OYO Rooms' Unstoppable Growth in China

Having great partners in business is key to the company's growth, says founder
OYO Rooms' Unstoppable Growth in China
Image credit: Entrepreneur India

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Former Correspondent, Entrepreneur Asia Pacific
3 min read

In less than a year, OYO Rooms has built a base of over 50,000 rooms, which is almost half the company’s entire inventory in India. In July alone, the company signed about 400 franchisees and added over 25,000 rooms to its inventory across 26 Chinese cities, including Hangzhou, Guangzhou, Xian, and Shenzhen, offering a combination of franchises and managed hotels.

While giving a presentation to the investors on August 6, the chief executive officer of Softbank Masayoshi Son talked about the growing numbers of budget hotel chain OYO Rooms in China.

“OYO Rooms had grown over 96 times in terms of overall number of rooms, as of June,” said Son of Softbank, which has a 42 per cent share in the company. Referring to the same metric, he added that OYO Rooms is seven times bigger than other market players like The Taj group of Hotels and Lemon Tree Hotels. At present, the total number of rooms available on OYO is 101,000.

Among other international geographies, OYO is already operating in Dubai, Malaysia, Nepal and Thailand while the company has expanded to London last month. The company is also said to be in talks with Chinese technology company Tencent to raise between $300 million and $500 million funding.

How did it happen?

 Founder Ritesh Agarwal was eyeing Chinese market since the past four years.

“Today OYO is one of the fastest growing hotel chains in China, and “it has happened” because of having great partners in business,” said Agarwal while giving his presentation at Entrepreneur 2018 convention in New Delhi on July 16.

Appreciating the efforts made by China team of OYO, Agarwal spoke at length about the importance of having great partners when it comes to expanding business. He said, “Whenever you look at expanding business, always partner with people, who you believe are mission oriented like you as this brings the great quality of management in the company.”

He also shared that when company was planning to foray in China, most of the shareholders were concerned for its future. But today they appreciate our move.

Agarwal also mentioned that China operations generated the significant cash at an asset-level profit within two months of its launch, and added that today Oyo Rooms is already the number two hotel chain in Shenzhen, in the fastest growing market like China.

Eyeing UK and other European Countries

The company had entered China last year in November, but disclosed its business only three months ago as they first wanted to increase its presence in the Chinese market. In a formal announcement, the company had announced its arrival in China where it said it covers 11,000 exclusive rooms across 26 cities. The hotel chain currently employs 1000 people in China.

Founded in 2013, Oyo was one of the fastest growing startups in India. After raising around $450 million in three investment rounds from SoftBank, OYO went for a $250-million funding round, the company again in September 2017, and achieved a valuation of $850 million bringing it close to the unicorn tag.

After China, Oyo is also looking at the UK and some European countries to expand into within the next 12-18 months.

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