India's OYO Rooms Raises $1 billion from SoftBank for its Global Expansion

The strategic investment includes funds from SoftBank Vision Fund, Lightspeed Venture Partners, Sequoia and Greenoaks Capital

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One of South Asia’s largest hotel-chains, OYO Hotels is raising $1billion from Japanese investor SoftBank to further strengthen its global operations.

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Founded by Ritesh Agarwal, OYO Hotels has raised $800 million from SoftBank Vision Fund. Today, the company confirmed a funding of $200 million from its already existing investors Lightspeed Venture Partners, Sequoia and Greenoaks Capital.  

The company’s expansion plan includes its entry into newer markets, and its further investment in India and China operations. The company will direct approximately $600 million to fuel its growth in China, which is still in the early stages.

Global Plans

In less than a year, the company has expanded widely in China. It 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.

On the recent development, Ritesh Agarwal, founder and chief executive officer, OYO says, “In a short span of time, OYO Hotels has grown to become the most-preferred hotel brand in both economy and mid-market segments. We have already started expanding our presence to newer segments, with OYO Home, OYO Townhouse and more recently Palette Resorts by OYO.”

He adds, “We will continue to explore newer businesses while remaining focused on both organic and inorganic growth. In the last 12 months, we have increased our international footprint to five countries - India, China, Malaysia, and Nepal, and more recently in The UK. With this additional funding, we plan to rapidly scale our business in these countries, while continuing to invest further in technology and talent. We will also deploy fresh capital to take our unique model that enables small hotel owners to create quality living spaces, global.”

Beyond Asia

The Gurugram-based hotel chain that has over 125,000 rooms, is witnessing 3 times growth in transactions year-on-year with net take rates over 20%, claims the company in statement to press.

It has also expanded its reach beyond Asia tapping the unexplored market of London in the UK. Agarwal confirmed the entry of company into the UK market to press in September, saying that it will invest £40 million in the UK and will look to launch in 10 cities that would include Manchester, Birmingham, Glasgow and Edinburgh. The company was eyeing the UK to expand its presence since a year.

 Speaking about the development, managing director of Lightspeed India Ventures, Bejul Somaia says, “It's exciting to see OYO's success in scaling the India business while extending their pioneering asset light, controlled-experience model to international markets. Budget travelers are consistently shortchanged by the lack of trust, quality, and consistency in this segment, and we believe that OYO will continue to disrupt the hospitality industry by building a trusted brand that delivers affordable, consistent and high-quality experiences.”

Launched in May 2013, OYO Hotel’s mission is to create quality living spaces, anywhere, for everyone. Globally, OYO Rooms is present in over 350 cities with over 10,000 asset partners spread across five countries including India, China, Malaysia, Nepal, and the UK.

Komal Nathani

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A firm believer of hard work and patience. Love to cover stories that hold a potential to change the momentum of business world. Currently, a part of all-women web team of Entrepreneur’s Asia Pacific edition to jig the wheel of business journalism!