Zo Rooms on expansion mode

Sangeetha Chengappa Bengaluru | Updated on January 23, 2018 Published on August 16, 2015


Plans setting up 4,000 hotels and 40,000 rooms in 100 cities by end-2015

Short stay, budget room aggregator, Zo Rooms, which launched its first set of budget rooms seven months ago, is targeting to close calendar year 2015 with 4,000 hotels and 40,000 rooms across 100 cities.

The start-up had received two rounds of funding of $5 million from Tiger Global in June and $30 million in July led by Tiger Global along with Orios Venture Partners. The second round came soon after rival OYO Rooms announced $100-million funding from SoftBank Group.

Expanding presence

With 600 hotels and 6,000 rooms across 35 cities today, Zo Rooms are priced between ₹1,000 and ₹3,000.

“Currently, we are doing 4,000 room nights a day, across the country at an average rate of ₹1,800 for a room night; and are targeting 30,000 room nights a day by December 2016. In the next 15 months, we want to hit a run rate of one million room nights a year,” Paavan Nanda, co-founder, Zo Rooms, told BusinessLine.

Ramping up headcount

At its current pace of growth, Zo Rooms is poised to take on competition largely due to its lean and scalable model versus other players.

“We have just 300 employees, with 3-member teams to handle each of the 35 cities that we are present in, while competition has more than double of that. We are increasing headcount to 700 people and leasing an additional 50,000 sq ft of office space to support our presence in 100 cities by December 2016,” said Nanda. In addition to Zo Rooms, Nanda and six other co-founders had launched backpacker hostel chain Zostel in August 2013, which currently has 700 rooms in seven locations. By November, 35 new Zostel properties with 3,500 rooms are being opened on a franchisee model, where ₹500 per person, per night is charged.

Budget stay market

The budget room space in India has witnessed an influx of players such as, OYO Rooms, Treebo Hotels, ZiP Rooms, Stayzilla, FabHotels, drawing tremendous investor interest in the space. A new hospitality venture, Stayology, is all set to go live with its mobile app this month.

“There are around two million budget rooms, dominated by unorganised players. While demand for budget rooms is growing at 35 per cent, supply is growing at 20 per cent. We are trying to fill that gap with rooms from ₹500 to ₹3,000” said Nanda.

Published on August 16, 2015
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