Amid Controversies, OYO On Its Way To Secure $1.5 Billion In Fresh Funding

The funds will be used to drive growth in the United States and strengthen its position in the vacation rental business in Europe
Amid Controversies, OYO On Its Way To Secure $1.5 Billion In Fresh Funding
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Hospitality chain OYO Hotels & Homes announced that it is in the process of raising $1.5 billion, as part of its Series F funding round. According to the official statement, founder Ritesh Aggarwal’s RA Hospitality Holdings will infuse approximately $700 million as primary capital in the company. The balance of  $800 million will be raised from the existing investors. 

According to the company, the capital will be used to drive growth in the United States, and also strengthen the company’s position in the vacation rental business in Europe. The SoftBank-backed company also counts Airbnb, Lightspeed Venture Partners, Greenoaks Capital, Sequoia India, and Hero Enterprise as its existing investors.

OYO’s Growth Plans

OYO was founded in 2013 by Ritesh Aggarwal which offers services across various verticals including holiday homes, coworking spaces. budget hotels, corporate stays etc. According to several media reports, OYO is present in over 80 countries including the US, Europe, UK, India, China, Indonesia, Philippines and Japan.

In the official statement, OYO said that the company recorded 3.8x YoY growth in revenue in Aug 2019. with 1.2 million rooms under management across hotels and homes. “The company already has a strong balance sheet of $2 bn across group companies, a significant part of which will be further invested in the business, given the company’s focus on maintaining its growth momentum,” the statement noted.

“I am also happy to share that on a Y-O-Y basis, we have seen that not only are we operating profitably at the building level but at the same time our EBITDA has also improved by 50 per cent(on a Y-o-Y basis). The losses as a percentage of NRV have also been on a steady and significant declining curve. The growth across verticals in India and globally has been phenomenal and we truly believe that we will be able to build a truly global brand out of India while ensuring that the business is run efficiently and with a clear path to profitability. Our immediate goal, however, is to make forward-looking investments so we can achieve our mission while delivering on our fiduciary responsibility to our investors by building a sustainable business,” OYO founder Ritesh Aggarwal said in a statement.

Are Hotel Partners Unsatisfied With OYO?

This development comes at a time when Reuters recently reported that a small fraction of over 10,000 hotel partners said that they are being “blindsided” by increasing fees. According to the report said that that company charges about 20 per cent franchise fee on room revenues, however some of the hotel operators have alleged that the startup sometimes takes up half or more of revenues through fees which were not disclosed.

Last month, a group representing hotel owners in Bengaluru called for a criminal probe on OYO accusing the company  of withholding money due to unfair fee increases, reported Reuters.

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