Money matters: OYO raises USD 1 billion aimed at global expansion

OYO has raised a total of USD 800 million in the latest financing round led by SoftBank Investment Advisers (SBIA) through SoftBank Vision Fund, with participation from existing investors Lightspeed Venture Partners, Sequoia and Greenoaks Capital.

OYO Hotels also confirmed that it received a commitment of an additional USD 200 million, bringing the total to USD 1 billion in this round.

“Deploy fresh capital to take our unique model… global”

Speaking about the development, Ritesh Agarwal, founder and CEO at OYO, said: “In a short span of time, OYO Hotels has grown to become the most-preferred hotel brand in both economy and mid-market segments. We have already started expanding our presence to newer segments, with OYO Home, OYO Townhouse and more recently Palette Resorts by OYO.

“We will continue to explore newer businesses while remaining focused on both organic and inorganic growth. In the last 12 months, we have increased our international footprint to five countries – India, China, Malaysia, and Nepal, and more recently in the UK.

“With this additional funding, we plan to rapidly scale our business in these countries, while continuing to invest further in technology and talent. We will also deploy fresh capital to take our unique model that enables small hotel owners to create quality living spaces, global.”

OYO India has over 125,000 rooms and is witnessing three times growth in transactions year-on-year with net take rates over 20%. In addition to attaining unit-level profitability, the company is benefiting from 90% demand coming from its direct channels, improving operating efficiencies while customer loyalty, with over 67% of the top line in India coming from repeat customers.

OYO China, on the other hand, has presence in 171 cities with over 87,000 rooms, in over ten months since its foray into the market. With both the home markets, India and China on a steady performance trajectory, the company will continue to expand its presence globally.

The company will direct a significant part of the funds from this round of financing, approximately USD 600 Million, into strengthening its position in China, which is still in the early stages of growth, while the rest will go into maintaining its leadership position in India and expansion into new markets.

“OYO has grown exponentially to become the largest hotel chain in South Asia”

Munish Varma, partner, SBIA, said: “With a promise to deliver good quality accommodation at affordable prices, OYO has grown exponentially to become the largest hotel chain in South Asia, and is swiftly expanding to international markets. We are tremendously excited to be a part of OYO’s successful journey.”

Justin Wilson, director at SBIA added “OYO’s unique value proposition and outstanding growth over the last few years gives us the confidence that OYO can scale, innovate and continue to offer an intuitive customer experience, curated for different markets.”

Bejul Somaia, managing director, Lightspeed India Partners Advisors, added: “It’s exciting to see OYO’s success in scaling the India business while extending their pioneering asset light, controlled-experience model to international markets.

“Budget travellers are consistently shortchanged by the lack of trust, quality, and consistency in this segment, and we believe that OYO will continue to disrupt the hospitality industry by building a trusted brand that delivers affordable, consistent and high-quality experiences.”

“High-quality experiences at affordable prices”

Commenting on support from the investors, Maninder Gulati, chief strategy officer, OYO, concluded: “Over the years, we have developed the expertise that makes it possible for us to offer the benefits of a big hotel chain to small hotels, thereby helping them improve efficiencies and customer experience. This makes OYO Hotels a perfect choice for customers looking for high-quality experiences at affordable prices. We have industry best capabilities to make a huge impact here.”