Zo Rooms, an online budget hotel startup by Zostel Hospitality Pvt Ltd, a tech startup which offers separate booking platforms for branded hostels and budget hotels, has raised a fresh Series A round of funding led by Tiger Global with participation from Orios Venture Partners.
The financial details of the deal are not disclosed. The startup plans to use the funds raised on branding, marketing and bolstering technology and ground operations, Zo Rooms’ co-founder Paavan Nanda said.
Founded by Nanda, Tarun Tiwari, Abhishek Bhutra, Akhil Malik, Chetan Chauhan and Siddharth Janghu, Zo Rooms is an online budget hotel stay brand operating in Delhi-NCR, Mumbai, Bengaluru, Noida, Pune, Gurgaon, Jaipur and Jodhpur.
The low budget hotel chain enables its users to book rooms via mobile application, which geo-detects location and books into the nearest Zo Rooms available.
Over the last six months, Zo Rooms has expanded to 30 cities with more than 400 hotels across the country.
The startup plans to add five hotels everyday, expand to two new cities every week and have 2,00 hotels in 60 cities by December this year.
Apart from Zo Rooms, a bunch of Indian startups including OYO Rooms, Treebo, ZiP, Zen and WudStay are trying to disrupt the highly fragmented market for no frills budget hotel business with their own version of alternative accommodation.
Anchored on an asset-light business model they are essentially aggregating standalone budget hotels, strapping them with a common brand with a promise to the consumer to offer a standardised set of amenities like a conventional budget hotel chain. Indeed some of them also have found venture capital investors to back their story.
They are seen as a new breed of accommodation booking providers as against large online travel agencies (OTAs) such as MakeMyTrip, Yatra, Goibibo and Cleartrip among others which simply list hotels of all categories.
Zo Rooms’ biggest competitor OYO Rooms, founded in 2013 and backed by Sequoia Capital and Lightspeed Ventures, is also reportedly planning to raise around $100 million in fresh round of funding.
OYO Rooms, earlier this year, filed a legal complaint alleging theft of its copyright material against Zostel Hospitality. The high court had then issued a stay order on Zo Rooms, at places where it was using Oyo Rooms’ tech.