Why Treebo decided to put a complete halt on marketing during the lockdown

• With returning consumer confidence, Treebo Hotels has witnessed an increase in bookings and has returned to 40%+ average occupancy, with zero marketing budget.
• Now it is aiming to go back to where it was in 2019 before COVID disrupted the world.
• We spoke to Sidharth Gupta, Co-founder, Treebo to understand the market sentiments, its plan to reach before COVID-level occupancy and revenue levels and what makes the brand stand out in the clutter of hospitality firms.

With COVID-19 impacting the hospitality industry, bringing its revenues down to almost zero, to the steady recovery of the industry, a lot happened in 2020. Young hospitality brand Treebo, which began its operations only in 2015, was making about Rs 40 crore monthly sales at a near-neutral EBITDA but the grinding halt on travel and tourism brought its revenue to zero.

However, after September 2020, people went on workations or took solo trips to snow-capped mountains in Manali or serene beaches in Goa. Today, Treebo is back to 40%+ average occupancy across the portfolio. The hotel chain is now expecting to revive to pre-COVID levels over the next 2-3 quarters.

Telling us how the lockdown impacted Treebo and the status of its business today, Sidharth Gupta, Co-founder, Treebo said, “The lockdown brought our business to a screeching halt. From the point where we were doing about 40 Cr of monthly sales at a near-neutral EBITDA, we came down to pretty much zero sales and ballooned up EBITDA losses. We are now at 40%+ average occupancy for the portfolio, with the leisure properties doing 60-90% occupancies. This is a big uptick from where we were 3-4 months back. We expect this trend to continue and we should be at pre-COVID levels over the next 2-3 quarters.”

However, once Treebo saw a window to open up its services, it was quick to revive. It executed a 3 point plan: Firstly, Treebo conserved enough cash to ensure that its family survives to see the other side of the crisis. Secondly, it pursued all possible revenue opportunities, no matter how unusual, to bring in some business for its hotel partners and lastly, it made sure the necessary safety measures were followed to give its guests the comfort and win their trust.

“We stripped down our expenses by giving up our office altogether and offering people paid voluntary resignation schemes. On the second, we went after COVID-related demand (quarantine facilities, hospital extensions), we found ancillary revenue opportunities like leasing out of kitchens and parking space, we set up offices at our hotels for some of our corporate clients who were not equipped to switch to work-from-home, etc. And finally, we launched a comprehensive hygiene program called Treebo Hygiene Shield in partnership with Dettol to implement strict safety measures at our hotels,” explained Gupta.

It also decided to put a halt on its marketing activities completely and shifted its focus to the fundamentals.

On how the brand tweaked its marketing strategy after the lockdown, Gupta said, “Our marketing strategy was to not do any marketing at all! Yes we were active on our social media handles and were telling people about the safety measures we had put in place, but beyond that, we weren't doing anything. We decided to rather conserve our marketing monies because no matter how loudly you shout from the rooftop, people were not going to travel at that time. They were either being extra careful (and rightly so!) or they were just under lockdown. As we move forward, we are still being cautious and taking a very hard ROI lens for every single marketing dollar we spend. We have minimum hurdle expectations from each sales & marketing channel and if we don't see that productivity, we pull the spend. We are spending on success-based expense channels, we are offering people incentives on sales, etc. rather than signing up for fixed commitments.”

USP in a room full of hospitality brands

Treebo has a network of 600+ hotels across 100+ cities in India. Within two years of launch, it became the highest rated brand in the budget segment of hospitality in India. It has been able to retain that position ever since. It is the oodles of love that the brand has received for its customer service that has helped the brand beat its competitors.

Gupta said, “We are obsessed about the experience we offer to our customers and we have made some tough decisions to protect that experience. Our company's culture is centered around this customer obsession. Every Treeb knows that customer experience is the holy grail and solves for it in their area of work. No other company has demonstrated that sincerity towards experience. Customers see this. They are smart. For them, the space is not a cluttered one. It just takes them a few quick filters around price and review ratings, and invariably Treebo emerges as a winner on this 'value for money' ask.”

In this 5-year-long journey, the brand has also survived many crises, which Gupta said, has made the brand stronger and prepared for the future.

“We were the pioneers of the full inventory manachised model in this segment and that turned out to be a win-win for customers and partners alike. Hotel owners have always lauded our model and business ethics. Thanks to the support of these two stakeholders, we have grown relatively quickly from 4 hotels in 2015 to well over 500 now. However, our journey has also seen multiple crises - sudden loss of a large distribution channel, irrational competitive intensity, eleventh hour miscarriage of investment rounds, etc. We wear our scars from these crises with pride because as they say, what doesn't kill you makes you stronger. We have used each of these challenges to reinvent ourselves as a company and strengthen our fundamentals,” shared Gupta.

Market sentiment today and travel trends to expect this year

After the excruciating lull of March to September, the travel sentiment has improved dramatically in the last 3-4 months. People, exhausted by months of lockdown and staying home, have started venturing out.

Telling us about the market sentiment today, Gupta said, “In February, we are seeing business travel opening up as well, which was not the case earlier. I think the expectation around the vaccine becoming available for common citizens soon, combined with the falling number of cases in the country has given people the confidence to travel again. With international travel staying closed for the next 6-9 months in all likelihood, the prospects for the domestic travel sector could look even promising through the rest of this year.”

It has seen leisure travel making a steady comeback and Gupta said, the work-from-anywhere travel trend is here to stay for a long time.

“Leisure travel has been leading overall business recovery for us. We believe this surge in leisure travel will continue in the foreseeable future. We are therefore ramping our inventory in such markets to be able to serve this demand rush. People are feeling much more confident about traveling now and are giving themselves the much needed break from staying locked up at home. Secondly, smaller leisure destinations in close proximity to big cities are becoming hugely popular. Places like Mahabaleshwar, Lonavala, Coorg, Chikmaglur, etc. have seen tremendous interest from travellers. Thirdly, people are realising what a win-win work-from-anywhere trend is as they get to spend 2/4/6 weeks staying in some getaway town and working from there rather than being in office everyday. This will lead to people doing many more workations and making long stay bookings and hotels and resorts. And finally, customers' inclination to engage with branded suppliers has become even stronger. A bare minimum peace of mind is needed even as you overcome your fear psychosis and decide to make the trip, and established brands provide that much more easily compared to unbranded suppliers,” said Gupta.

Goals for Treebo’s 6th year

Founded by Sidharth Gupta, Rahul Chaudhary, and Kadam Jeet Jain in 2015, the company has been using a technology-enabled ‘manachised’ model to work with owners of existing hotel assets. Hotel owners need to abide by Treebo’s standard operating procedures and maintain quality as desired by the brand, whereas the company takes responsibility for sales and marketing of the property.

This year, Gupta and his team will continue to polish its USP, which is good customer service. It will also focus on reducing cash burn.

Sharing the two areas Treebo will focus on in 2021, Gupta said, “We will continue to deliver the best-in-class experience to customers so that we keep the brand reputation strong as always and remain the preferred brand for our customers as they step out and look for a new freedom and a breath of fresh air. And remain acutely conscious of our business economics and ensure sustainability of business. While the COVID situation in the country looks promising, we can't lower our guard and we need to have staying power in the company in the medium-to-long term. It is critical to be cash conscious. The external environment is still hugely unpredictable. The best you can do in such times is to solve for foundational success factors, which in our case are guest experience and economics. As long as these two remain strong, revenue will follow. Our vision is centered around what is predictable and what will ALWAYS matter - guest experience and economics.”