Branded budget hotel rooms aggregator OYO Rooms has bought out its rival Zo Rooms. Talks of the acquisition were in the air since December 2015, but a quarterly presentation by SoftBank confirmed the deal.
Earlier in the week, NextBigWhat pointed out that Zo Rooms website and mobile app were inactive further pointing out to the acquisition. Meanwhile, TechCircle reports that a formal announcement will be coming in two weeks (could we leave out the Twitter public display of acquisition this time, please?).
Earlier in August 2015, OYO Rooms raised $100 million in a funding round led by SoftBank group and participation from existing investors Greenoaks Capital, Sequoia Capital and Lightspeed India. At the same time, Zo Rooms raised $30 million from existing investors Tiger Global Management and Orios Venture Partners. An Economic Times report said that Zo Rooms was cash strapped and was unable to raise a fresh round of funding which lead to the acquisition.
The report further added that it was an asset sale which would give Zo Rooms seven founders and Tiger Global a 7% stake in OYO Rooms. The seven founders of Zo Rooms will be exiting the company and about 40% of the team will be acquired by OYO Rooms. MediaNama could not verify this independently.
OYO Rooms operated as Oravel.com and pivoted its business from an Air BnB clone following operational issues. Founded in 2012, Oravel allowed users to search for short stay rooms and apartments in India. Users could list their serviced apartments, boutique properties and villas and travelers can book these properties from the site. Later the company shifted focusing on its budget hotel chain OYO Rooms.
In April, The Delhi High Court issued a stay order against Zostel, based on an alleged copyright material theft complaint filed by OYO Rooms. OYO Rooms alleged that Zostel’s recently launched hyperlocal hotel rooms booking platform Zo Rooms is based on data copied from them. Apparently, OYO Rooms produced emails and CCTV footage to claim that some of its employees stole proprietary software from the company, and left to join Zostel.
OYO’s international expansion
Earlier this month, OYO Rooms started international operations and forayed into Malaysia. OYO joins a number of Indian startups which have expanded globally. In India, OYO Rooms has scaled to offer 40,000 rooms in its network.
Delisted from online travel agents
In November 2015, online travel agencies (OTAs) like MakeMyTrip and Yatra decided to delist budget hotel aggregators Oyo and Zo Rooms from its platforms. At that time, Kavikrut, Chief Growth Officer of OYO Rooms said that only 10-15% of its users came from OTAs and that most of its user base came via its app, website and helpline. MakeMyTrip then went on to launch its own budget hotel aggregation platform called Value+.