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Analysis

800 million euros invested in the next 10 months ... Who will stop OYO?

The Indian company announced its intention to invest once again on its "domestic markets" in the next ten months, meaning in China with 600 millions euros and in India with 200 million euros.

OYO pursues growth in Asia and strengthens its model

Just a few days from the publication our global ranking, we only had a word to say about the new announcement for investment by the Indian chain OYO. The Indian "start-up" announced its intention to invest once again its "domestic markets" over the next 10months, meaning in China for 600 million euros and in India for  200 million euros. This sum will be dedicated in part to modernizing hotels, to technological  investments and employé training.

The company opened its first rooms in Europe a few month ago (OYO, a new challenger in the UK hotel market?), but this investment, first and foremost, confirms OYO's priority and the growth margins in southeast Asia. This announcement also shows a desire to expand its development in the mid-range and strengthen its network, just as its innovative business model has been copied by new companies such as Vista Rooms and Treebo.

From new beginnings to a giant in under 5 years

In 2013, its rooms were in the hundreds. Now there are hundreds of thousands. And the management assumes its ambition to surpass 1.2 million rooms and thus the globe leader: Marriott.

How has this exponential growth been possible ? This idea has been developed for the Asian market, which is still largely under-exploited by traditional hotel groups, particularly in the most economic segments. OYO has invented a standardized room modelant a sophisticated distribution platform. To rapidly grow its supply, it offers independent hoteliers the possibility of having OYO branded rooms that have been renovated according to brand criteria. Independent hoteliers benefit from a partnership that allows them to modernize their hotel progressively and attract new clients who are reassured by OYO standardizations. This disruptive  model is based on that of voluntary chains and  with exclusively a few rooms backed by state of the art digital technologies that point towards properties with unparalleled adoption statistics.

OYO propose de nouveaux services en plus de OYO Rooms, son activité originelle.
OYO offers new services in addition to OYO Rooms, its original activity.

OYO is now interested in new markets. Among other things it launched a bed an breakfast / rental division, OYO Homes - in  direct competition with AirBnB - a midscale hotel chain, OYO Town House, and OYO Smart Coin, to develop loyalty and fluidity of transactions on its platform. 

An economic model that seduces investors

Growth would not have been possible without rapid recognition from business angels and major fund drives from 6 leading investment funds (SoftBank Group, which has also invested in Uber and Wework, Lightspeed India, Sequoia, Greenoaks Capital, Hero Enterprise, China Lodging Group) which made it possible to accumulate 382 million euros since 2013. This announcement calls for another pass around the table. 

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