Hotel franchise FabHotels gets $25M in Series B financing led by Goldman Sachs

Technology-driven budget hotel franchise, FabHotels has raised $25 million in a Series B financing led by Goldman Sachs Investment Partners to further accelerate the nationwide expansion. The existing investor Accel Partners has also participated in the round of financing.

Hotel franchise FabHotels gets M in Series B financing led by Goldman Sachs

“We see significant growth potential in the budget lodging market in India and believe it is ripe for disruption. With technology at its core, FabHotels has scaled significantly within a short duration of time. We expect them to continue to transform and enhance the Indian hospitality marketplace,” said Shweta Bhatia, head of Asia investments at the Venture Capital and Growth Equity team at Goldman Sachs Investment Partners.

Founded in 2014 by Vaibhav Aggarwal and Adarsh Manpuria. Earlier, Vaibhav had co-founded Rocket Internet-backed online furniture e-tailer FabFurnish. He also had stints in Groupon and Bain & Company while Adarsh was associated with Rocket Internet Ventures and had closely worked with many of its portfolio companies, including FabFurnish, FoodPanda and Jabong.

Commenting on the fund raising, Vaibhav Aggarwal, co-founder and CEO, FabHotels said, “We have built our technology framework and operations with three core objectives: delivering a superior return on investment to our franchise partners, providing consistent high-quality experiences for hotel guests and building a strong sustainable business for everyone involved. This investment by Goldman Sachs Investment Partners will further strengthen our market leadership position, brand and expansion.”

FabHotels works on an asset-light model, wherein it uses the technology platform to promote its partner hotels with capacities of 20-40 rooms, and provides standardised services to budget travellers. The company also operates a professional training academy for hotel staff and on the ground quality control teams.

FabHotels has over 5,000 rooms across more than 225 franchise hotels in over 20 major cities across India, including Mumbai, NCR and Bengaluru.

The industry is considered to be a $20 billion market where 70% of it is in the budget segment. Therefore, there is a huge opportunity lying in this sector for startups like FabHotels and its rivals OYO and Treebo Hotels.