OYO Hotels raises $1 billion, to strengthen market leadership

OYO – South Asia’s largest hotel chain – has raised a total of $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 US$200 million, bringing the total to US$1 billion in this round.

Speaking about the development, Ritesh Agarwal – Founder & CEO, 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 3x 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 its globally. The company will direct a significant part of the funds from this round of financing, approximately $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.

Said Munish Varma, Partner, SBIA, “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.”

Added Justin Wilson, Director, SBIA, “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 travelers 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.”

Commenting on support from the investors, Maninder Gulati, Chief Strategy Officer, OYO, added, “The deal reinforces the confidence of our investors in our unique full stack fulfillment led business model and the growth potential it promises, and we are humbled to continue to have their support and backing. 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."

Launched in May 2013, OYO Hotel’s mission is to create quality living spaces, anywhere, for everyone. Globally, OYO chain of hotels is present in over 350 cities with over 10,000 asset partners spread across five countries including India, China, Malaysia, Nepal, and the UK. OYO Hotels has pioneered the world’s first full stack technology led hospitality model and has over 211,000 franchised and leased rooms as a part of the chain, delivering strong revenue yields for its asset partners. OYO Hotels host more than 125,000 stayed room nights every single day, a testament to its impact on millions of guests across the world.

J.P. Morgan is acting as the exclusive financial advisor to OYO on this fundraising.


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