Expansion

After Indonesia, OYO Competes with RedDoorz in the Philippines

The Ritesh Agarwal-led company has been eyeing expansion in 35 cities from the beginning of 2019
After Indonesia, OYO Competes with RedDoorz in the Philippines
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Former Correspondent, Entrepreneur Asia Pacific
4 min read

After investing $100 million to strengthen its presence in Indonesia, the Indian hospitality chain OYO has now entered the Philippines market to expand its operations in Southeast Asia. The firm has launched its operations with over 21 franchised and leased hotels in the country.

The hospitality chain will be investing $50 million over the next few years in the Philippines and aims to generate 1,000 direct and indirect employment opportunities.

"We believe that by setting foot in the Philippines, we are advancing our vision of strengthening our foothold in Southeast Asia," said OYO Hotels and Homes COO Abhinav Sinha in a PTI interview.

Launched in October last year, the company started its operations in Indonesia with 30 full-inventory-franchised exclusive hotels and 1,000 rooms in Jakarta, Surabaya, and Palembang. Today this has grown five times in just three months, to over 4,100 rooms from more than 150 hotels in 16 cities. The company now aims to expand to 100 cities by the end of the year, said Ritesh Agarwal in a press statement.

Fulfilled promises

The company was eyeing expansion in 35 cities in Indonesia from the beginning of 2019. In a statement to press during its launch in Indonesia, founder and CEO Ritesh Agarwal had announced an investment of $100 million. 

“We intend to invest over $100 Mn (INR 711 Cr) in this high-growth market and plan to expand our presence to the top 100 cities in Indonesia, including Yogyakarta, Bandung, Surabaya that we recently entered and breaking into Bali over the next 11 months, ” Agarwal said.

Founded by a 25-year-old college dropout, OYO Rooms has been going full throttle in expanding its presence in Southeast Asia. The company already has its strong presence in India and China. In India, it has over 8,700 leased and franchised hotels, and more than 1.64 lakh rooms. In China, it has an inventory of more than 1.8 lakh rooms in a year. 

In an interview with Skift, Agarwal said, “It’s just the initial amount to start with. The company is doubling its investment in Southeast Asia as it aims to become the world’s largest hotel chain in scale, revenue and margin by 2023.” During its foray into the Indonesian market, the company had announced an investment of $100 million to expand its operations to 35 cities in the country, including Yogyakarta, Bandung, and Bali, over the subsequent 15 months.

Glocal Approach

While commenting on its billion-dollar strategy to expand rapidly, Agarwal said, in the release, “We believe that our secret to success in Indonesia is the way we have built our business in the country. It was never about expanding into this new country with a distinct multi-national identity or way of working. We entered Indonesia with the mindset of an Indonesian company that saw an opportunity to emulate OYO’s successful business model in India to create something unique and relevant for Indonesia, and the results are visible.”

“Each and every aspect of our operations in Indonesia is highly localised. This localization had helped us in customizing our offering from the point of view of a traveller in the country and what was lacking from his/her experience earlier when OYO was not around,” he added.

Rivals on the radar

OYO’s investment news comes after its rival regional expansion plans in Indonesia. The Singapore-based budget hotel chain unveils its plan to expand in ten new cities in East Java, starting with Pasuruan and Jember. The Singaporean hotel chain is also on an aggressive expansion drive to capture most of the Southeast Asian countries. Recently, the company expanded in the Philippines market, and right after it, OYO announced its expansion in the same region.

 

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