The consolidation in budget hotel startups has already begun. The speculations and rumour mills were buzzing since December that OYO Rooms is on verge of buying its rival ZO Rooms. Today, when Softbank released it’s financials, it clearly specified the acquisition of ZO Rooms by OYO rooms.
The picture also depicts as to how quickly OYO rooms has grown with a 34x growth year on year in used room nights.
Although the financial report confirms that ZO Rooms is now a part of OYO Rooms the terms of the deal are still unknown. The unknown elements include the amount that OYO rooms paid to buy ZO rooms, how the ZO rooms team be included and if it will be a part of the OYO rooms team. It is expected that an official announcement will be made in the next couple of weeks that will give a clearer picture about the terms of the deal.
OYO rooms currently operates in 165 cities in the country and was looking to expand into the Southeast Asian market where a startup like ZenRooms is already doing well in the budget hotel space. On the other hand ZO Rooms has its presence in 30 cities and was also looking to make a move in the Southeast Asian market. Hence, it is pretty certain where the combined company will be looking to expand and leave a mark next.
The acquisition comes as a surprise to some, at least at this point of time given that there are so many startups already shutting shop in so many parts of the country to save up on their investor money. With the food delivery startups having already laid off a combined of more than 1,000 people (Zomato, TinyOwl and FoodPanda) shows how the investment trend is shifting. Add to that on demand grocery delivery startups (PeperTap and Grofers) shutting shop in some cities only confirms the mood of the investors. It is also a possibility that the investors and possible lack of investment forced ZO Rooms hands to eventually being bought up by OYO Rooms. This acquisition also means that two of the most active investment firms in India – SoftBank and TigerGlobal shall be working together yet again. Having backed Grofers and India’s Uber Rival Ola Cabs, this isn’t the first time both the firms will be shaking hands.
As of now this appears to be a step in the right direction for both the startups and it will be interesting to see what exactly the terms of the deal are. We will keep you posted as and when the terms of the deals are shared by ZO Rooms and OYO Rooms. Keep a check on this space for more.