India's Dark Horse Hotelier Oyo to Invest USD600 Million in China
/ SOURCE : yicai
India's Dark Horse Hotelier Oyo to Invest USD600 Million in China

(Yicai Global) July 17 -- India's Oravel Stays, which operates the Oyo Hotels & Homes accommodation chain has now has USD1.5 billion in assets and it is committed to diverting 40 percent of these funds towards China, the six-year-old unicorn announced today, Beijing Business Today reported.

Of its USD600 million investments in China, USD100 million will go to recruitment, customer experience, quality and systemic improvements to promote Oyo's further growth, said a company insider, per the report, though the hospitality firm did not relate what the rest will be used for.

This is not the first time Oyo, which is based in Gurgaon, in Haryana state, just outside New Delhi and which also does business under the name Oyo Rooms, has pledged to pump some serious cash into China, where it became the largest hotel chain last month, Business Insider reported.

When SoftBank, Sequoia Capital and Lightspeed Ventures jointly invested USD1 billion in Oyo in its series E funding in September the firm committed over 50 percent of proceeds to help grow its China business.

After another USD800 million flowed in from SoftBank, the hotel chain also palmed USD100 million from Chinese ride-hailer Didi Chuxing in a symbiotic relationship, since the two sectors target the same user base and are thus mutually reinforcing, Zhao Huanyan, chief knowledge officer at Shenzhen Huamei Restaurant Management Consulting, told National Business Daily.

Some of these funds will extend its footprint in India, but most will expand its Chinese market, the firm said then.

Setting Stores

The company may also use the money to build its own hotel support system, including a room reservation mechanism, Zhao explained. Most of the funds will still go to expansion as Oyo sets great store by its hotel tally, sector professionals said.

The firm has thus recently taken over other hotels in a manic drive to lift its location count as part of its bid to break into the premium and mid-end lodging market. The company now has over 10,000 hotels in 337 Chinese cities, as against just over 5,000 in July, data on its website shows. Oyo fully entrenched itself in the country when it clinched its takeover of domestic mid-range hotel brand Qianyu Islands in the first quarter, it announced.

It has operated via a franchise program featuring low-end and small hotels since its November 2017 China debut, and a strategy that has eschewed the saturated first-tier city market to tap the undeveloped potential of lower-tier ones. The firm now offers over 500,000 rooms in 10,000 hotels in 337 Chinese cities.

Founded in 2013 in India, Oyo expanded rapidly from a single location to become the world's third-largest hotel chain as of June, it announced on its website on July 19.

It became the world's third-largest hotel chain by room number after leapfrogging several established brands, and is present in over 800 cities, with more than 23,000 hotels, 850,000 rooms and 46,000 holiday homes worldwide, the chain announced on July 12. It has 720 hotels in Indonesia with more than 20,000 rooms. It has 85 hotels in the UK and 68 in the US.

It is mulling an initial public offering in the next few years, Bloomberg reported.

Editor: Ben Armour

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Keywords: Oravel Stays , Oyo Hotels , India