Treebo Hotels, a Bengaluru-based premium-budget hotel chain, said it had crossed the ₹100 crore revenue mark for the fiscal year ending March 2024. The good news came with a catch-the company’s total outstanding losses rose to ₹488 crore, a 17% increase from the previous year.
PC: The Economic Times
Treebo’s revenue from operations stood at ₹109 crore in FY24, as against ₹89 crore in FY23, an increase of 22.5%, according to the consolidated financial statements submitted to the Registrar of Companies. Income from accommodation services accounted for 95% of the total revenue and rose by 22.3% to ₹104 crore, reflecting the chain’s success in attracting guests and filling its rooms.
Besides accommodation, Treebo also earned revenue from product sales and subscription services. The company reported another ₹7.22 crore in non-operating income, taking its total revenue to ₹116 crore for the fiscal year, up from ₹94 crore in FY23.
Despite the revenue growth, Treebo’s financial health has been impacted by increasing operational costs. Employee benefits accounted for 41% of the total expenditure, which increased by 7% to ₹59 crore in FY24. Advertising and commission costs also witnessed significant increases, with advertising expenses rising by 70% to ₹17 crore and commissions increasing by 48% to ₹43 crore.
Overall, Treebo’s total spend went up by 22% to ₹144 crore in FY24 from ₹118 crore in FY23. This was because advertising and commission spends had risen together, causing a 16.7% increase in losses to ₹28 crore in FY24, as against ₹24 crore in FY23. ROCE and EBITDA margins stood at -540% and -18.1%, respectively, indicating ample scope for operational efficiencies to improve.
Treebo faces competition from others in the budget hotel space, particularly Bloom Hotels and FabHotels. In FY24, Bloom Hotels had performed well with 73.6% growth in operational revenue and ₹250 crores, as well as profits of ₹14 crores. FabHotels reported ₹224 crores of operating revenue in FY23; however, their FY24 performance is yet to be disclosed.
Since its inception a decade ago, Treebo has successfully raised ₹566 crore or approximately $70 million from investors ranging from Accor, Elevation Capital, Matrix Partners to Bertelsmann. The last major fund raised was some $16 million in June 2021.
Looking ahead, management at Treebo will face a dual challenge: sustaining revenue growth while managing the rising costs and losses. It will have to look for strategic initiatives to improve operational efficiency in the hotels and possibly in controlling costs and marketing spend to boost profitability.
Treebo Hotels’ achievement of crossing the ₹100 crore revenue milestone is commendable, but the concurrent rise in losses poses challenges that must be addressed. As the company navigates this complex landscape, its ability to balance growth with effective cost management will be crucial for its long-term sustainability and competitiveness in the ever-evolving hospitality sector.
