complementary skills and several years of business experience. We have also built a high-quality management team that comes from IITs/ IIMs/ Ivy League and top notch corporations including McKinsey/ HUL/ Flipkart, etc. Finally, ours is a differentiated and sustainable business model that is based on creating genuine value for the customer,” said Gupta.
They are planning to raise more funds in near future.
Obstacles to Overcome
At such an early stage of business there are multiple challenges you face everyday. You have to achieve growth, keep costs in control, maintain a great culture, deliver a great experience, keep your partners and distributors happy, etc.
But the biggest challenge in our context, and rightly so, is delivering great guest experience. There are so many things that you need to keep a close eye on and control lest they should interfere with guest experience. I wouldn’t want to wake up any day to find that even one guest had a bad experience with us. And that is why we have put in place several mechanisms to arrest this possibility.
I address such problems by bringing my team together to break these problems down into smaller, manageable chunks and root-causes.
Occupancy has steadily grown us over the last 8 months as our target customers are now well aware of Treebo brand and the quality benefits that come with it. While in the early days we used to struggle with 40-50 per cent occupancy, now we consistently do 70-75 per cent occupancy, which is roughly 2x of what other players achieve. We currently have an annualised sales run rate of $15 million. This will grow to $75-80 million by the end of this calendar year.
We are currently present in 12 cities with a network of 65 hotels and 1800 rooms in Delhi, Mumbai, Bangalore, Kolkata, Hyderabad, Chennai and all key mini metros, and is expanding its footprint rapidly. By the end of this calendar year we will expand to 18-20 cities and will grow our network to 250-300 hotels.
Journey So Far:
Running a business of your own is a process of great self discovery as well. You realise so much more about your own working style and you learn so much as you go. I have become much more appreciative of different working styles and different backgrounds by working with a diverse team. In my previous professional stints I have mostly dealt with executive teams of large corporations. Now, working with our partners most of which are small businessmen I have also come to understand this community much better and feel at ease doing business with them.