The $700 million bet on Treebo and FabHotels

The two budget hotel chains have roared into contention over the last six months. And the duo believe that they can come out trumps in their segment

The online hotel segment is set to grow to gross bookings worth $10.9 billion (about Rs 65,000 crore) by 2020

Typically, unorganised budget hotels run at 40% capacity. It, more or less, helps them break even

FabHotels earned Rs 20.9 crore ($3.2 million) from operations in FY16. But it gave up Rs 23.9 crore ($3.7 million) as part of its revenue share agreement with these hotels. Treebo had similar numbers

In this internet-led budget hotel chain business model, there is nothing to upsell or bundle. So there is a little room to make more money on the originally decided upon take rate

Vaibhav Aggarwal, the founder and CEO of FabHotels, sits quietly in his cabin in Udyog Vihar, Gurugram. He has an unopened bottle of cold pressed juice sitting on his table and an uneaten apple lies forgotten on a chair leaning against a laptop bag. His glass-walled cabin has a table and a few chairs. There is barely anything else of note, except Aggarwal’s laptop and his phone. It is charging.

AUTHOR

Patanjali Pahwa

Patanjali has spent over seven years in journalism. He last worked at Business Standard as Principal Correspondent, where he wrote on startups, e-commerce companies and venture capital. He has worked at an array of institutions, which include Forbes India, Caravan and Outlook Business. He is a Mumbaikar, born and brought up. Patanjali did his BSc in IT from Mumbai University and then got his journalism degree from IIJNM in Bangalore. He is enamoured by Ernest Hemingway and Tom Waits and may try to sneak in references to them in his stories.

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