Hotel aggregator OYO Rooms has acquired service apartment operator Novascotia Boutique Homes, in its first major purchase. Negotiations for the deal began in October 2017 and concluded last month.
While OYO did not reveal the size of the deal, media reports have predicted that the buyout was worth nearly US $1 million or about Rs 6.71 crore. The Chennai-based Novascotia has a presence in Chennai, Coimbatore, Hyderabad, Kochi and Trivandrum, and OYO will expand the offering post-acquisition. It caters to the corporate sector and reportedly has an EBITDA of 14%.
OYO plans to expand rapidly, and the company’s chief executive had earlier said it was looking for acquisitions. The startup is backed by SoftBank and secured a funding of $250 million (Rs 1600 crore) in a Series D round led by the SoftBank Vision Fund. Other investors in the brand include Sequoia India, Lightspeed Venture Partners, Greenoaks Capital and Hero Enterprise.
Clash with Zo Rooms
Last month, another hotel aggregator Zo Rooms dragged OYO’s parent company Oravel Stays to court alleging that OYO stole ZO Rooms’s data about employees, assets, hotel properties, etc. while conducting due diligence in a process of acquisition. The said acquisition did not eventually take place.
ZO Rooms alleged in its petition that OYO obtained certain confidential information, and “in fact acquired the entire business of the petitioner (ZO Rooms) and is now refusing to pay the dues owed to the petitioner”. In 2015, OYO was exploring the acquisition of ZO Rooms, and this was even confirmed by SoftBank. However, the deal was later called off by OYO.
On the matter, OYO said that ZO was “blackmailing the company” and had filed the legal case as part of their ‘counterblast strategy’. And on February 16, OYO filed a criminal complaint against the founders of Zostel pertaining to Criminal Breach of Trust, Cheating and Misrepresentation of data.
Some other competitors of OYO in the sector are Treebo, FabHotels, MakeMyTrip-GoIbibo, Paytm, Booking.com, Hotels.com, Yatra, Airbnb, and others.
Last month, OYO struck a deal with MakeMyTrip to list OYO’s inventory of hotels across India, Malaysia and Nepal will be listed on MakeMyTrip and its brand Goibibo. A similar deal was signed between Yatra and OYO in 2017. The three online travel agents had delisted OYO from their platforms in 2015.