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Treebo and MakeMyTrip part ways over rising commissions

The hiking of commissions by big OTAs for budget hotel room startups clearly indicates at a threat that established companies perceive from younger ventures in the travel segment

April 07, 2017 / 07:32 PM IST
Treebo Hotels – Bagged $3,000,000 in latest round from investors. (image: Treebo)

Treebo Hotels – Bagged $3,000,000 in latest round from investors. (image: Treebo)

Budget hotel accommodation provider Treebo Hotels and country's largest online travel aggregator (OTA) MakeMyTrip have parted ways over commission issues.

The Bangalore-based company which used to list its properties on the portal of MakeMyTrip has decided to delist due to the issue of hike in commission rates, a company official confirmed to Moneycontrol.com.

"It was a decision we mutually arrived at. We had a negotiation to reduce the commission that they charge us for selling our properties on their portal. It is currently much higher than what other domestic or international OTAs charge. Those types of commissions were not sustainable...we took a hard stance for our long term business. We are not working with them anymore," Sidharth Gupta, co-founder of Treebo Hotels said.

Usually, OTAs charge 12-17 percent commissions. According to Gupta, in just one year MakeMyTrip had escalated its commission way higher. He declined to disclose the commission rate.

This withdrawal applies to Treebo's listings on GoIbibo as well. MakeMyTrip in October announced a merger with GoIbibo.

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The online travel aggregator declined to comment on the matter.

Interestingly, MakeMyTrip along with the then rival GoIbibo and Yatra in 2015 had delisted budget hotel room aggregators Oyo and Zo Rooms among others, citing conflict of interest as the startups had started giving competition to the companies in a major way.

These companies had also cited issues related to consumer experience with the startups.

To compete with the startups, the three big OTAs also started their budget accommodation segments.

MakeMyTrip started Value Plus, GoIbibo launched Go Stays and Yatra launched TG Rooms and TG Stays.

The OTAs had not delisted Treebo at that point in time, given that Treebo claims to be running a chain of hotels rather than aggregating them.

Treebo offers accommodation to travellers in the price range of Rs 1,000-3000. Its properties come with basic amenities such as linen, complimentary breakfast and branded toiletries among others.

Founded in 2015 by Sidharth Gupta, Rahul Chaudhary and Kadam Jeet Jain, Treebo is backed by Bertelsmann India Investments, the strategic investment arm of German media conglomerate Bertelsmann SE and Co. KGaA. SAIF and Matrix partners have also invested in the company.

It last raised around USD 17 million in a round led by Bertelsmann.

priyanka.sahay@nw18.com
Priyanka Sahay
first published: Apr 4, 2017 01:34 pm

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