ZEN Rooms, one of the leading online budget hotels aggregator in Southeast Asia, has raised a $4.1 million in Series A round of funding from investors Redbadge Pacific, the Asia-Pacific arm of US-based VC firm RedBadge and SBI Investment Korea.
Along with them, Asia Pacific Internet Group, which participated in the company’s previous funding round, has also joined this round. With this investment in the company, ZEN Rooms’s total equity financing to date has now touched $8 million.
ZenRooms is a hotel booking platform for price-conscious travelers, and is a part of Rocket Internet. Like other Rocket Internet companies, ZenRooms replicates a proven business model—in this case, Oyo’s.
The company is expected to avoid competing directly with Oyo by launching in different countries. At present, the company has started its operations in Indonesia, Thailand, and Singapore.
The company’s co-founder and global managing director Kiren Tanna states that eventually, ZenRooms will become “the biggest budget hotel brand network in Southeast Asia”. He was previously chief executive officer at Foodpanda, a restaurant delivery platform backed by Rocket Internet.
Commenting about the funding round, Kiren Tanna said, “This funding round is now an important milestone to consolidate our early leadership and launch more features to modern temporary budget accommodation in Southeast Asia.” He further said, “we founded ZEN in 2015 to put an end to widespread, unreliable low-cost stays in Indonesia. Since then, we have become the top-rated budget accommodation franchise in the region and expanded to eight countries.”
He adds that they are bringing much-needed customer-centric innovation with the likes of pay-at-hotel, self check-in kiosks, and more in the pipeline. The company is now also managing all their rooms on commercial and ops processes including data-driven pricing, distribution and corporate sales, something that many independent hotels are not able to do themselves.
Zen Rooms works on revenue sharing model by partnering with the hotels. Beyond adding its branding and providing the means to market its rooms, it offers some standards facilities like free Wi-Fi, working air conditioning, clean towels and bedding and a concierge smartphone app. The above-mentioned facilities are very basic in any hotel.
The main advantage of the ZenRooms is that it has around 1,000 properties which make its network more manageable and allows more direct relationships. Zen Rooms — which has around 100 staff — is looking to expand beyond its current markets, with countries such as Vietnam, Laos and Myanmar among its potential new outposts.
The company is also planning to raise a Series B funding round by the end of this year. In order to expand its business at such rapid pace into new countries, it will certainly need much financial resources. To give you context, Oyo Rooms — India’s largest network of hotels, has raised more than $187 million so far. It is currently operating in Indian and Malaysia.