industry

Fab Hotels plans to double inventory by 2019


NEW DELHI: Fab Hotels, which operates primarily through franchising arrangements, plans to double its inventory to 20,000 rooms by the end of next year.

“We have about 10,000 rooms across 450 franchising hotels. We don’t do aggregation. We want to double the inventory next year to 20,000 rooms,” said Vaibhav Aggarwal, cofounder of Goldman Sachs and Accel Partners-backed Fab Hotels.

Aggarwal said the company will also add some business and leisure cities. “We will add another 20 cities to the current 40 cities we are present in. We are looking at expanding to locations like Manali, Shimla, Vadodara, Coorg, Raipur and Nagpur,” he said.

Fab Hotels competes with OYO—which has been ramping up its portfolio aggressively and currently claims to have over 5500 leased and franchised hotels and over 143,000 rooms in India and Treebo Hotels. Aggarwal said there is ample space for Fab Hotels to grow, given its franchising arrangement model and high-average daily rates.

According to Aggarwal, in the last six months the company’s topline has grown by 50% and occupancy rates are upwards of 75%.

“Hoteliers want a return on investment and high average daily rate, regardless of the inventory or your network size. Relative to our industry, we are operating at twice the daily average rates of around Rs 2,000. Over the last six months the number of inbound leads-hoteliers wanting to partner with us has grown by 3x,” said Aggarwal. “Eighty percent of our business comes through repeat customers and 40% of our team members come from the hospitality background so we look at it as a hospitality play rather than ecommerce.”

Aggarwal said a chunk of the expansion for the company next year would be through the flagship Fab Hotels brand. The company is also experimenting with different sub brands—like Fab Express, which has tariffs of about Rs 1,200, and Fab Hotels Prime, where tariffs are about 20% higher than Fab Hotels, and Fab Escape, which is targeted at leisure travellers.

“Eighty percent of expansion will be in the Fab Hotels category. We have 20-odd properties under management. That’s also a format that we are experimenting with. We will continue to focus on the basics—how a hotelier gets the highest RoI, and how does the consumer get the best experience in this segment,” Aggarwal said.





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