OYO to invest $200 mn in India & Southeast Asia ops this year

Hospitality unicorn OYO has committed to invest Rs 1,400 crore (around $200 million) in its Indian and Southeast Asian operations over the course of the current calendar year.

At an event in New Delhi, OYO announced that the investment was part of efforts to double down on its expansion plans, improve customer experience and boost the prospects of asset owners. The money will be spent on ramping up technology and renovation, said OYO founder and chief executive officer Ritesh Agarwal.

Gurugram-based OYO also announced the launch of Oyo Collection O, a mid-market offering aimed at millennials. This is the sixth platform in its hotel portfolio after OYO Rooms, Townhouse, SilverKey, Capital O, Palette Resorts. Apart from this, the company also offers long-term rentals under the Oyo Life banner.

“The key priorities as identified by the business for the year include delivering superior quality of product and service for every OYO brand with a focus on safety and security,” said Aditya Ghosh, OYO chief executive for India & South Asia. The former president of budget carrier IndiGo joined OYO four months ago.

OYO currently operates in more than 259 Indian cities across 1.75 lakh rooms in 8,700 hotels and homes via a mix of both franchise and lease models. Aggarwal said that budget accommodation remains its core offering. 

OYO has aggressively spread its wings to overseas markets over the last one year or so, launching properties across Southeast Asian nations such as the Philippines, Indonesia and Japan. It has also set up a presence in the UK and Saudi Arabia, among other countries.

Aggarwal claimed that OYO was the fourth-largest hospitality chain in China and the seventh-largest globally in terms of the number of properties on its network.

He added that the company had identified China, Southeast Asia and the Middle East as its core overseas markets.  

In addition, OYO is reportedly planning a foray into the cloud kitchen and co-working space. However, it has yet to make any official announcements in this regard.

“While we have charted the universe in terms of  the practical scope of the expansion, we are currently not in a position to disclose the company plans on that,” Aggarwal said.

OYO’s expansion is being fuelled by a massive funding round of $1 billion -- raised at a valuation of $5 billion -- which it announced last September. The company counts SoftBank Group, Greenoaks Capital, Sequoia India, Lightspeed India, Hero Enterprise and China Lodging Group among its investors.

Aggarwal said that the company had also started tapping strategic sources of capital for its funding requirements. As part of the $1 billion fundraise, OYO had secured $100 million each from South East Asian cab hailing majors Didi and Grab.

Oravel Stays Pvt. Ltd, which operates OYO, reported a three-fold rise in operating revenues to Rs 415.78 crore in the financial year 2017-18 while its losses remained flat.