Oyo Rooms and Zo Rooms, two of India’s biggest budget hotel providers, are all set to raise a huge funding round which is speculated to be around $600 million, reports Economic Times.
As per the people aware of the matter, Oyo Rooms has already started talks with the potential investors to raise around $400 million. The company is looking forward to strengthen its leading position in the market. With the valuation of the funding round which Oyo Rooms is planning, it is targeting to reach the ‘unicorn’ status.
Another source informed ET that Zo Rooms, the biggest rival of Oyo Rooms in the budget hotel offering space, is also planning to raise around $200 million. It was initially planning to raise around $80-$100 million but it seems that it has now raised the amount of capital to raise to $200 to take on Oyo Rooms.
Oyo Rooms, which raised $100 million from Lightspeed Venture Partners, Sequoia Capital India and Greenoaks Capital, has now expanded to 30,000 rooms in more than 3,000 properties.
It aims to build a 50,000 hotel network spanning across 100 cities by the end of this year . While that may be the year-end plan, a long term two-year plan for Ritesh, founder of Oyo Rooms, is to build a gargantuan 5,00,000 hotel network in over 250 cities across the country.
Prior to the $100 million funding round, it had raised around $24 million round, led by LightSpeed India and GreenOaks Capital. In total, the company has raised $125.65 million in four funding rounds.
Zo Rooms, which is backed by Tiger Global Management and Orios Venture Partners, has expanded its network to 11,000 rooms in 1,000 hotels across more than 50 cities and towns in India. In the coming six months, the company is targeting 5,000 hotels and 50,000 rooms. Till now, it has raised around $47 million in two funding rounds.
Oyo Rooms recently launched a new service called Oyo WE, a budget hotel chain targeted exclusively towards the women travelers while on the other hand, Zo Rooms launched a new service called Zo Prime, a premium offering of three star hotels.
With this much amount of money coming to both the companies, it will be hard for other startups in this space like Treebo Hotels, Vista Rooms, Qik Stay, etc. to compete against them.