Zo Rooms, the online budget hotel marketplace by backpacker hostel chain Zostel, has raised an undisclosed amount of funds in a fresh Series A round of funding, led by Tiger Global with participation of Orios Venture Partners.

This investment round’s sum has not been revealed, however various reports peg the deal to be somewhere near a $15 Million. Zo Rooms is now planning to utilize the money raised in this round to build a strong brand, increase marketing efforts, bolstering technology and ground operations.

Just to state some numbers and put things in perspective here, Zo Rooms competitor Oyo Rooms, which has a similar concept, is looking to raise a staggering $100 Million in a fresh round of funding.

Founded by Paavan Nanda, Zo Rooms is a low-budget hotel chain which enables users to book rooms through their mobile application. The app geo-detects location and books into the nearest Zo Rooms available.

The company was started with a vision to clean the budget accommodation space and provide a suave, tech-savvy option of accommodation to today’s youth. As it provides budget accommodations, its pricing starts at just Rs. 999.

It has opened over 400 hotels across 30 cities in India, including Delhi, Gurgaon, Noida, Mumbai, Bengaluru, Hyderabad, Jaipur, Goa, Jodhpur, etc., in a span of just six months. Unlike others, ZoRooms has a locality-level presence.

Commenting about how his company plans to use his fresh capital, Paavan Nanda, co-founder of the company, said,

We would primarily be investing in capturing a strong leadership position in the market. Majority of the use of proceeds are going to be in building a strong brand, marketing, bolstering technology and ground operations.

The budget hotel industry is a $20 billion industry in India and to dominate this market, Zo Rooms will have to compete with the likes of Oyo Rooms, StayZilla, AwesomeStays, etc.

Oyo Rooms poses as the biggest competitor for Zo Rooms. Founded in 2013, the company has raised over $25.7 million in funding so far and as mentioned previously, is in talks to raise another $100 million from SoftBank.

Zo Rooms was earlier involved in a legal battle with Oyo Rooms, with latter accusing former of copying its tech and critical data to launch the concept. The high court had then issued a stay order on Zo Rooms, at places where it was using Oyo Rooms’ tech.


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