FabHotels: Leading Budget Hospitality Chain Prepares for IPO

FabHotels, a prominent player in the budget hospitality sector, has recently secured the green light from SEBI to move forward with its initial public offering (IPO). As the company gears up to enter public markets, comparing its performance with other emerging hotel chains like Treebo Hotels and Bloom Hotels illustrates how these three entities differ in scale, profitability, and operating costs.

Revenue Overview

In terms of generated revenue, FabHotels stands at the forefront with earnings of Rs 716 crore for the fiscal year 2025, more than doubling the revenue of Bloom Hotels, which reported Rs 344 crore during the same timeframe. Treebo Hotels remains the smallest in the trio, attaining Rs 128 crore in revenue in the last fiscal year.

Market Segments

For context, FabHotels and Treebo operate within the budget hotel segment, targeting price points between Rs 1,000 and Rs 2,500. In contrast, Bloom Hotels, backed by Samena Capital, functions in the premium segment, catering to clientele willing to spend between Rs 3,500 and Rs 10,000.

Expense Analysis

When examining operational expenditures, Bloom Hotels reported the highest rent expenses at Rs 63 crore, indicating a more asset-heavy or leased property strategy. In comparison, the rent costs for FabHotels and Treebo Hotels were at Rs 3 crore and Rs 1 crore, respectively, suggesting a focus on franchising and management models.

Employee Benefits and Commissions

In terms of employee benefits, FabHotels incurred costs of Rs 96 crore, followed by Bloom Hotels at Rs 86 crore and Treebo at Rs 71 crore. Treebo also had the largest commission payouts at Rs 39 crore, compared to Rs 28 crore for FabHotels and Rs 21.5 crore for Bloom Hotels.

Advertising Expenses

Advertising expenditures varied across these companies, ranging from Rs 11 crore to Rs 28 crore. Overall, FabHotels totalled expenses at Rs 730 crore, significantly more than Bloom Hotels, which had expenses of Rs 337 crore, while Treebo Hotels’ total expense was Rs 170 crore.

Performance in the Current Fiscal Year

During the first half of the current fiscal year (H1 FY26), FabHotels reported operating revenue of Rs 400 crore and net profits amounting to Rs 32 crore for the six months ending September 2025. Despite leading in revenue, FabHotels posted a net loss of Rs 6.3 crore along with an EBITDA loss of Rs 5 crore. Treebo Hotels faced the largest losses among the three, reporting a net loss of Rs 36 crore and an EBITDA loss of Rs 35.2 crore. Conversely, Bloom Hotels emerged as the only company to report profitability, achieving a net profit of Rs 15.2 crore while also posting the highest EBITDA of Rs 61.5 crore, indicating superior operational efficiency.

Cost Efficiency and Liquidity Metrics

Cost efficiency and liquidity measures further underscore the distinctions between these companies. Treebo Hotels had the highest expense-to-operating revenue ratio at 1.33, while FabHotels had a ratio of 1.02, suggesting it is close to breakeven. Bloom Hotels maintained the most efficient ratio at 0.98.

Current Assets Overview

Regarding liquidity, FabHotels led with the highest current assets at Rs 191 crore, which included Rs 95.5 crore in cash and bank balances. Bloom Hotels followed with current assets of Rs 119 crore, of which Rs 29 crore was in cash. Treebo Hotels reported current assets of Rs 30 crore, with cash and bank balances of Rs 9 crore.

Customer Experience Insights

Having experienced stays at all three hotel brands, it can be noted that Bloom Hotels provides the best and most consistent guest experience, likely due to their focus on delivering a uniform service. Their website indicates a high rejection rate of property owners as a unique selling proposition. FabHotels and Treebo, on the other hand, target primarily the budget segment. Particularly, FabHotels offers a broader range of locations and properties, although the overall guest experience may vary significantly. While each brand has its rationale for following its particular business model, FabHotels is well-positioned for growth, with potential profitability near at hand due to its robust network of over 1,300 properties. In contrast, Bloom will likely continue to maintain a slight premium in the market due to the dependable experience it provides, while Treebo may have to navigate through challenges associated with losses and a model that struggles to ensure a premium guest experience.