South Korea’s Yanolja invests $15m in Zen Rooms with option to acquire

The Rocket-backed Zen Rooms has been facing months of uncertainty according to reports

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Rocket Internet-backed Zen Rooms has secured a US$15million investment from South Korea’s most popular hotel app Yanolja on Thursday, according to TechCrunch, months after facing a potential fire-sale or closure due to financial troubles.

Yanolja, Korean for “hey, let’s play”, will have an undisclosed “strategic non-controlling stake” in return for the investment, with the right to option of buying up 100 percent of Zen Rooms.

The South Korean firm was started by a former love motel worker Lee Su-jin, and has been working on cleaning its image carried over from a sleazy past. The investment will see Yanolja expanding into Southeast Asia, while contemplating a future IPO.

For the Southeast Asia’s based Zen Rooms, the news would give the budget hotel chain a relief, said TechCrunch. It reported how the company was aggressively courting buyers in March this year due to cashflow issues. Zen Rooms is similar to India’s Oyo which pioneered the budget hotel chain model.

Zen Rooms told TechCrunch that future acquisition by Yanolja is an option and not based on financials or performance. The company is on a hiring spree and a potential expansion into Vietnam is in the cards. In Southeast Asia, Zen Rooms is facing stiff competition from companies like Reddoorz, which raised US$11 million in March; Airy Rooms, which is associated with online travel agent Traveloka; and last but not least India’s Oyo, which is getting ready for its Indonesia debut.