OYO Hotels Raises $1 Bn To Strengthen Market Leadership And Expand Global Footprints | #VentureCanvas
Meha Agarwal | Inc42
Hotel chain OYO has raised a total of $800 Mn 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 $200 Mn, bringing the total to $1 Bn in this round.
J.P. Morgan is acting as the exclusive financial advisor to OYO on this fundraising.
The company will direct a significant part of the funds from this round of financing, approximately $600 Mn, 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.
Ritesh Agarwal – Founder & 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 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 a 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.
According to Justin Wilson, Director, SBIA, OYO’s unique value proposition and outstanding growth over the last few years gives them 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.”
OYO is currently on an acquisition spree. It has so far acquired three startups this year. This includes Mumbai-based Weddingz, an online marketplace for wedding venues and vendors; Chennai-based service apartment operator Novascotia Boutique Homes in March and internet-of-things technology venture AblePlus in July.
This year, OYO also launched venue business, Auto Party. In June 2018, Auto Party was launched in eight cities to provide banqueting and wedding planning services.
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