Research Insights

Business Model

Budget hotel aggregator in India

Based on No Inventory model
Tie-ups with 2-star, 3-star and 4-star
hotels
Zo Rooms tried to reinvent hotel market
by:
Standardizing
Customer
Experience
Providing Affordable Price Hotels
NewCustomer
Technology based Solutions
Choosing Strategic Location Hotels

What did they do wrong?

Earnings
Profit for
Investors
Saving Invest in more
locations
s
Zo Rooms
Expenditur Future
Investment
e
Different
Expenditure:
Operational
Technology
Marketing
Manpower
Support &
Training

Zo Rooms needed abundant capital to

compete in the industry
Did not anticipate slow growth and
expanded without market speculation
Investor confidence got lost in Zo Rooms
due to:
Faltering revenues, fickle customers
and frothy balance sheets
Slowness in Market Growth
Losses made by Zo Rooms Vast
difference
between
actual
and
anticipated revenue
Tried to raise $100 million in August,
2015 after raising $30 million in July,
2015
Tuff Competition from OYO Rooms, based
on similar model
Oyo got $100 million funding by Softbank
in August 2015
Following being accessible mantra, they
added too many properties (adding two
properties on a daily basis and opening
100 odd hotels by April 2015)
Discounting model adopted by the industry
to create loyal customer is a failure
Discount based customers are not loyal
Indian consumers are typically money
savvy and will switch to alternatives if

What else could have been

done?

Funding (from Tiger Global and Orios

Venture Partners) of $30 million in July
2015 and $100 million in August 2015
should have been better planned
Investor would not be willing to
make 2 big investments within short
span of time
Zo Rooms could have targeted a
particular segment of the market like
North India/ Metro cities to establish
themselves first
Better collaboration with MNCs to be
their accommodation partner
A particular stream of revenue should
have been created first before creating
PAN India presence
Travel is a trust based industry.
Because
of
some
bad
reviews,
customer confidence could not be
gained and image was damaged
Standardizing the Customer Experience
was not achieved a strong team
should have been build to address this
The main aim to improve Occupancy
Percentages was lost and should have
been central approach
Targeting the whole industry led to
target being lost

What exactly happened?

References

http://
timesofindia.indiatimes.com/business/india-business/The-curious-case-of-Oyos-Zo-buyout/articleshow/512833
42.cms
(retrieved on 17 July, 2018)
http://yourstory.com/2015/04/zo-rooms/ (retrieved on 17 July, 2018)
http://yourstory.com/2016/02/oyo-zo_rooms-acquisition/ (retrieved on 17 July, 2018)
http://
www.livemint.com/Companies/W7Mn4W0ZuYhxDiSiLhxqeJ/Zo-Rooms-parent-firm-Zostel-posts-seven-fold-jumpin-revenue.html
(retrieved on 17 July, 2018)
http://blog.ncrypted.net/the-business-model-economics-of-oyo-rooms/ (retrieved on 17 July, 2018)
http://
www.business-standard.com/article/companies/budget-hotel-aggregator-zo-rooms-looks-to-raise-100-mn-115
082700330_1.html
(retrieved on 17 July, 2018)
http://www.financialexpress.com/industry/companies/tiger-globals-burning-india-ambition-dims-heres-why/300
244
Thank
you
/ (retrieved
on 17 July, 2018)
http://
www.thehindubusinessline.com/info-tech/zorooms-raises-32-mn-from-tiger-global-mgmt-orios-venture-partners
/article7602997.ece
(retrieved on 17 July, 2018)