OYO, one of the leading hotel chains has raised a total of $ 800mn in its latest round of funding led by SoftBank Investment Advisers through SoftBank Vision Fund and also with some participation from existing investors like Sequoia Capital, Greenoaks Capital, and Lightspeed India Partners. They have also confirmed a committed investment of $200mn in add-on to the $800mn from non-disclosed investors. This would make their total funding to $1 bn in this round.
OYO had previously generated about $450mn in funding from key investors such as Sequoia Capital India, Lightspeed India Partners, DSG Consumer Partners, and SoftBank.
JP Morgan, who is exclusively handling the financial advisory for OYO estimates the current valuation of the company at $5Bn after this round of funding.
The major part of this funding will go towards strengthening their position in China, which is early stages of development, while the remaining will be kept for further maintaining their position in India along with expansion into new markets.
Ritesh Agarwal, Founder, and CEO, OYO, said, “In the last 12 months, we have increased our international footprint to five countries — India, China, Malaysia, and Nepal, and more recently, 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.”
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.”
The Current Business
OYO has over 125,000 rooms in India alone and is rapidly growing with net takes rates over 20% year on year. With OYO’s current spread out in China, Nepal, Malaysia, and Indonesia, it is now eyeing the US and UK markets for expansion. 67% of its top line demand in India is coming from repeat customers and hence OYO is very much focused on improved operational efficiencies in order to retain the customer base.
With 87,000 room and presence in 171 cities, OYO China has seen a fast and steady growth just in 10 months since its inception in the market.
OYO is also into expanding into other segments of businesses and has recently acquired 3 startups. Mumbai based Weddingz, an online marketplace for wedding venues and vendors; Chennai based service apartment operator Novascotia Boutique Homes and the Internet of Things technology venture, AblePlus make for these 3 startups. Along with this OYO has also ventured into its venue business named Auto Party. Launched in 8 cities, it helps to provide venues and wedding planning services in cities like Jaipur, Lucknow, Kolkata, and Delhi.
OYO is definitely on a roll to make it bigger and better.