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Source: Slideshare

SoftBank Group is doubling down on its bet on hospitality chain OYO with chairman and chief executive Masayoshi Son calling it a “next-generation hotel company” and saying that it planned to support the Gurgaon-based company through a joint venture for its foray into China. This is as a report in the Economic Times.

About nine months back there were reports saying that OYO had brought Shanghai-based China Lodging Group on board as an investor. China Lodging Group is now known as Huazhu Hotels Group. It is one of the world’s largest multi-brand hotel groups. China Lodging Group had led a $10 million funding round in OYO in September last year.

Source: Luxury Hospitality Daily

Now, OYO has officially announced its foray into China.

With this launch, OYO claims to have more 11,000 rooms on a franchised or manchised model across 26 cities including Hangzhou, Xian, Nanjing, Guangzhou, Chengdu, Shenzhen, Xiamen and Kunming among others.

China is third International market for SoftBank-backed OYO after Malaysia and Nepal.

The report has quoted Ritesh Agarwal, founder & CEO of OYO saying that, “With our expertise in managing chain of hotels backed by technological innovations, we will further continue to strengthen our footprint while empowering neighbourhood hotels to emerge in the same league as the big boys of hospitality.”

“We’ve been at the forefront of the small and budget hotels revolution in India, Malaysia and Nepal. Building the category of small-unique hotels grounds-up, we have employed design and operational acumen to deliver delight to our customers and benefits to assets ensuring high yield”

OYO also recently launched operations in Jakarta, the capital of Indonesia that is fast emerging as a destination of choice for Indian startups. The company had opened three hotels under its brand in Jakarta, offering 130-plus rooms as of May this year. OYO is also expected to launch operations in Dubai this month.

With this launch, OYO claims to have more 11,000 rooms on a franchised or manchised model across 26 cities including Hangzhou, Xian, Nanjing, Guangzhou, Chengdu, Shenzhen, Xiamen and Kunming among others.

Masayoshi Son’s Comments on OYO’s foray into China

Speaking at Softbank’s 38th annual general meeting on the 20th of June, the 60-year-old billionaire, who has ploughed billions into India’s startup ecosystem, said OYO was growing “exponentially” and heaped praise on founder Ritesh Agarwal.

Source: We the Transformers

“I would really like to introduce this company to all of you,” Son said. “The founder, as of today, is only 23 years old. He founded the company when he was only 19 years old. Only four years have passed but it is growing exponentially.”

“It is the biggest player in the hotels business. It owns about 100,000 rooms,” he said. “It is also growing exponentially. I think, on a per-month basis, the number of rooms, or net growth, is going to continue to grow at the pace of more than 10,000. It is a next-generation hotel chain using the internet service.”

A joint venture with OYO will not be the first time that SoftBank has entered into such a partnership with a portfolio company. It has done so with WeWork and was also reported to be setting up one with ride-hailing giant Didi.

The comments come at a time when OYO has launched its services in China.

OYO’s Chinese operations also include more than 11,000 exclusive — franchised or ‘manchised’— rooms in 26 cities including Hangzhou, Xian, Nanjing, Guangzhou, Chengdu, Shenzhen, Xiamen and Kunming among others. Manchise refers to a franchise relationship that includes a management contract.

“After our successful overseas expansion and operations in Malaysia and Nepal, we are thrilled to offer OYO hotels’ hassle-free and standardised stay experience to guests in China,” Ritesh Agarwal has been quoted in the report.

The company currently operates about 70,000 rooms in more than Indian 230 cities and has a target of 180,000 rooms under its brand by the end of 2018.

SoftBank’s CEO Masayoshi Son has seen potential in OYO along with Paytm. Both SoftBank and Alibaba have just completed investing $445 million in Paytm.

As per a report in the Economic Times, SoftBank has more than $8 billion (Rs 53,222 crore) invested in India. The returns, so far, have been mixed. Snapdeal and Housing.com have virtually disintegrated, while Paytm, OYO and a rejuvenated Grofers, have prospered, even as Son and his crew have fine-tuned their approach.

 

 



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