OYO is flush with funds, having raised $1 billion from the Japanese investor SoftBank and it makes sense to foray into lucrative markets like the US.

Oyo Hotels Homes plans to enter US market records 43X y-o-y growth globally
Atom Hospitality Thursday, February 07, 2019 - 20:04
Written by  S. Mahadevan

OYO Hotels & Homes, one of India’s successful startups in the hospitality sector is now poised to set up shop in the United States. OYO has tasted enormous success in China and is a force to reckon with there. The company has its operations in many other countries like Sri Lanka, Indonesia, Nepal and UK. Very few Indian companies have been able to make a dent in the US market so far.

OYO is flush with funds, having raised $1 billion from the Japanese investor SoftBank and it makes sense to foray into lucrative markets like the US. The company has issued a statement that it is conscious of the fact that the American market, while being rich with opportunities is also highly competitive and it has to approach that market with that perspective. In addition, there are many factors that are different in that country and OYO’s experience in other markets may not necessarily work there.

It is reported that a start has been made in the city of Texas and OYO says it is testing the market with its OYO Townhouses in this West American city. The company says it will help in generating employment while creating appropriate living spaces for the youth and the middle-income population.

OYO might have to tweak its strategy a little to align with the market trends in the US and not rush headlong and suffer reverses later.

Meanwhile, OYO has come out with details of its financial performance as of December 2018. Globally, with 458,000 rooms as at December 2018, with Realised Value run-rate of $1.8 billion, OYO is all set to be the world’s largest hotel chain. OYO continues to add more rooms than the top three Hotel chains combined. The company has seen a 4.3X Y-O-Y growth globally. OYO has also seen global stayed room nights (Annualised based on December run-rate) increase from 6 million in December 2016 to 13 million in December 2017 to a whopping 75 million (99m based on December 2018 peak) in December 2018 (with the growth of 5.7x on Y-o-Y basis).

The revenue growth has been driven by strong underlying business drivers notably increase in exclusive room supply, 5.7 times increase in stayed room nights and consistent increase in commission incomes. Partnering with OYO significantly improves the quality of standalone hotels and the occupancy from 25% to 65% on an average, thereby increasing yield on underutilized assets for asset owners.

“We have had a great 2018. Globally we have reached 458,000+ fully controlled leased and franchised keys (rooms) with a realized value run rate of $1.8B as at December 2018 representing a 4.3x Y-O-Y growth. OYO continues to invest in technology and to build long term capabilities while getting on-board, the top talent in the country. OYO Hotels & Homes is a disruptor, in fact, I'd rather say, an innovator which is fundamentally re-industrializing how small-hotels were looked at and is bringing better living spaces for the common-man globally,” said Abhishek Gupta, Chief Financial Officer, OYO Hotels & Homes.