US-based online home rental company Airbnb is currently in talks to invest $100-200 million in homegrown budget hospitality chain OYO, subscription-based digital media publication The Information stated, citing two persons in the know.
According to The Information, it isn’t clear if the proposed terms of Airbnb’s investment will give it exclusive access to rent OYO rooms through its site.
The report also stated that the deal could fall apart because of tax-related complexities for Airbnb to invest in a foreign startup. “There also is competition among investors to put money into OYO,” it said.
An OYO spokeswoman told The Information that the hospitality company “is working closely with a range of global distribution partners such as Airbnb and other regional and global players. None of these relationships are exclusive in nature.”
"OYO Hotels and Homes are working closely with a range of global distribution partners such as Airbnb and other regional and global players. Our mission is to create quality living spaces and offer those to guests and travelers across the world, and global strategic relationships support that work. None of these relationships are exclusive in nature as OYO will always strive to offer its accommodation spaces to every potential guest," a spokesperson from OYO told TechCircle.
Email queries sent to Airbnb did not elicit any response at the time of publishing this report.
The decision to invest in OYO comes soon after the San Francisco-based Airbnb acquired US-based booking app HotelTonight for $400 million.
Airbnb currently operates in 191 countries, providing homestays that range from private rooms to manors and islands.
Last month, it had launched Plus Homes in India, featuring homes with the highest ratings. The company said that more than one million Indians travelled with Airbnb globally in 2018 and that there has been a 115% increase in Indian listings over the past year.
In India, it faces stiff competition from OYO, which initially aggregated hotel rooms under its brand. Later, OYO consolidated its operations under the franchise model, where it controls the inventory and decides the pricing along with its exclusive hotel partners.
In February, it raised $100 million (Rs 709.4 crore) from Chinese ride-hailing firm Didi Chuxing to close its ongoing $1 billion investment round.
Prior to Didi Chuxing’s investment, OYO raised capital from Japanese conglomerate SoftBank, Singapore ride-hailing company Grab, investment firms Lightspeed Venture Partners, Sequoia Capital and Greenoaks Capital as part of the $1-billion funding round.
The round valued the Ritesh Agarwal-led firm at $5 billion.
The investment has fueled the company’s expansion plans. Just after closing its $1-billion round, OYO entered the online food business by launching private labels on delivery platforms Swiggy, Zomato and Uber Eats. It also plans to venture into the cloud kitchen and shared offices sectors.
Subsequently, in March, it said it has committed Rs 1,400 (around $200 million) into its Indian and Southeast Asian operations in the coming year.
With budget accommodation as its core offering, OYO has spread its wings not only in India but in several overseas markets, including China, Malaysia, Nepal, UK, UAE, Indonesia and the Philippines. It currently operates over 13,000 franchised or leased hotels and over 6,000 homes as part of its chain.
It identifies China, Southeast Asia and the Middle East as its core foreign markets. In India, OYO is present in over 259 cities across 1.75 lakh rooms in 8,700 hotels and homes.