Top online travel portals block OYO & Zo Rooms

28 Oct, 2015

Budget hotel aggregators OYO Rooms and Zo Rooms will no longer list on online travel agencies MakeMyTrip, Goibibo and Yatra.

The three OTAs have blocked OYO Rooms and Zo Rooms,The Economic Times, which first reported the development, said in a news report quoting executives of MakeMyTrip, OYO Rooms and Zo Rooms.

The OTAs seek to protect their market share in the hotel bookings space, which is a high margin category.

Separate emails to OYO Rooms, Zo Rooms, MakeMyTrip, Goibibo and Yatra did not elicit a response till the time of writing this news report.

Both OYO Rooms and Zo Rooms say that the delisting move will not have a major impact on their business. While OYO Rooms said less than 10 percent of its sales come from OTA platforms, Zo expects its mobile app to make up for the temporary dip in sales, the news report suggested.

OYO Rooms, Zo Rooms, Treebo, ZiP Rooms, Zen Rooms and WudStay are aggressively trying to disrupt the highly fragmented market for no-frills budget hotel business with their own version of alternative accommodation. Anchored on an asset-light business model, they are essentially aggregating standalone budget hotels, strapping them with a common brand with a promise to the consumer to offer a standardised set of amenities like a conventional budget hotel chain. On the other hand, large OTAs such as MakeMyTrip, Yatra, Goibibo and Cleartrip among others simply list hotels of all categories.

Budget hotel aggregators are generating tremendous interest among investors.

Delhi-based OYO Rooms, owned and operated by Oravel Stays Pvt Ltd, had raised $100 million (Rs 635 crore) in a fresh round of funding in August this year, led by Japanese tech conglomerate SoftBank. Existing investors Sequoia Capital India, Lightspeed Venture Partners and Greenoaks Capital also put money in this round. OYO caters to over 15,000 rooms in 90 cities and with its latest round of fundraising, the company is gunning for 50,000 rooms across 100 cities by the current year end.

Zo Rooms raised a Series A round led by Tiger Global with participation from Orios Venture Partners in July.

Over the last six months, Zo Rooms has expanded to 50 cities with close to 1000 hotels across the country. It plans to add five hotels daily, expand to two new cities every week and have 2,000 hotels in 60 cities by December this year.

Zo Rooms and OYO Rooms are said to be preparing for another big round of funding.

In July, WudStay Travels Pvt Ltd, which owns and operates online room booking portal WudStay.com, raised $3 million in Series A funding from venture capital firm Mangrove Capital Partners and Nimbuzz CEO Vikas Saxena. Before that, Bangalore-based Treebo Hotels raised $6 million co-led by Matrix Partners India and SAIF Partners.

It may be recalled that Naspers-owned Goibibo floated its own version of the budget hotel aggregation business. It recently unveiled goStays, a standardised budget accommodation starting at Rs 999 per day (with free breakfast) at multiple Indian cities. Yatra.com recently launched TG Rooms and TG Stays with a starting price of Rs 499 in over 60 cities.