Oyo to Raise a Further US$1.5bn to Expand in the USA and Europe

Main Photo: The OYO Premium Longting Shanshui Hotel Xunlong Guilin, China

Date: October 2019

Location: India HQ – hotels and other businesses global

Name: Oyo Hotels & Homes

No. of Keys: Oyo now manages 1.2 million rooms in over 80 countries. In the US, Oyo now boasts 7,500 rooms with another 3,500 in the UK. During 2019 the company says that it’s revenue has expanded nearly four-fold compared to last year, thanks in part to its having established a network of 590,000 rooms in China and another 27,000 rooms in Indonesia.

The Company: Indian hospitality group Oyo Hotels and Homes today announced that it is raising a further US$1.5 billion to continue its expansion into the US, Europe and other global markets.

25-year-old Oyo founder Ritesh Agarwal is leading the financing round with support from the six-year-old company’s biggest backer, Softbank, Lightspeed Venture Partners and Sequoia India.

The fresh capital for Oyo comes as Softbank continues to take flak from investors in the wake of the failed IPO of WeWork, with Agarwal taking care to emphasise the hotel firms declining losses in the statement.

“We truly believe that we will be able to build a truly global brand out of India, while ensuring that the business is run efficiently and with a clear path to profitability,” Agarwal said, while indicating that the company’s earnings before tax, depreciation and amortisation – EBITDA has improved 50 percent year on year.

In the new funding round, RA Hospitality Holdings, a company controlled by Agarwal, will be investing $700 million to buy back shares in Oyo from the current stakes of existing investors Lightspeed and Sequoia India.

According to an account by Bloomberg, the new round, which includes Softbank’s Vision Fund, Lightspeed and Sequoia putting a combined $800 billion into Oyo, values the hospitality chain at $10 billion.

Oyo received US$1 billion in funding last year led by $800 million from Softbank’s Vision Fund, targeted specifically at growing its business in China. That expansion was not without some speed-bumps, however, with reports in the mainland press this year alleging that the Indian unicorn had laid off as many as 1,000 staff. Oyo denied the press reports at the time.

The company, which has also branched out into student housing, vacation home rentals and co-working, licenses independent hostelries to use the Oyo name in return for receiving an average 25 percent of all bookings.

In return for turning over a quarter of their top-line revenue, Oyo’s partners receive assistance with upgrades, standardised linens and toiletries and staff training support.

THPT Comment: We should give Oyo it’s own section in our weekly report! Another £billion into the pot to help Agarwal achieve his aim and ambition to be the world’s largest hotel company.

First Seen: Mingtiandi

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