Rocket Internet-backed Zen Rooms has launched its budget hotel network in Brazil, marking its first foray outside of Asia.
The service aggregates a range of hotels to offer its customers rooms at low prices with a set of minimum guarantees, including Wi-Fi, a hot shower, clean sheets and more. Zen Rooms claims to vet all the hotels on its service and, where needed, upgrade their facilities to satisfy its standards.
This business was first pioneered by OYO Rooms, an Indian startup that has raised over $125 million from investors like SoftBank. Zen Rooms launched in November to bring the model to emerging markets where few or no existing competitors are present — as is the case with many Rocket Internet companies. It started out in Indonesia, and in recent months has expanded to Thailand, the Philippines, Singapore and Sri Lanka. Now it is tackling Brazil — via Sao Paulo and Rio de Janeiro initially — making its way into an emerging market with similarities to Southeast Asia and a huge 200 million population.
“We’re the first [to bring this accommodation model to Brazil] and that’s one of the reason’s we’re going now [earlier than first planned]. There’s a lot of work to be done locally because the local hotel market is a disaster,” Zen Rooms co-founder Nathan Boublil told TechCrunch.
In particular, Boublil cited issues with price transparency and trust that he believes a hotel network approach can help solve. Despite the Olympics looming, it doesn’t seem like this is a great time to enter Brazil. Its economy is in a state of uncertainty, with unemployment crossing 10 percent and millions of jobs tipped to be lost amid a political crisis. Yet Boublil believes that there is opportunity lurking, particularly for products that focus on value and low cost.
Financially speaking, Zen Rooms is still running on its undisclosed seed round, six months and four country expansions after launch. Boublil said the company has stayed lean, unlike other Rocket Internet companies in Southeast Asia, but it does plan to raise additional capital soon. While we can expect Rocket Internet to follow-on with more funding — multiple market launches indicate things are progressing as expected — other investors outside of the usual Rocket Internet circles may also participate.
“Some investors have reached out to us already, including some strategic investors and interested parties in Indonesia,” Boublil admitted.
“We will be raising money [but] we knew from the get-go that 2016 was not going to be a year of money. We’ve managed to be pretty lean and have kept an eye on costs,” he added, explaining that the company has 60 staff right now.
Zen Rooms isn’t giving us too much information about how its business is performing right now. Citing competitors — such as OYO Rooms, RedDoorz, and Tinggal — Boublil would only say that it has “hundreds of hotels in Asia” on its platform.