Treebo lays off 150 people as budget hotels aggregator runs out of funds
Bengaluru-based Ruptub Solutions Pvt. Ltd, which operates budget hotels aggregator Treebo, has laid off as many as 150 employees following a failed bid to raise fresh capital, two people privy to the development told TechCircle.
Sidharth Gupta, co-founder of Treebo, informed employees about the layoffs in a town hall that lasted not more than five minutes on July 9, one of the persons mentioned above said. Detailed queries to Gupta did not elicit responses at the time of publishing this story.
Gupta told employees that the company made several hires in the recent past in the hope of closing the funding round but since it did not materialise, the startup was forced to let go off a large number of people to survive the current crisis.
The affected employees received an email regarding the same right after the town hall. They were asked to leave immediately after completing the exit formalities, the second person cited above said.
Treebo had an employee strength of about 750 people, and according to the two people, pink slips have been handed out to nearly 20% of its overall workforce across levels, functions and geographies.
Treebo, in a verbal communication, informed the employees that they will be given a month’s salary as severance pay, and assistance in finding new jobs.
The company manages properties in about 100 cities and has offices in 50-60 cities. Treebo may pull back from some cities and return the properties to the owners. The company managed about 450 properties across the country, of which nearly 50% were reporting losses, one of the people mentioned earlier said.
Treebo’s rival and the largest budget hotels aggregator in India OYO (Oravel Stays Private Limited) has been reaching out to the affected workforce. The Gurugram-based company has already made offers to several employees as it looks to hire for its aggressive growth drive. OYO is also making contact with Treebo hotel owners to turn them into OYO properties, said one of the people cited earlier.
This isn’t the first instance of layoffs at Treebo. The company had let go around 80 employees, representing around 10% of the total workforce, as part of cost-cutting measures around this time last year.
Treebo has been facing stiff competition from deep-pocketed and better-established players like OYO, MakeMyTrip and Yatra who are seen as the current market leaders in the hotel accommodation space.
Global players like Airbnb, Booking.com and Agoda have also set up shop in India where they are looking to expand operations through strategic investments or tie-ups.
Ruptub was founded in 2015 by former McKinsey and Myntra executives Rahul Chaudhary and Sidharth Gupta and former MakeMyTrip executive Kadam Jeet Jain.
Treebo works with new and existing hotels on a franchise model where it offers its brand name, quality oversight, access to leading vendors, staff training and sales and marketing expertise to the property.
The company’s last known funding round was in August 2017 when it raised $34 million (Rs 220 crore then) in its Series C round led by Hong Kong-based investment firms Ward Ferry Management and Karst Peak Capital.
Treebo was in advanced talks to raise up to $40 million from French hospitality chain Accor SA, The Economic Times had reported in May 2019.
The hotel chain operator had raised Rs 112 crore ($16.7 million then) in 2016 in its Series B funding round led by Bertelsmann India Investments, the strategic investment vehicle of international media company Bertelsmann. Existing investors SAIF Partners and Matrix Partners India had also taken part in the round.
In 2015, it had raised $6 million in its Series A round of funding co-led by Matrix and SAIF.
The startup reported a net loss of Rs 114. 9 crore for the year ended March 2018 compared to Rs 73.5 crore the previous year. The company's net sales for 2017-18 more than doubled to Rs 41.4 crore from Rs 17.9 crore the previous year.