Leading budget-hotels aggregator OYO has acquired Chennai-based service apartment company Novascotia Boutique Homes.

This is OYO’s first business acquisition since its launch in 2013.

With this acquisition, OYO will bring its distribution, operational, transformational and technological capabilities on board.

The acquisition will boost OYO’s portfolio by 350 rooms across locations where Novascotia has its footprints.

Commenting on the development, Ritesh Agarwal, Founder & CEO of OYO, said: “Though in the niche segment of boutique homes, Novascotia brings with it the expertise in catering to the corporate travel segment, an area we have seen great potential and established ourselves as the market leader with varied offerings across 230-plus cities including all major corporate hubs.”

“The acquisition forms an integral part of our inorganic growth plan, in line with our ambition to create beautiful and quality living spaces and adding value to every form of real estate. OYO is poised to deliver 180,000 keys by the end of 2018 and with Novascotia’s Strength, we will be adding service apartments to our existing portfolio – which includes budget rooms, OYO Townhouse, OYO Home, enabling us to offer a wide range of choices to our customers,” he added.

With 100% of its demand coming from corporates and a healthy EBITDA of 14%, Novascotia has built a strong portfolio for itself while providing executive furnished accommodation to corporates for their personnel stay in locations, including Chennai, Coimbatore, Hyderabad, Kochi and Trivandrum and OYO plans to expand these offerings to 12 cities by the end of 2018. These serviced apartments are located in the heart of business hubs equipped with spacious rooms, upscale interiors, meals, gym and dining area to cater all the requirements of business travellers.

G. Madhu Manohar and Girja Madhu, Co-founders, Novascotia, said, “Novascotia is a brand built over years with a lot of commitment and hard work. With OYO, we saw similar passion towards solving a problem and we are thrilled to become a part of the entity which is driven by perseverance and innovation. We are convinced that OYO with its wide experience in the hospitality business and hunger for delivering quality customer experience has every potential to take the Novascotia brand promise of ‘home away from home; forward. We are delighted with the support and professionalism received from OYO, its teams and our advisers at ANOVA Corporate Services for taking this to closure. We are excited to be onboard.”

OYO has operations in more than 230 cities across India, Malaysia and Nepal. With over 70,000 rooms in its network, OYO works in close proximity with its hotel partners while exercising full control over the hotels for ensuring a quality experience for travellers. Its network includes major metros, regional business hubs, top leisure destinations as well as pilgrimage towns.

OYO is backed by leading investors, including the SoftBank Group, Greenoak Capital, Sequoia India, Lightspeed India, Hero Enterprise and China Lodging Group.

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Leading online budget hotels aggregator OYO Rooms said on Monday that a Gurgaon court has rejected an arbitration petition filed against it by smaller rival ZO Rooms, for want of jurisdiction with the Court as per order pronounced by the court on Feb 23.

Tiger Global-backed Zo Rooms (owned by Zostel Hospitality) had filed a lawsuit against SoftBank-backed OYO Rooms for allegedly stealing data while conducting due diligence as part of the failed acquisition.

“After continuously harassing OYO management and investors for months, Zostel filed a frivolous arbitration petition in the district court on Feb 2 ,2018, as a counterblast to OYO’s rightful legal case. This arbitration petition has been rejected for want of jurisdiction with the court as per order pronounced by the court on Friday (Feb 23),” OYO said in a statement.

“We are delighted with the outcome which reinforces the faith entrepreneurs have in the judiciary. Zostel is taking an emotional route now after the dismissal of their petition,” the statement noted.

According to OYO, these are factual misrepresentations and theatrical antics by Zostel in a futile attempt at gaining emotional mileage on the case. They are continuing their efforts to pressurise OYO to pay for an unviable business that Zostel shut down on its own in the absence of resources to further carry on its loss making operations.

“The non-binding agreement fell apart earlier and we stated in a statement that there was no real business to acquire. In addition, Zostel was not meeting its obligations to clear significant dues from vendors and owners to move the diligence forward. Getting into a deal with this background would have been harmful for our reputation and our business,” it said.

OYO said it continues to pursue its criminal cases under section 379, 414, 420 and 120B of IPC filed in January 2018 and other implications under IT and Copyright Acts with the Economic Offences Wing & Cybercrime department, filed in 2015, against senior employees of Zostel for stealing data and other assets including laptops which continue to be under Zostel’s access even now and being used to its benefit.

Last week, ZO Rooms filed a lawsuit against OYO alleging acquisition of data of employees, assets, hotel properties under the guise of accelerating the process of acquisition. While the deal collapsed midway, OYO still used its data to its advantage and to expand its business, but is now refusing to pay the dues. According to ZO, the overall incident has caused irreparable harm to ZO Rooms.

As per the petition, ZO wanted OYO to deposit the revenue earned from the hotels that were acquired from it with the court and prevent it from diluting any of these assets. It had also prayed to the court to pass an order for search and seizure of OYO to retrieve the stolen data and bar the company from using any of the data. It has also petitioned the court to restrain OYO from raising any funds through equity.

The battle between the two firms has its genesis in a failed acquisition of ZO by OYO in 2016. SoftBank had announced the acquisition of ZO Rooms by OYO in an earnings report in February 2016, but a year later OYO said the deal collapsed midway .

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