The Hosteller raises $4 million to accelerate expansion plans across India

Homegrown backpacker hostel chain The Hosteller has raised $4 million (approximately Rs 32 crore) in a Series A funding round led by V3 Ventures.

The round also saw participation from existing investors, including LV Angel Fund, FAO Ventures, Synergy Capital Partners, Unit-e Consulting, Ice.VC (backed by Mrunal Jhaveri), Thrive Ventures, Chirag Jain and several real estate-based family offices.

The latest round elevates the startup's valuation to approximately Rs 200 crore (around $25 million).

The Hosteller's market presence

Founded in 2014, The Hosteller has become synonymous with affordable, quality lodging and immersive travel experiences.

The startup claims to have a presence in over 60 locations, including major metros and scenic spots in Himachal Pradesh, Uttarakhand, Karnataka, and more. 

The Hosteller said that its self-operated model ensures consistent quality and a standardised backpacker experience, making it a preferred choice for budget-conscious travellers.

“Our focus remains on delivering exceptional travel experiences to our backpacker community while fostering sustainable growth. With the launch of Glu, our complete tech concierge, and other initiatives, we are setting new benchmarks in the hospitality sector," said Pranav Dangi, Founder and CEO of The Hosteller.

Expanding footprint to over 150 locations

The Hosteller plans to use the raised capital to expand its footprint, with plans to expand to over 150 locations across India within 24 to 30 months. 

“The Hosteller has firmly established its position as a leader in the consumer and travel space through its outstanding execution. We are proud to support the company as it enters its next phase of growth, with plans to expand to more than 150 locations within the next two years," said V3 Ventures, Co-Founder Arjun Vaidya.

The startup aims to strengthen its hold in existing metro cities while also venturing into new travel destinations, with a particular focus on providing high-quality, immersive travel experiences for backpackers.

CFO highlights the financial benefits of the investment

For the fiscal year ending March 2024, The Hosteller reported a top-line revenue of Rs 55 crore, with positive net margins.

The startup also said that it is on track to scale up significantly, with plans to add 50 more properties by the end of this year.

“This capital infusion will accelerate our expansion plans while ensuring we maintain the high service standards our guests expect. We’ve experienced significant demand, with 4x growth in the number of locations over the past three years. We plan to continue this momentum by adding four to five new hostels to our portfolio each month," said Saksham Khemka, Chief Financial Officer (CFO) of The Hosteller.