The acquisition of ZO Rooms by rival OYO Rooms has been in news for a while. Earlier reports indicated that OYO Rooms was in process to acquire ZO Rooms in an all stock deal and that ZO Rooms has been laying off employees. Earlier today some speculations came out about the acquisition being completed after ZO Rooms website and app stopped working but were dismissed soon after the website went live again. Now there is a confirmation of the same from OYO Rooms investor Softbank.
The acquisition wasn’t surprising considering the fact that both the companies were spending the funds on expanding rapidly and OYO Rooms had a clear advantage. Zostel Hospitality was unable to raise subsequent rounds from other investors or their existing investors which eventually resulted in the acquisition. Softbank’s earning release indicates that OYO Rooms has grown 34 fold from the previous year.
This acquisition will clearly put OYO Rooms on the top in this space with a significant margin. This segment has not only seen new startups trying to aggregate the budget hotel properties but also the entry of major OTAs including MakeMyTrip, Goibibo and Yatra. While the brands haven’t shown any significant revenue yet, it should change over time as they build trust among travellers.
Source: Business Standard