After scouting for funds for several months, budget stay operator Vedanta Wake Up, with 18 hotels in the South, has decided to tie up with Oyo Rooms.
But it is using the hotel aggregator as a sales channel rather than a co-branding partner, as it claims to have higher service standards than what Oyo offers.
“Oyo Rooms still has no profits to show, unlike brick-and-mortar players like us. It will benefit from our 18 properties, which it will sell from its site. But we do not want to dilute our brand as our standards of service are higher. We will stay away from a co-branding initiative with them,” said Rishabh Gupta, Director, Blanket Hospitality Ventures, which owns Vedanta Wake Up.
The company, which recently changed its positioning from a “hostel” brand to an “accommodation” brand, had raised seed capital of ₹50 lakh at the time of launch in 2011. Since then it had been seeking VC funds.
Hostel chains may be struggling to raise funds for capex, but when it comes to selling their rooms, they resort to hotel aggregators who are not necessarily cash strapped.
Today, Vedanta Wake Up would rather sell its brand through hotel aggregators than give discounts for direct sales.
“Being an aggregator, Oyo has been discounting its properties to acquire customers, which we do not believe in doing. We will continue to charge the same amount for our rooms,” added Gupta.
The rates range from ₹500 to ₹1,500, and the properties are located across Karnataka, Tamil Nadu and, recently, Puducherry. Vedanta Wake Up typically takes properties on lease and standardises them under its own brand.
Nearest competitorIts nearest competitor Zostel, promoted by the founders of Zo Rooms, with 15 properties, is waiting for a possible merger with Oyo Rooms.
“We are 40 per cent Ebita positive with 15 properties of Zostel. Merger or no merger with Oyo Rooms, we will continue to expand with franchises. We have even gone to the overseas market and have been selling rooms through our own platform,” said Paavan Nanda, promoter of Zo Rooms.