Zo Rooms has been the focus of a lot of media speculation recently. Until the beginning of last year, it was seen as a viable competitor to Oyo, and had managed to raise $47 million from big ticket investors such as Tiger Global and Orios Venture Partners. As the year progressed though, it couldn’t compete with Oyo’s fast paced growth, and the delisting of its properties by established travel sites.
As early as 3rd December, there had been speculation that Oyo was going to acquire its smaller rival. This was denied by Zo Rooms at first, but the news had then been carried by prominent papers a few weeks later. The deal was supposed to have been structured as an asset sale with Oyo giving 7 percent of combined stakes to Zo Room’s seven founders and investors including Tiger Global. Oyo would not have taken any liability of Zo’s previous debts, but would’ve taken over Zo’s assets including its technology and its network of 11,000 hotels in more than 50 cities and towns.
This development had never been confirmed by either party. There had even been articles after this development that the deal was falling apart. But now it looks like the deal has indeed taken place.
Since Wednesday, Zo Rooms’ website has been inaccessible. Its app does open, but attempts to make hotel bookings are met with this.
Calls to the company’s customer service numbers are returned with a “this number is outside the coverage area” message. We tried contacting the company and its founders, but haven’t heard back from them yet.
It would appear that Zo Rooms has transferred its properties to Oyo following the deal, and the brand is going to shut down. This move would make sense for Oyo, as it can focus on building its brand without competition from a funded upstart. Also, the additional properties would buttress its already growing inventory of hotel rooms across the country.
Oyo might have just secured a huge step towards winning the budget hotels segment in India.