Accor’s second chop at Treebo

Back in the day – the day being before the pandemic – the likes of OYO and Treebo were very much the hip kids about town. Their domestic market of India had been confusing overseas hotel companies for years, with Whitbread finally giving up and going home in 2016. It was too fragmented, too red tapey, too complicated to stay and try to play.

Then along came OYO and Treebo with only the very lightest touches of branding, branding only a shade more than Airbnb. Distribution and a neon sign were about the level of it, but that was enough for the market and all of a sudden OYO in particular was the darling of the sector.

Through use of its proprietary apps for inventory-management, room-service, revenue-management and customer-relationship management, OYO delivered predictable, affordable and available budget-room accommodation to millions of travellers in India. By 2019 it was also in Malaysia, UAE, Nepal, China and Indonesia.

In 2018 the platform finalised a funding round led by SoftBank, which valued the budget platform at $4bn, on a few months after Chinese hotel company Huazhu invested $10m in the group as it expanded into China.

Masayoshi Son, founder, chairman & CEO at SoftBank, described his enthusiasm for OYO to analysts on an earnings call calling it “a next-generation type of hotel management”. He commented: “In just two years, it grew the number of rooms in India to 100,000. By the end of the year, I would say 150,000 more rooms or maybe 200,000 rooms, which will be 10 times more than Taj group’s rooms. It’s completely a new type of hotel and they are growing so fast.

“The world’s biggest hotel chain in the world is Marriott, and how many net room adds were created by Marriott monthly? It’s 8,000. Hilton, the second biggest, 7,000, and Intercontinental, the third-biggest hotel chain in the world, they grew number of hotels in last three months, 2,000. OYO is not a travel agent. OYO manages hotel comprehensively with OYO’s management, with OYO’s IT, OYO’s booking technology and OYO’s quality control method. It’s like a franchise.

“OYO helps [owners] to get people and increase the occupancy of the rooms. So in return for that, the profit will be shared with OYO and hotel owners. And what they do is to create heat map with AI for demand production. And with AI, they decide pricing. So per day 43 million micro-optimisations take place by looking at the weather, looking at day or week, looking at what kind of campaign is ongoing. Because depending on that kind of situation, demand-and-supply balance is different. So dynamic pricing takes place – 43 million micro-optimisation per day. Without AI, you can’t do such micro-optimisation. I believe this is the most advanced hotel management.”

The less said about SoftBank the better, but it wasn’t the only company thinking about getting a bit of the Indian budget market and in 2019 Airbnb paid a rumoured $150m for a stake in OYO. It wasn’t the only company to have a sniff around and Accor – of course – was linked to the company, with CEO Sébastien Bazin photographed hanging out with OYO’s executives and generally saying lovely things about them.

It turned out, however, that it was rival Treebo Accor was making eyes and at rumours flooded the press in India linking the two. And why not? Accor has significant powers as a budget player and adding Treebo – or bits of it – would have given it greater access to India and Treebo a step into Europe.

The deal never came off, but two years later and Accor has led a $16m Series D funding found for the company, alongside Elevation Capital, Matrix Partners, Bertelsmann, Ward Ferry and Bennett Coleman & Company.

Not a gripping number, certainly not in Accor land, but intriguing nonetheless. It may be the same two companies, but the motivations have changed. The 2019 deal was all about super-budget and its reach. This time around, the deal is Treebo’s Hotel Superhero technology being rolled out at selected Accor properties.

Floor Bleeker, CTO, Accor, said: “Hotel Superhero is exactly the kind of technology that the hospitality industry needs today. It is cloud based, intuitively designed, and comprehensive in its functionalities. We are looking forward to using their solutions to improve guest experience and operational efficiency.”

Accor has been very busy indeed upgrading its technology during the pandemic, working with a number of suppliers with an experience and operations focus. It clearly plans to come out of the recovery traps with vigour. As ever, the rest of the sector looks on. 

Image: Accor’s first Tribe, Paris Batignolles

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