Budget accommodation startup, FabHotels, has raised $8 Mn (approx INR 54 Cr) in a Series A round of funding from Accel Partners and RB Investments. Mohandas Pai’s Aarin Capital and Qualcomm Ventures also participated in the funding round.
FabHotels partners with smaller hotels with the aim of providing standardised services to budget travellers. It charges hotel owners a franchisee fee of around 20% of the monthly revenue.
According to co-founder Vaibhav Aggarwal, FabHotels’ franchisee model is different from OYO’s partial inventory model. It gives it better control over two critical parameters – customer satisfaction and RevPAR (revenue per available room).
He further said, “Each of these corresponds to two stakeholders – the customer and the hotel operator. To be able to build a successful business, you need to build both these legs. You need to have a highly consistent experience for the consumer and you have to have a very high RevPAR in the industry.”
The startup will use the newly raised funding for brand building and to expand its network. It is aiming to reach 100 hotels by September.
Prior to this in May 2015, FabHotels raised $5 Mn funding from Accel Partners and Kalaari Capital.
Also, earlier this year in April 2016, competitor OYO Rooms raised $100 Mn in its fifth round of funding from existing investors including Japan’s Softbank, Sequoia Capital, Lightspeed Venture Partners, Greenoaks Capital, DSG Consumer Partners and Venture Nursery. Other startups in this segment include Wudstay Hotels, Treebo Hotels and GoStays, etc.
The development was reported by LiveMint.
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