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FabHotels achieves near profitability with 48% revenue growth in FY23

FabHotels, one of the leading budget hotel chains in India, has posted impressive financial results for the fiscal year ending March 2023. The company, which operates more than 600 properties across 50 cities, has recorded a 48% increase in its revenue from operations, while reducing its losses by 16.7%. The company has also improved its key performance indicators such as ROCE and EBITDA margin, indicating a strong operational efficiency and a sustainable business model.

Revenue from bookings drives growth

According to the annual financial statements filed with the Registrar of Companies, FabHotels’ revenue from operations rose to Rs 219 crore in FY23 from Rs 148 crore in FY22. Out of this, revenue from bookings accounted for 75% of the total operating collection, which grew by 30.2% year-on-year to Rs 164 crore in FY23. The rest of the income came from sales and marketing fees.

The company also earned Rs 12 crore from non-operating activities, such as interest income and other income. The total income of the company stood at Rs 231 crore in FY23, up from Rs 156 crore in FY22.

Cost control and scale help reduce losses

FabHotels has managed to keep its expenses under control, while expanding its scale and reach. The cost of accommodation, which formed 59% of the overall expenditure, increased by 30.8% to Rs 140 crore in FY23 from Rs 107 crore in FY22. This implies that the company has been able to negotiate better deals with its hotel partners and optimize its occupancy rates.

FabHotels achieves near profitability with 48% revenue growth in FY23

The company also incurred expenses on employee benefits, commissions, brokerage, website development, legal/professional, and other overheads, which pushed the total cost by 47.5% to Rs 236 crore in FY23.

The notable growth in scale and controlled cost mechanism helped FabHotels reduce its losses by 16.7% to a mere Rs 5 crore in FY23. Its ROCE and EBITDA margin improved to -33% and -1.7% respectively. On a unit level, the company spent Rs 1.08 to earn a rupee in FY23.

FabHotels competes with Oyo, Treebo and others

FabHotels, which was founded in 2014 by Vaibhav Aggarwal and Adarssh Mnpuria, has raised $65 million across rounds and was last valued at around $141 million. According to data intelligence platform TheKredible, Accel is the largest external shareholder with 21.39% followed by Goldman Sachs and Panthera Growth Partners which command 20.52% and 10.64% respectively. Its co-founders together own 25.84%.

FabHotels operates primarily through franchising arrangements, where it provides technology, branding, and quality assurance to its hotel partners. The company claims to offer standardized and affordable stays to its customers, along with loyalty benefits and rewards.

FabHotels directly competes with Oyo, Treebo and several mid-segment independent chains in the budget hotel segment. Oyo, which is preparing for an IPO, posted a revenue of Rs 5,464 crore and a loss of Rs 1,286 crore in FY23. Treebo, which is backed by Accor, reported a revenue of Rs 89 crore and a loss of Rs 3.6 crore in FY23.

FabHotels, with its near profitability and consistent growth, has proved that small is beautiful in the budget hotel space. The company has had to build and survive challenges like the pandemic the hard way, and deserves credit for making it this far.

Olivia Brown is an American author known for her compelling writing style and ability to craft relatable characters. With a keen eye for detail and a passion for storytelling, she has captivated readers with her works of fiction, earning critical acclaim…

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