OthersNEW DELHI: SoftBank-backed Oyo Hotels & Homes is setting sights on the upscale, four-star hospitality segment in India and is looking out for partnerships, people familiar with the development told ET.
The partner companies will acquire these assets and Oyo will operate and manage them. Work has begun on this project and the company has set an internal target of reaching 5,000 rooms by the end of the year, the sources said.
“Oyo is getting into the four-star hotels business in India with such partnerships through which they will manage hotels under a new brand that they are creating,” said one of the sources.
“They (Oyo) are extremely aggressive with the vision that they want to have 5,000 rooms through these partnerships. This is not an aggregator model. Five thousand rooms mean that they are aiming for, probably, 50 hotels by the end of the year,” another source said.
In a response to ET’s queries, Oyo said it is exploring opportunities for expanding its existing inventory in the four-star/upscale segment. “Currently, Oyo provides guests a premium experience at competitive prices via its upper-end leisure resorts category of Palette Resorts in India. The discussion is at an early stage and we have no further comments at this time,” a spokesperson said.
According to some media reports, anchored by SoftBank, Oyo is in talks to raise another round of funding in the range of $1-1.5 billion at a valuation of $12.5 billion.
Rohit Kapoor, the chief executive of its new real estate business, is heading this project for Oyo. The former McKinsey consultant and Max Healthcare executive director joined Oyo last December.
For expanding its presence in the upscale category in India, Oyo wants a company that understands buying of assets to step in as its third-party partner.
The midscale segment constituted around 71% of overall brand signings in the sector last year, followed by the upscale segment at 15%, according to a report by hotel consultancy HVS Anarock. India Hospitality Industry Review 2018 said the quantum of rooms signed by all mainstream hotel operators is dwarfed by Oyo which, alone in 2018, signed more than 120,000 keys — over 700% more than all other chains put together.
The branded hotel sector comprises a collection of about 50 hotel companies. Chains like Taj, Radisson Hotel Group, Marriott, Hyatt and Accor Hotels were among those which signed the most number of keys last year, the HVS report said.
The partner companies will acquire these assets and Oyo will operate and manage them. Work has begun on this project and the company has set an internal target of reaching 5,000 rooms by the end of the year, the sources said.
“Oyo is getting into the four-star hotels business in India with such partnerships through which they will manage hotels under a new brand that they are creating,” said one of the sources.
“They (Oyo) are extremely aggressive with the vision that they want to have 5,000 rooms through these partnerships. This is not an aggregator model. Five thousand rooms mean that they are aiming for, probably, 50 hotels by the end of the year,” another source said.
In a response to ET’s queries, Oyo said it is exploring opportunities for expanding its existing inventory in the four-star/upscale segment. “Currently, Oyo provides guests a premium experience at competitive prices via its upper-end leisure resorts category of Palette Resorts in India. The discussion is at an early stage and we have no further comments at this time,” a spokesperson said.
According to some media reports, anchored by SoftBank, Oyo is in talks to raise another round of funding in the range of $1-1.5 billion at a valuation of $12.5 billion.
Rohit Kapoor, the chief executive of its new real estate business, is heading this project for Oyo. The former McKinsey consultant and Max Healthcare executive director joined Oyo last December.
For expanding its presence in the upscale category in India, Oyo wants a company that understands buying of assets to step in as its third-party partner.
The midscale segment constituted around 71% of overall brand signings in the sector last year, followed by the upscale segment at 15%, according to a report by hotel consultancy HVS Anarock. India Hospitality Industry Review 2018 said the quantum of rooms signed by all mainstream hotel operators is dwarfed by Oyo which, alone in 2018, signed more than 120,000 keys — over 700% more than all other chains put together.
The branded hotel sector comprises a collection of about 50 hotel companies. Chains like Taj, Radisson Hotel Group, Marriott, Hyatt and Accor Hotels were among those which signed the most number of keys last year, the HVS report said.
( Originally published on Jun 20, 2019 )
Get Unlimited Access to The Economic Times
