FabHotels nabs $25 million Series B

FabHotels, one of India’s technology-driven budget hotel franchise companies, has raised a further $25 million and has earmarked the cash to expand the portfolio and to increase its technology team.

The Series B funding was led by Goldman Sachs Investment Partners, with current investor Accel involved. Accel was part of Fab’s $8 million Series A round last June.

The business was set up in 2014. It operates like a franchise business, partnering with unbranded budget hotels which then operate under the FabHotels marquee, getting access to Fab’s direct and third party distribution channels. Guests get consistency of service.

Fab’s estate currently comprises 225 hotels in 20 Indian cities, providing some 5000 rooms. It is looking more at corporate than leisure guests and is concentrating on building its presence in business hubs.

CEO Vaibhav Aggarwal told Livemint that the chain is currently seeing an occupancy rate of 85% at a average daily rate of INR2000 ($30), “the highest in the segment.”

Goldman’s head of Asia investments at its venture capital and growth equity team Shweta Bhatia said: “We see significant growth potential in the budget lodging market in India and believe it is ripe for disruption.”

Branded online budget hotel aggregators in India emerged a few years ago. OYO Rooms is the market leader and has picked up some $200 million in funding so far, led by Japan’s Softbank.

Related reading from Tnooz:
Zen Rooms attracts $4.1 million Series A (April17)
NIDA Rooms secures $5.6 million to grow branded hotel platform (Feb17)
German media giant invests in Indian budget hotel startup (July16)



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