OYO takes hotel biz to Japan via joint venture with SoftBank

OYO takes hotel biz to Japan via joint venture with SoftBank
Photo Credit: Photo Credit: VCCircle

OYO is taking its hotel offerings to Japan as the hospitality unicorn presses on with its rapid global expansion on the back of a recent funding spree.

Gurugram-based OYO said in a statement that OYO Hotels Japan GK (Oyo Hotels Japan) will be a joint venture with SoftBank Corp and the Tokyo-headquartered conglomerate’s SoftBank Vision Fund.

Masayoshi Son-led SoftBank is an investor in OYO and led its $1 billion funding round which was announced last September.

Prasun Choudhary, vice president of operations and head-south and east region at OYO, will lead the Japan chapter as its operating partner.

“Combining OYO's most advanced business model with SoftBank Corp.'s knowledge of the Japanese market, we will provide brand-new hotel experience to travelers in Japan,” said Ken Miyauchi, president and chief executive officer of SoftBank Corp.

The development comes a few months after OYO launched its long-term rental and co-living space offering, OYO Life, in Japan through a joint venture with Yahoo Japan.

Earlier this month, the company announced that OYO Life had gone live with over 1,000 properties across Tokyo.

“Now, through our new entity, OYO Hotels Japan, we will be focused on creating unique hospitality experiences for both domestic and international travelers in Japan,” said Ritesh Agarwal, group chief executive officer and founder of OYO Hotels & Homes.

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. Agarwal recently identified China, Southeast Asia and the Middle East as its core overseas markets.  

This expansion has been fuelled by the large sums of capital it has raised in recent months.

Earlier this week, San Francisco-based home-sharing marketplace Airbnb said it invested an undisclosed sum in OYO. Media reports pegged the investment at $200 million.

OYO had in February raised $100 million from Chinese ride-hailing firm Didi Chuxing as part of a $1 billion Series E 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 firm at $5 billion.

OYO, operated by Oravel Stays Pvt. Ltd, has half-a-dozen offerings in its portfolio: OYO Rooms, OYO Collection O, OYO Townhouse, OYO SilverKey, OYO Capital O, OYO Palette Resorts and OYO Life. However, the company has said that budget accommodation remains its core offering

In India, 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 across all price ranges.

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.

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.