Accel & Kalaari Bets On Branded Budget Accommodation Startup Fabhotels With $5 Mn Investment

With the ongoing messy relationship between the budget hotel chains ZoRooms & Oyo Hotels, there is another startup which is silently rooting out its way to lead in this category. Budget accommodation startup, Fabhotels has secured $5 Mn funding from Accel Partners and Kalaari Capital in its first institutional round of funding.

Fabhotels plans to use the infused funds to establish a pan-India footprint and going forward, it also plans to invest in consumer and operator facing technology.

Commenting on its first funding Fabhotels’ co-founder Vaibhav Aggrawal said, “We are not merely aggregating rooms, but delivering a wholesome hospitality experience to our guests. Technology can play a more encompassing role in delivering the right experience in the hospitality industry.”

Founded in 2012 by Vaibhav Aggrawal and Adarsh Manpuria, Fabhotels, earlier known as Casa2inns, is presently spread across six cities with more than 50 hotels on its platform.

We tried reaching out to the founders for further details, Adarsh Manpuria confirmed the development, however, he declined commenting further.

Prashanth Prakash, Partner, Accel Partners said, “Today’s aspirational traveller is really sensitive to the experience and lowest price is not the primary decision criterion. We are also convinced that technology is broken in hospitality industry and only a player offering a full range can comprehensively solve that problem.”

Just today, ET reported that Tiger Global may lead a $10-15 Mn round in ZoRooms and on the other side, there have been rumors that Gurgaon based branded budget accommodation marketplace OyoRooms might also get Softbank as its investors, as the latter is said to be investing over $100 Mn into Oyo, which has around 350 hotels under its brand as compared to more than 150 hotels of Zo Rooms. In a recent development, Oyo launched its mobile app to provide hassle free experience to users.

Apart from the above mentioned startups, there are couple of other startups that are also trying their way out in this space such as Awesomestays.

Ritesh Agarwal, Founder, CEO OYO Rooms opines that establishing budget hotel is very encouraging given that OYO has pioneered this opportunity of building a network of standardized and technology enabled hotels in India. “There are more startups raising funds in this space, which only validates our belief in the idea and our ability to change how and where people stay when they travel,” he added.

This particular space, no doubt has huge market to address, but with number of players in this space the cut-throat competition is here to stay. However, winner will be the one who is able to provide customer with the best of experience and obviously the quality services.

The California-based venture and growth equity firm, Accel Partners usually invests in Internet and Consumer Services, Infrastructure, Cloud – Enabled Services, Mobile and Software industries. Just recently, Accel Partners invested INR 10 Cr in UrbanClap along with SAIF Partners and founders of Snapdeal. Whereas, Bangalore-based Kalaari Capital that generally invests in early-stage technology oriented startups has invested in more than 25 startups in India. It recently raised $275 Mn (INR 1,750 Cr) for its two new funds.