On April 16, 2026, The Hosteller announced that it had raised ₹150 crore (approximately $16-18 million) in a Series B funding round . The round was led by PROMAFT Partners and V3 Ventures, with participation from ITI Growth Opportunities Fund, Merisis Wealth Trust, and several prominent family offices .
The company described this as the largest institutional funding ever raised by a backpacker hostel operator in India . For a segment that has traditionally flown under the radar of large venture capital firms, this was a statement. Investors are no longer treating hostels as a niche corner of hospitality. They are treating them as the future of how young India travels.
The round also marked PROMAFT Partners' second investment from its debut $100 million Series A/B fund, following its earlier backing of New Delhi-based internet technology company Wiom . For V3 Ventures, this was a continuation of an existing relationship, having supported The Hosteller since its Series A round in 2024 .
From One Hostel to 75 Properties
The Hosteller was founded in 2014 by Pranav Dangi. What began as a single property has grown into a network of over 75 hostels spread across 13 states . The company has hosted more than 2 million unique travellers to date, a number that its founder repeats with visible pride .
Over the twelve months leading up to the funding announcement, The Hosteller added more than 30 new properties and grew its traveller capacity by nearly 70 percent . That pace of expansion is not accidental. The company has been methodically planting flags in key travel destinations, from the mountains of Himachal to the beaches of Goa to the backwaters of Kerala.
The goal now is more ambitious. The Hosteller is targeting 25,000 beds nationwide within the next 36 months . That would make it one of the largest branded hostel networks in Asia, let alone India.
Pranav Dangi, founder and CEO, explained the company's origin and trajectory. He stated that he started The Hosteller because Indian travellers deserved better than a choice between overpriced hotels and unreliable budget stays. Eleven years and 2 million travellers later, he believes the model has proven itself. He described this round as being about sustained acceleration to 25,000 beds, a full stack travel platform, and building the kind of company that can define this category for decades. He added that the company is on a path to building a truly public, enduring hospitality brand out of India .
The Numbers That Convinced Investors
Funding rounds of this size do not happen on vision alone. The Hosteller's financial performance provided the necessary evidence.
The company's revenue from operations stood at ₹71.52 crore in the financial year ending March 2025, up from ₹47 crore in the previous fiscal year . That represents strong year-on-year growth, driven by both increased bed capacity and higher occupancy rates.
Investors pointed to unit economics as the real differentiator. Soham Avlani, founding general partner at PROMAFT Partners, told The Economic Times that the occupancy rates, repeat rates, and revenue per bed at The Hosteller all outperform what budget hotel chains achieve at comparable price points . He added that the founder chose substance over vanity scale and built something that actually works at the unit level, property by property. He observed that when customers choose destinations based on where a brand opens next, that brand is no longer just a hostel company but a travel platform .
There are caveats. The company's net loss widened to ₹15.4 crore in FY25 from ₹3.8 crore in the previous year . Rising expenses accompanied the aggressive expansion. Investors appear to view this as a calculated trade-off: spend now to capture market share, and figure out profitability at scale later.
Arjun Vaidya, co-founder of V3 Ventures, told The Economic Times that the growth and performance metrics have been exceptional. He added that continuing to back the company in this round was one of the easiest decisions his fund has made .
Mohit Gulati, CIO of ITI Growth Opportunities Fund, noted that India's experiential travel segment is still early and that Pranav has built the only brand in this space that a traveller actively plans around. He stated that The Hosteller is one of those rare businesses where the unit economics tell the story better than any pitch deck, with occupancy, repeat rates, and revenue per bed holding up property by property across geographies and seasons .
The Super App Ambition
The funding is not just about opening more hostels. The Hosteller is preparing to launch what it calls a travel super app, a single platform that integrates accommodation, food and beverage, mobility, and curated experiences .
The logic is straightforward. A traveller who stays at a Hosteller property in Manali might also want to book a taxi to Kasol, reserve a table at a cafe, and sign up for a river rafting trip. Currently, all of those transactions happen through separate apps or offline arrangements. The super app would bundle them into one seamless experience.
This is a familiar strategy in Southeast Asia, where companies like Grab and Traveloka have built massive businesses by aggregating travel services. In India, no one has yet executed this playbook at scale for the budget traveller segment. The Hosteller is betting that its brand and customer base give it a head start.
The company's operational model has already proven some of these synergies. By working with partner factories rather than owning them, The Hosteller has kept its capital expenditure manageable while scaling quickly. The super app would extend that asset-light philosophy to the digital layer, using technology to coordinate services rather than owning the underlying assets.
The Macro Story: Why Investors Are Betting on Budget Travel
The Hosteller's funding round stands out because it arrived during a period of relative caution in Indian venture capital. Investor attention has shifted toward profitability and unit economics, away from the growth-at-all-costs mentality of previous years.
That The Hosteller secured ₹150 crore in this environment says something about how investors view the travel market. Domestic tourism in India has been growing steadily, driven by rising disposable incomes, improved infrastructure, and a generation of young professionals who prioritize experiences over possessions.
Hostels occupy a sweet spot in this market. They are significantly cheaper than hotels, making them accessible to students and early-career workers. But they also offer something hotels cannot: community. Shared dormitories, common lounges, and organized group activities turn a place to sleep into a social experience.
Soham Avlani captured this shift when he said that India's travel market is being reshaped by a generation that values experience over star ratings, and he believes The Hosteller is best positioned to lead that shift .
The Competitive Landscape
The Hosteller is not alone in this space. It competes with goSTOPS, Zostel, and Backpackers Panda, among others . Each of these brands has carved out its own following, and the competitive dynamics in the budget hostel segment have intensified over the past several years.
What distinguishes The Hosteller is its combination of scale and unit economics. With 75 properties and a clear path to 25,000 beds, it has a distribution advantage that smaller competitors cannot easily match. At the same time, its revenue per bed and repeat rates suggest that the expansion has not come at the cost of operational quality.
The super app ambition, if executed successfully, could widen the gap further. A competitor that only offers accommodation will struggle against one that offers accommodation, transport, food, and activities in a single transaction.
What the Funding Will Fuel
The ₹150 crore will be deployed across several priorities .
First, geographic expansion. The Hosteller plans to increase its presence in key travel destinations across India, both by opening new properties and by expanding existing ones.
Second, operational improvements. The company will invest in systems and training to ensure that its service quality remains consistent as it scales.
Third, the super app. Building a platform that integrates multiple travel services is a complex technical and operational challenge. A portion of the funding will go toward product development and engineering talent.
Fourth, brand building. The Hosteller wants to become the default choice for budget travellers in India. That requires marketing, partnerships, and a consistent brand identity across all touchpoints.
Merisis Advisors acted as the exclusive advisor to the company on the transaction .
The Bottom Line
The Hosteller's ₹150 crore Series B round is not just a funding story. It is a signal that India's travel market is maturing, and that investors are willing to bet on companies that can capture the imagination of young travellers while maintaining operational discipline.
For Pranav Dangi, who started the company eleven years ago with a simple observation about the gaps in Indian hospitality, the round is validation that his instincts were correct. For the broader startup ecosystem, it is a reminder that some of the most interesting opportunities are not in the sectors that dominate headlines, but in the unglamorous, difficult work of building physical infrastructure and operational excellence.
The company is on a path to building a truly public, enduring hospitality brand out of India. Whether it succeeds will depend on execution, competition, and the continued growth of India's travel market. But the funding suggests that a growing number of influential investors believe the journey is worth betting on.
