Hotel startups spark investor interest as leisure travel shows strong recurrence

Youth hostel brand GoStops, for example, raised $ 1 million as part of the pre-series A run by IAN and Yuj, the family office of Xander group founder Sid Yog. Treebo Hotels has raised $ 16 million in Series D led by Accor.

Pankaj Parwanda, co-founder of GoStops, said the recovery curve in demand has strengthened after the hotel sector’s second lockdown. India experienced a severe second wave of covid 19 in April and May, resulting in restrictions and curfews in several states. According to him, the world has learned how to deal with covid with a ready-made playbook that says people tend to travel when the positivity rate is low and they stay home when it is high. . This trend is being driven by the younger segment – Gen Z and Millennials – who are mobile and have no attachment to city life. Likewise, the luxury segment experiences revenge trips.

“The players in this segment are witnessing the interest of investors because there is a huge pent-up demand. Given that the real estate supply is depressed, I think this is the best time for any hotel business to acquire the offer and expand its presence across the country, ”he added.

GoStops, which operates approximately 20 properties, is looking to add 40 new properties in key leisure destinations over the next 12 months. These properties will appear in Goa, Mukhteshwar, Nainital, Dehradun, Mysore, Lonavala, Matheran and Panchgani.

“Our demand bottomed out in May, but in July we hit 25% more than our pre-covid occupancy, which also shows that the gestation period for the recovery is on the decline. At GoStops, there is a clear 3x increase in demand from June to July, ”Parwanda said.

Launched in 2014, Gostops targets young people between the ages of 18 and 35 looking for affordable housing. The company takes over the existing hotel properties and transforms them into hostels with 70% of the rooms converted into dormitories and common areas as well as a few private rooms. They are leveraging the concept of a shared economy to make high-quality, branded accommodation affordable for young travelers.

In June, Bengaluru-based budget hotel chain Treebo Hotels closed the Series D investment round 118 cr (approximately $ 16 million) from a group of investors led by the Accor hotel group. Accor’s investment is part of its broader partnership with Treebo where the latter announced it will deploy its comprehensive, cloud-based hotel management software, called “Hotel Superhero”, in various locations. Accor hotels around the world.

Treebo, which has 600 hotels across India, is also betting big on its SaaS business, Hotel Superhero, which it relaunched in July 2020. Hotel Superhero helps hotels with property management, point of sale and more. solutions for efficient operations.

“We will deploy a considerable portion of the funds raised in the construction and deployment of our Hotel SuperHero. We also plan to use these funds to make our hotel business profitable next year, provided there is not another disastrous third wave of covid. We were a striking distance from profitability of EBIDTA when the pandemic hit, but we hope to be profitable by June 2022, ”said Sidharth Gupta, co-founder of Treebo Hotels.

Meanwhile, Mumbai-based vacation home rental chain Vista Rooms has increased 10 crore of financing led by DSG Consumer Partners in January. The company invests in team building by recruiting talent from the best players in the hospitality industry, activating partners in new regions, adding 20 properties on a monthly basis and improving the technology product to offer seamless integration to our partners as well as to our customers.

“We receive 60% of reservations from locations that are now open for operations. For us, June and July 2021 are the best months in terms of revenue generation and activity compared to the other months of 2021. We even achieved record sales in these two months. We also aim to establish a presence encompassing macro markets over the next four to five months, ”Pranav Maheshwari, co-founder of Vista Rooms.

Jaideep Dang, managing director, Hotels and Hospitality Group, South Asia, JLL, a real estate consultancy firm, noted that customer preferences have changed dramatically during the pandemic. People prefer to stay in isolated low density properties and are willing to think outside the box.

“As a result, there is a good demand for luxury rental accommodation that can be booked online. This is why small luxury boutiques are doing well and, as a result, this business segment is seeing increased interest from venture capitalists (VCs), “he said.

Dang also pointed out that this model is scalable, which is of more interest to VCs.

“Plus, most of these companies are technology platforms that increase their profitability from an investor perspective. It makes sense for these players to invest in such models that are lightweight and scalable, ”he added.

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About John McTaggart

John McTaggart

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