FabHotels, a Gurgaon-based online budget hotel aggregator has secured Series B funding of $25 million from Goldman Sachs, reports Livemint. Accel Partners, an existing investor, also participated in the round. With the fresh funding, the company is looking to double the number of hotel rooms on its platforms, and strengthen its presence in select cities, the report added.

Started in 2014, FabHotels is an online aggregator for hotel rooms, which aims to provide standardized services at economical budgets. To do so, it partners with hotel owners and takes over full inventory. FabHotels claims to offer a better experience than other hotel aggregators by entering into franchise agreements with hotel owners. It charges a franchisee fee of around 20% of the monthly revenue. Rooms booked through FabHotels cost about Rs 1,800 to 2,000 per night on an average. The company claims to be earning revenues worth $1 million a month and has an occupancy rate of 83%.

Having raised a total funding of $35 million, including its the recent funding, FabHotels works with about 225 hotels across 20 cities. It is worth noting that the hotel aggregation space is currently unregulated in India, and the Indian government is currently in the initial stages of working on guidelines for accommodation aggregators, which can have a huge impact on Fabhotels and other players in the similar segment.

 Previous funding

In February 2016, it raised $8 million (Rs 54 crore) from Accel Partners, RB Investments Mohandas Pai’s Aarin Capital and Qualcomm Ventures in a Series A round. Earlier it raised $5 million in a round of funding from Accel Partners and Kalaari Capital in May 2015.

Competition

 

FabHotels competes with the likes of MakeMyTrip-GoIbibo, Paytm, Booking.com, Hotels.com, Yatra, Airbnb, Oyo Rooms and Treebo Hotels among others.

  • OYO Rooms is also foraying into hotel chain segment. According to unconfirmed reports, Oyo is close to raising $250 million from Softbank, at a reduced valuation of $850 million. This would be its second round of funding from Softbank, after it had raised $100 million in August 2015.  
  • MakeMyTrip recently said that revenues from its hotels and packages segment increased by 22.6% YoY to $78.9 million in the quarter ending December 31 2016.
  • Last month, Airbnb tied-up with Maharashtra Tourism Development Corporation (MTDC) to list MTDC home stays on its platform. It also had signed a MoU with Self-Employed Women’s Association of India (SEWA) to expand its network of homes in rural India, in November last year.
  • Note that a hotel aggregator Stayzilla shut down operations in February this year and claimed to reboot with a new business model, but no timeline was given at that time.