Budget hotel aggregator ZO Rooms looks to raise $100 mn

ZO Rooms raised $15 mn from existing investors Tiger Global and Orios Venture Partners in July 2015, and $30 mn earlier this month from the same investors

ZO Rooms, an online budget accommodation aggregator owned and operated by the New Delhi-based Zostel Hospitality Private Limited, is planning to raise $100 million (approximately Rs 660 crore) in a fresh round of equity funding, according to a source privy to the development.

Founded in August 2013 by seven co-founders — IIM-Calcutta graduates Dharmveer Chauhan, Paavan Nanda, Akhil Malik and Tarun Tiwari, Chetan Singh Chauhan and Abhishek Bhutra from IIT-BHU, and MDI-Gurgaon graduate Siddharth Janghu, Zostel had forayed into hotel booking and reservation services with ZO Rooms in April 2015.

ZO Rooms, which has over 600 properties across 35 cities in India, had in July 2015 raised $15 million from existing investors Tiger Global Management and Orios Venture Partners, and $30 million early this month from the same investors.

When contacted, ZO Rooms co-founder and Chief Executive Officer Dharmveer Chauhan, indicated that they were exploring various options. “There are different people who want to back us in different ways... and we explore those things. Right now, we will not be able to comment on how we approach it. When we are doing the right thing, I don’t see money ever being a problem. If we require funds, we will be raising it. I, however, don’t have a hard date in my mind,” he told Business Standard.

ZO Rooms operates in a highly-fragmented budget accommodation aggregation market, where an estimated one million rooms are yet to get standardised. Also, there is a shortage of 200,000 budget rooms in the country.

“Despite having a significant demand out there, the supply standardisation is falling behind. There are close to 30 more players in this market, who are trying to do similar things at different levels. If people could attack the right problem and try to solve it in the right way, there would still be enough room for more players,” Chauhan said.

Stating that the southern region is highly unexplored, Chauhan said ZO Rooms was targeting to double its properties in Hyderabad to 100 in a month or two, and add 40 more properties to the existing 60 across 10 southern cities, including Kochi and Mysore in a week’s time.