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The hotel company OYO Rooms has opened an office in the United States and is about to land in southern Europe. OYO was born in India with one goal: to place thousands of independent hotels in the Asian country at the same level of quality and service to improve its marketing and business. The company, created by Ritesh Agarwal, has unified in quality and service part of the hotel factory in India and other countries in the region where it has developed, such as China, Malaysia, Nepal or indonesia. One of the keys to OYO is to focus on the low cost hospitality market. According to the company, OYO ended 2018 managing 458,000 rooms across all of its Asian markets, with around 18,000 properties in 500 cities.

OYO Rooms enjoy the chaos of Indian hospitality

In the United States, the Indian company has opened an office in Dallas and is already testing its format there and in Austin, reports portal Skift.com. For Spain and Portugal, OYO hired Tobias Jörk, CEO of Groupon between 2011 and 2013, who will lead its development in the Iberian Peninsula. Since September 2018, Jörk has created part of the OYO Spain team with professionals from companies such as Cabify or Groupon. As of January, the Indian company also has offices in the UK, headed by Andrew Verbitsky, from Airbnb and Kayak.

OYO has secured $ 1,500 million in funding since its inception and one of its investors is Softbank, the source of successes like Alibabá and Uber. On the other hand, Airbnb is also planning to invest between $ 100 million and $ 200 million in OYO rooms, according to The Information, in a clear Airbnb strategy to participate in the internet hotel reservation business. The Indian company is so attractive because it has been able to give a unique identity to hotels that were not under an identifiable brand. In addition, there is an audit to improve the quality of these accommodations and common services, such as wi fi.

The keys to the activity of OYO are multiple. First, the company does not own any property, but has a collaborative business model. In its early days, OYO signed repositioning and service agreements with hoteliers. With this, he managed to standardize the product of thousands of independent housing as part of his teaching OYO. Today, the company enters into franchise agreements with hoteliers, which makes it more involved in the hotel's suitability.

Second, once OYO has a unified hosting offering, comes the marketing part. Unlike other franchisees, the main difference of OYO is that it markets all of its hotel offer directly, via its website or mobile application. This ensures a better return on investment, as it does not share a percentage of the revenue with online travel agencies and other intermediaries. The OYO franchise hotels are integrated into its sales system and are accessible through its web portal and app.

In Spain, OYO is already announcing two properties in Madrid, which are not precisely hotels, since one is a bed and breakfast and the other a rural hotel, both in the mountains of Madrid. However, in Salamanca the company offers several hotels and a hostel. Valencia, Segovia, Toledo and Zaragoza are other Spanish cities where there are already accommodation under the OYO education.

Just because OYO has triumphed in Asia doesn't mean that it can replicate success in the US and Europe, as these are totally different hotel markets. The United States is dominated by large hotel chains, such as Marriott, and the number of independent hotels is very low (a third of all in the country). Uniting them under one brand and marketing them as a single product can make sense for hoteliers if they manage to increase their turnover.

In Europe, the reverse is true, the hotel market is very fragmented with a large abundance of hotels that do not belong to any major brand. In addition, the average qualities of accommodation are very standardized across the continent, so the proposal that has succeeded in Asia may be a failure in Europe.

For example, in Spain, where there is a star system that guarantees quality standards, hotel rooms and the establishments themselves have a set of characteristics that make them very similar. On this side, OYO might have little work and should focus more on marketing integrated hosting under its brand. The real business potential of OYO in Spain is found in lower quality hotels (one and two stars), which have an average occupancy of 38% and 47%, respectively, according to data from the National Institute of Statistics.

The hostels segment can also benefit from the customers that OYO can supply, as the average occupancy of this type of establishment is 36% in Spain. Increasing these numbers would dramatically improve your business. In India, accommodations of similar characteristics that joined OYO increased their occupancy rate from 25% to 65% in one month, according to data provided by the Indian company.

Oyo Rooms (stylized as OYO), also known as Oyo Homes & Hotels, is an Indian hotel chain. It is the third fastest growing hotel chain in the world, comprising leased and franchised hotels, homes and living spaces. Founded in 2013 by Ritesh Agarwal, OYO initially consisted mainly of budget hotels. Over a period of six years, the startup has grown globally with thousands of hotels, vacation homes and millions of rooms in hundreds of cities in India, Malaysia, United Arab Emirates, Nepal, China, Brazil, Mexico, UK, Philippines, Japan, Saudi Arabia, Sri Lanka, Indonesia, Vietnam, USA and more The company's investors include SoftBank Group, Greenoaks Capital, Sequoia India, Lightspeed India, Hero Enterprise, Airbnb and China Lodging Group.

History

In 2012, Ritesh Agarwal launched Oravel Stays to enable registration and booking of budget accommodation. After undertaking months of research and staying in various guesthouses, guesthouses and small hotels across India, he pivoted Oravel to OYO in 2013.

OYO partners with hotels to deliver a similar customer experience in all cities. Shortly after the launch of Oravel Stays, Ritesh Agarwal received a $ 100,000 grant as part of the Thiel Fellowship from Peter Thiel. OYO currently has more than 17,000 employees worldwide, including approximately 8,000 in India and South Asia. OYO Hotels & Homes now identifies itself as a full-fledged hotel chain that leases and franchises assets. The company claims to invest in investments, [16] GMs to oversee operations and customer experience as well as generate around one million job opportunities in India and South Asia alone. OYO has also established 26 training institutes for hospitality enthusiasts across India.

Funding

The company is currently valued at $ 10 billion [19] according to the latest round of financing.

September 2018 - raised $ 1 billion, of which the RoC deposit for the amount of $ 100 million raised from Star Virtue Investment Ltd. was made on February 13, 2019.

October 2019 - $ 1.5 billion Series F financing led by SoftBank Group, Lightspeed Venture Partners and Sequoia India.

Founder and CEO, Ritesh Agarwal, through RA Hospitality Holdings (Cayman), signed a $ 2 billion primary and secondary management investment cycle in 2019, backed by global institutional banks and financial partners, subject to regulatory and shareholder approval. Lightspeed Venture Partners and Sequoia India, the first supporters of OYO, sell part of their holdings in order to help the founder increase his stake and thus his commitment while remaining significantly invested in the long-term mission of the business.