ZEN Rooms Co-founders

ZEN Rooms, a Singaporean company that built a network of budget hotels has sold a minority stake to Yanolja Co., a South Korean hotel app, for US$15 million.

The deal allows for Yanolja to take 100 per cent ownership of ZEN Rooms in the future.

Yanolja is investing the money for a controlling stake in ZEN Rooms, which was founded in 2015 and is backed by Rocket Internet. Last year the company raised a US$4.1 million Series A  from a  US-based VC firm named Redbadge and SBI Investment Korea.

In March of 2018, TechCrunch reported that ZEN Rooms was facing financial difficulties and was looking to either sell or close.

In Southeast Asia, the company has hotels in Indonesia, Thailand and Malaysia and also has operations in Brazil.

Also Read: Building an international business: What I learned founding ZEN Rooms from scratch

Yanolja has its roots in love hotels — the company was founded by Lee Su-jin, who worked in the industry for years before taking his knowledge and building a US$622 million company. Yanolja means ‘Hey let’s play’ in Korean.

The pitch of the company is to move the branding of love hotels beyong sleaze and sex to attract families and business travellers. Yanolja also partnered with Rakuten to enter the Japanese vacation-lodging space.

In many ways — except for the sex — this is similar to what ZEN Rooms is working to achieve. The ideal behind ZEN rooms is to create a budget brand whereby travellers feel confident that the quality of rooms would meet a certain standard of cleanliness and professionalism.

Oftentimes, budget hotels are either decent or simply horrendous and usually it is impossible to tell until walking into the room. ZEN Rooms works by making people feel confident every room they book will be at a similar quality.

Also Read: Meet the 10 startups selected for Rakuten Accelerator programme in Singapore

Kim Jong-yoon, the chief business officer at Yanolja told Bloomberg that part of the logic behind the deal was to tap into the growing wealth of Southeast Asia. He said people are travelling abroad and within their own countries more often and they need apps to cater to their needs. He hopes the Yanolja-ZEN Rooms tie-up can help facilitate that goal.