Treebo Hotels, a prominent player in India’s premium-budget hotel sector, has crossed a major milestone by achieving over Rs 100 crore in revenue for the fiscal year ending March 2024. Despite this significant achievement, the Bengaluru-based hotel chain faces an uphill battle with rising expenses and mounting losses.
Revenue Growth and Key Performance Metrics
For FY24, Treebo Hotels saw a 22.5% year-on-year (YoY) growth in its revenue from operations, which surged to Rs 109 crore, up from Rs 89 crore in FY23. A substantial portion of this growth can be attributed to the company’s expanding presence in the budget hospitality space.
Accommodation services—mainly from leased and managed properties—contributed the largest share to Treebo’s revenue, accounting for 95% of its total operating income. This segment alone grew by 22.3%, generating Rs 104 crore in FY24, compared to Rs 85 crore the previous year. Additionally, non-operating income of Rs 7.22 crore boosted Treebo’s overall revenue to Rs 116 crore for FY24, marking a 23.4% increase from Rs 94 crore in FY23.
Rising Losses and Operational Costs
Despite the revenue boost, Treebo’s losses continued to rise, reflecting challenges in its operational efficiency and cost management. The company reported a 17% increase in its outstanding losses, which surged to Rs 488 crore for FY24, up from Rs 416 crore in FY23. The rise in losses highlights the ongoing financial pressure Treebo faces, despite its expanding revenue base.
Treebo’s overall expenditures also saw a significant increase in FY24. Employee benefits alone accounted for 41% of the total expenditure, growing by 7% to Rs 59 crore. Moreover, advertising costs shot up by 70%, reaching Rs 17 crore, while commission costs grew by 48%, amounting to Rs 43 crore. These increases, coupled with higher costs in areas like technology, legal, and travel, pushed total expenditure up by 22% to Rs 144 crore in FY24, compared to Rs 118 crore in FY23.
As a result of these rising costs, Treebo’s losses widened by 16.7%, reaching Rs 28 crore in FY24, compared to Rs 24 crore in FY23. The company’s Return on Capital Employed (ROCE) stood at a negative 540%, and its EBITDA margin remained in the red at -18.1%. Notably, on a unit level, Treebo spent Rs 1.32 to earn every rupee in FY24.
Financial Overview for FY24:
- Revenue from Accommodation Services: Rs 104 crore (up 22.3% YoY)
- Total Revenue: Rs 116 crore (up 23.4% YoY)
- Employee Benefits Expense: Rs 59 crore (up 7% YoY)
- Advertising Costs: Rs 17 crore (up 70% YoY)
- Commission Costs: Rs 43 crore (up 48% YoY)
- Total Expenditure: Rs 144 crore (up 22% YoY)
- Net Losses: Rs 28 crore (up 16.7% YoY)
- ROCE: -540%
- EBITDA Margin: -18.1%
- Current Assets: Rs 34 crore
- Cash and Bank Balances: Rs 7 crore
Funding and Investment Support
Treebo Hotels continues to attract substantial investment despite its financial challenges. The company has raised a total of Rs 566 crore (approximately $70 million) from prominent investors such as Accor, Elevation Capital, Matrix Partners, and Bertelsmann. The latest funding round, amounting to $16 million, was completed in June 2021, helping Treebo maintain its growth trajectory.
Competitive Landscape
Treebo faces stiff competition in the budget hospitality segment from rivals like Bloom Hotels and FabHotels. In FY24, Bloom Hotels saw a significant 73.6% increase in operational revenue, reaching Rs 250 crore, along with a profit of Rs 14 crore. FabHotels, while reporting Rs 224 crore in operating revenue for FY23, has not yet released its FY24 figures.
Funding and Future Outlook
Despite the growing losses, Treebo remains well-funded, having secured Rs 566 crore (approx. $70 million) in total funding over the years from investors such as Accor, Elevation Capital, Matrix Partners, and Bertelsmann. Its most recent funding round, which raised $16 million, took place in June 2021.
The company faces fierce competition from other budget hotel chains, such as Bloom Hotels and FabHotels. While Bloom Hotels saw a remarkable 73.6% growth in operational revenue to Rs 250 crore in FY24, FabHotels recorded Rs 224 crore in operating revenue for FY23, although its FY24 figures are yet to be released.
As Treebo continues to expand its footprint in the competitive budget hospitality space, the company must navigate its rising expenses and losses to achieve sustainable growth in the future.
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