Airbnb confirms investment in budget hospitality chain OYO
San Francisco-based home-sharing marketplace Airbnb has invested an undisclosed sum in SoftBank-backed budget hospitality chain OYO.
Airbnb said in a statement that it has pumped money into OYO, owned by Gurugram-based Oravel Stays Pvt. Ltd, as part of its Series E funding round. The company didn’t disclose the details of the investment.
In a report last month, subscription-based digital media publication The Information, citing people it did not name, had reported that Airbnb was in talks to invest up to $200 million in OYO.
Airbnb said on Monday that it expects to leverage the investment in OYO to gain access to franchised and leased hotels as it looks to expand its offerings from its staple home rentals.
“Emerging markets like India and China are some of Airbnb’s fastest-growing, with our growth increasingly powered by tourism to and from these markets,” said Greg Greeley, president of homes at Airbnb.
Maninder Gulati, global chief strategy officer at OYO Hotels & Homes, said: “Airbnb’s strong global footprints and access to local communities will open up new opportunities for OYO Hotels & Homes to strengthen and grow while staying true to our core value proposition.”
Airbnb currently operates in 191 countries, providing homestays that range from private rooms to manors and islands.
In February, it had launched ratings-based Plus Homes in India. 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.
OYO had in February raised $100 million from Chinese ride-hailing firm Didi Chuxing as part of a $1 billion investment round. SoftBank, Singaporean ride-hailing company Grab, Lightspeed Venture Partners, Sequoia Capital and Greenoaks Capital had contributed the initial $900 million to the round which valued the Ritesh Agarwal-led firm at $5 billion.
Since first announcing the round in September, OYO has been on an expansion spree and is currently present in 500 cities across eight countries: India, 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. In India, OYO is present in over 180 cities with more than 8,700 properties.
OYO also entered the online food business recently 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.
OYO had recently strengthened its top deck by making a slew of appointments with an aim to expand across different regions.
The company appointed Andrew Verbitsky as the head of its European operations, Sam Shih as its chief operating officer for China, Jeremy Sanders as the UK head and Tan Ming Luk as the head for Malaysia. Verbitsky has had stints at Airbnb and Delivery Hero across Europe and Asia.
Earlier, the company had appointed Aditya Ghosh, former president of budget carrier IndiGo, as chief executive officer to head its operations in India and South Asia.
OYO recently reported a three-fold rise in operating revenues amidst flat losses even as gross expenses rose nearly two-fold for the year through 31 March 2018. The company reported operating revenues of Rs 415.8 crore for 2017-18, up from Rs 120.4 crore in the previous fiscal.