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Delhi High Court Issues Stay Order over Zostel’s Oyo Rooms Like Budget Hotel Concept, ZoRooms

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Zostel, the backpacker’s hostel startup chain which recently launched an ‘Oyo-Rooms like’ concept named ZoRooms, is now in trouble due to the very same concept. In a recent twist of events, Oyo Rooms filed a case against ZoRooms for allegedly copying data and confidential information while launching of ZoRooms.

To support their case, they have produced e-mails, CCTV footages, theft of its ‘software’ by few of its own employees who apparently left OyoRooms to join Zostel. The employees have been made a party in the case as well.

The Delhi High Court, in response, has issued a stay order on ZoRooms for using confidential data and information of Oyorooms. In response to the same, Zostel has claimed that the step taken by Oyorooms is merely out of business rivalry and the story has been cooked up. 

The High Court in its stay order dated April 21, 2015 barred Zostel which recently started budget hotel aggregation business ‘Zo Rooms’ from using ‘confidential information and software’ of Oyo Rooms.

OyoRooms has also sent out a much-needed statement, reminding all the budding entrepreneurs that business should be carried out on moral grounds with sound business ethics. 

With Zostel having been the pioneer of a fresh wave of hospitality start-ups in India, it was definitely set apart in its own unique concept of setting up backpacker’s hostel across India.

With a giant like Oyo Rooms, founded in October 2012 and funded by Peter Thiel, already acquiring a good share in the market, Zostel had already taken battle with a well established brand name. With Zo Rooms, the team had built a similar platform for finding budget hotels across India with ease, ensuring comfort, convenience and safety.

But why would a start-up with a concept as fresh as Zostel’s, shift focus on an aggregator model? So here is the deal when we asked this to Dharamveer, the Founder of Zostel.

Prima facie, zorooms not only looks similar to OyoRooms but also sounds the same. However, having a closer look, Zorooms is more technology driven where they have not just bought room nights from hotels to offer on their portal, but have “associated” with hotels per se. Though that association is still not precisely clear.

As the start-up battle between the two budget hotel aggregators has heated up, we still need to figure out how its going to take further turns. We just look forward to an amicable end of this war and it would be interesting to see how it pans out.


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