OYO to add 17,000 new properties in Europe with new acquisition

OYO to add 17,000 new properties in Europe with new acquisition
Photo Credit: VCCircle
7 Feb, 2020

OYO is acquiring the holiday homes tour operating business of Hanover-based TUI Group, which will add about 17,000 new properties to the SoftBank-backed hospitality company’s European portfolio.

The acquisition was done via OYO Vacation Homes, its global vacation homes vertical.

At the end of last year, Frankfurt-based e-domizil, which runs a holiday homes businesses, announced the purchase of 100% equity in TUI's subsidiary Wolters Reisen. Wolters Reisen runs three business segments -- roundtrip tours operator, holiday homes tour operator and holiday homes online travel agency. OYO Vacation Homes, under its Belvilla brand, has entered into an agreement with e-domizil to acquire TUI’s holiday home tour operator business TUI Ferienhaus.

OYO has an existing portfolio of over 35,000 fully-managed vacation homes across Europe, gained from its $415 million acquisition of Amsterdam-based @Leisure Group last year. On completion of the deal, OYO will have a total of over 50,000 holiday homes in Europe, the company said in a statement. Besides, the acquisition will enable OYO to expand its presence from 22 to 26 countries.

The financial details of the deal were not announced. "This transaction is subject to customary conditions and approvals, in particular from the relevant antitrust authorities,” the statement said.

OYO is strengthening its footprint in Germany, France and Italy, while also expanding its current base in Poland, Greece, the United Kingdom, Portugal, Norway and the Czech Republic, the statement added. Currently, the company offers fully-managed, private homes under brands including OYO Home, Belvilla, DanCenter, Danland and Germany-based Traum-Ferienwohnungen.

“At OYO, our acquisition strategy is focused towards building on our existing capabilities. With e-domizil as a partner, we have found synergies to strengthen our presence across Europe. Through this acquisition, we are unlocking a sizable opportunity of adding over 17,000 units to our existing portfolio,” Tobias Wann, global chief executive officer, OYO Vacation Homes, said.

OYO recently appointed Raj Kamal as the chief operating officer of OYO Vacation Homes in the UK and Europe.

In troubled waters

The development comes amid serious operational issues at the company, according to multiple media reports. Last month, the SoftBank-backed hospitality major fired 200 employees from its Delhi office. OYO reportedly laid off about 2,000 employees in India last month. Earlier this week, travel intelligence media company Skift reported that OYO fired around 360 employees in the US, more than a third of its workforce in the country.

Meanwhile, the arbitration between ZO Rooms and OYO has resurfaced. On January 21, ZO Rooms filed a petition in the Delhi High Court, asking Oravel Stays Singapore and Alcott Town Planners to be made party to an ongoing arbitration between it and OYO's holding company Oravel Stays, incorporated in India. In July, OYO had hived off its business into three entities — Oravel Stays Singapore, which houses the international business of the chain in China and US; Oravel Stays, which focuses on the OYO brand and technology functions across verticals; and Alcott Town Planners, an arm responsible for all India business dealings for OYO.

ZO Rooms contested that not making the subsidiary companies respondents to the ongoing arbitration will see a loss of value. Post the merger, proprietors of ZO Rooms were to be allotted 7% equity shares in Oravel Stays. With the demerger, ZO Rooms said that it is worried about the loss of value if the arbitration is decided in its favour

In 2015, OYO had committed to acquiring the business of ZO Rooms, announcing the acquisition in 2016. However, the deal did not materialise and the parties have been stuck in a long-drawn arbitration since 2018.

While the court quashed ZO Rooms' charges against OYO, which accused the SoftBank-backed company of stealing employee data in 2018, the companies have been suing each other on various other charges.