7 Things That Make Oyo India's Most Aggressive Startup

Sky is the limit for Oyo founder, Ritesh Agarwa

Who would have thought that a hotel aggregator business started by a teenage college dropout could become a success, much less India’s only startup to grow leaps and bounds globally? Much has been said and written about Oyo rooms in the past year, be it the aggressive expansion, acquisitions, funding and more. The past year has been historic for Ritesh Agarwal’s business empire.

Let’s have a look at the remarkable year Oyo has had and what started it all:

Expanding Global Footprint

The dialogue around Oyo’s global expansion had just started when Japanese investor SoftBank invested $1 billion in its business, boosting its plan to go global. The Indian unicorn raised $800 million from SoftBank Vision Fund in September before raising another $200 million from its already existing investors Lightspeed Venture Partners, Sequoia and Greenoaks Capital.  

The Big Funding:

In six years, the Gurugram-based hotel chain that has over 815,000 rooms in nearly 10 countries including India, the United Kingdom, Japan, Nepal, the Philippines, Malaysia, Indonesia, the UAE, Saudi Arabia and where the expansion started, China. “Today OYO is one of the fastest growing hotel chains in China, and “it has happened” because of having great partners in business,” Agarwal had said at Entrepreneur Annual Conclave 2018.

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

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

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.

Unstoppable in China:

If checking into various geographical boundaries was not enough, Oyo formed a joint venture in February to start OYO LIFE services in Tokyo, with more than 1,000 residential units, under which it will offer technology-driven rental housing products to Japanese students, citizens and young professionals. The organization also teamed up with Yahoo Japan Corporation and appointed Hiro Katsuse as the Chief Executive Officer to oversee operations in Japan.

OYO Rooms' Unstoppable Growth in China

Having great partners in business is key to the company's growth, says founder

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.

Beyond Hospitality

After a spree of international expansions, Oyo ventures into other modes of habilitation through multiple ventures. The hospitality company ventured into co-living rental places with OYO Living in October 2018. Targeted to gen X and young professionals, the venture started with hosting properties in Noida, Gurgaon, Bangalore, and Pune.

Now, Oyo Checks into Japan

The hospitality chain will offer technology-driven rental housing products to Japanese students, citizens, and young professionals

The  well-known hospitality chain OYO knows no boundaries. The Indian unicorn is going all out in its plan for global expansion. After launching its operations across countries, including Malaysia, Nepal, China, Dubai and Indonesia, OYO stepped into the Japanese territory last month. The Ritesh Agarwal-led firm formed a joint venture in February to start OYO LIFE services in Tokyo, with more than 1,000 residential units, under which it will offer technology-driven rental housing products to Japanese students, citizens, and young professionals.

OYO teamed up with Yahoo Japan Corporation and appointed Hiro Katsuse as the Chief Executive Officer to oversee operations in Japan.

According to a Press Trust of India report, the service has gone live with over 1,000 keys across Tokyo. The company has already received over 11,000 pre-registrations and there is strong interest coming from students and young professionals.

"OYO LIFE is geared to provide a hassle-free, tech-driven, upgraded living experience at an affordable price in Japan. The service has gone live with over 1,000 keys across Tokyo. We have already received over 11,000 pre-registrations and there is strong interest coming from students and young professionals," OYO Hotels and Homes’ Founder and Group Chief Executive Officer Ritesh Agarwal told PTI.

Budget Properties On the Go

The Japanese home rental market is large and growing with a market size of 12 trillion yen ($108 Billion) but has its own share of challenges and problems. Much like India, young Japanese people who are looking to rent a decent property, face similar challenges like researching for the property, dealing with a plethora of agents and middle-men, paying upfront deposits and signing long-term leases. Even if a young person finds a place to rent after overcoming all these barriers, a new set of challenges rises, such as arranging furniture, appliances and other essential items for the property. This is a hugely challenging task that requires time, energy and money.

This is where OYO is planning to introduce itself. According to the company, OYO LIFE is an ideal solution with ready-to-move-in beautifully designed homes. There is also financial freedom with minimal deposits and no lock-in periods and privacy so that users can save and spend the way they like. 

Through this joint venture both companies promise to deliver good quality fully managed homes at affordable prices. Kentaro Kawabe, Chief Executive Officer, Yahoo! Japan, believes that with local know-how, online distribution network and marketing support, OYO LIFE will soon emerge as the most preferred abode for the Japanese citizens and visitors in the county.

The Japanese people have lapped up subscription-based services in music, video, apparel, and furniture increase, which has resulted in a change in consumer mindset from ‘owning to sharing’ resources. With more than 90 per cent of the Japanese population living in cities, OYO LIFE is an ideal product for the Japanese citizens.

US-based Airbnb has confirmed it has picked up stake in OYO rooms. According to reports, the home renting startup has closed the investment in the Series E round being raised by OYO.

Entry in Co-living

After foraying in co-living, co-working was the next spot for the Indian unicorn which acquired Gurugram-based startup Innov8 in an all-cash deal worth about $31.84 million. OYO also revamped the presence of mid to budget category co-working startups, Workflo and PowerStation.

After a Spree of International Expansions, OYO Expands into Co-Living spaces

OYO Living will host properties with more than 2000 beds

Looks OYO is on full expansion mode. Soon after expanding its wing to the Middle East and South Asian market, the hospitality company has now ventured into co-living rental places with OYO Living.

According to the company’s official statement, the services was piloted in mid-2018 and now OYO Living will host properties with more than 2000 beds in Noida, Gurgaon, Bangalore, and Pune. The services in majorly targeted to gen X and young professionals.

Discussing its new offering, Ritesh Agarwal, CEO & Founder, OYO Hotels & Homes said the move to continue innovating and create customer experiences.

“OYO Living was conceptualized based on the feedback and demand from our valued customers and asset partners. We saw this as a huge opportunity and decided to leverage our hospitality experience to offer a first of its kind end to end fully managed living experience,” he shared while adding that, “This launch, therefore, marks a key milestone as we embark on our journey towards becoming India’s biggest provider of housing, consolidating our position as a category innovator and leader.”

With OYO Living, the Softbank-backed start-up will also take complete control of the property this will also include maintenance and professional upkeep of the space.

Co-Living Spaces in India

In the era of sharing economy where co-living spaces are gaining popularity in India – with over a couple of them popping up each year, a handful of them such as NestAway and ZiffyHomes have been able to make a mark for themselves in segment.

The hospitality start-up will offer residents fully managed independent residential units, inclusive of contracting, furnishing, cleaning, maintenance, and in-stay services with essential amenities like Wi-Fi connectivity, television, regular housekeeping, power backup, CCTV surveillance, and 24/7 caretaking.

Explaining its offering, Kavikrut, Chief Growth Officer, OYO Hotels & Homes, said, “OYO Living spaces have been designed based on the needs of the millennials, who look for ‘when one stays at home’ feeling during their stays. Our robust design and data science team, has helped us understand this need and has curated an offering that is inspiring, artsy, modern, comfortable, and adaptive”

The cost of services will start from INR 7999 per month/bed and help customers save on brokerage and lock-in periods.

The Expansion Mode

Earlier this year, the company has raised USD 800 million funding from Japan-based Softbank Vision Fund. The start-up is also backed by, Greenoaks Capital, Sequoia India, Lightspeed India, Hero Enterprise and China Lodging Group.

The company, earlier this week, expanded its operation to Indonesia. Including India, OYO has a presence in over seven countries which will also include China, Dubai, Malaysia, Nepal, UK and UAE.

Debut in Co-working

Oyo’s recent steps have proved that it is no more satisfied with being called a hospitality platform alone and recently moved into a new territory of cloud kitchens. In fact, its hospitality paid loyalty programme, OYO Wizard reached 1.5 million users recently, contributing to about 25 per cent of its bookings.

Oyo Debuts into Co-working Spaces with First INR 220 Cr Acquisition

After indefinite refusals and hesitations, it is now out in the open

News that has definitely broken the start-up bulletin board is that of hotel-chain unicorn Oyo acquiring Delhi-based co-working start-up Innov8. This acquisition has managed to subsume the business headlines.

Rumours were floating for the past few months of Oyo acquiring Innov8 but neither of the start-ups confirmed or gave out any detail. After indefinite refusals and hesitations, according to reports, it is now out in the open that the unicorn is acquiring the co-working start-up for INR 220 crore.

This will give Oyo an opportunity to debut into the co-working space, if reports are to be believed, it is all set to open 35 co-working offices over the next year in the major metropolitans of the country.

Two Companies-Successful in Their Own Stride

The acquiring deal between Oyo and Innov8 is an example of how two companies, successful in their own stride have now come together to give the business world something better and the common belief is that exciting times are supposed to come in with this acquisition.  

Innov8 was founded by doctor-turned-entrepreneur Dr Ritesh Malik. Malik was also featured in Entrepreneur’s 35under35 in 2017. Innov8 founded in 2015 and backed by Y- Combinator began its journey in one of Delhi’s oldest places and heritage places, Connaught Place. The million-dollar business co-working has over 350 employees and is located in over 4 cities with 13 centres.

Oyo, on the other hand, has been on a roll. Recently, it exited from its operations in the UAE and handed over the baton of leading them to Naspers-backed Delivery Hero. The rental accommodation start-up also launched operations, Oyo Life, in partnership with Yahoo in Japan with Hiro Katsuse as the CEO. The rental company is one of India’s most valuable unicorn and business enterprise that has not just expanded its footing in the domestic territory but also has a considerable stake in the international market.

From Malaysia, China to the U.K. and now Japan, Oyo’s success and growth is unstoppable and the glory of the over-achieving founder almost unmatchable.

Coming Back to the Deal…

According to media reports, Oyo is launching two other co-working brands, Workflo and PowerStation. Innov8 will be placed on the third spot. All innov8 employees have been hired by Oyo and it will continue to function as a separate entity. This partnership will give the hotel-chain enterprise an upscaling in its operations with the hand of a co-working firm now a part of its day-to-day functioning.

Now Oyo can also give a befitting competition to the big co-working giants in the country including WeWork, 91springboard etc. Innov8, although acquired but with the backing of a unicorn will have ample business opportunities to expand in ways that might have proved difficult for him initially.

The Young Success

Oyo’s success can only be credited to the man who built this platform from scratch – Ritesh Agarwal. The man has been in the media limelight ever since the hotel chain received its first funding. Building a startup which matches with his personality of being surreal and giving employment to not just a 10,000 oyopreneurs but partners all over to build a vision of the world’s largest hotel network is a journey that according to him has just begun. The nation can be more proud.

What Got Oyo Founder Ritesh Agarwal Into Entrepreneur's 35under35 list

Ritesh Agarwal created the biggest hotel chain bringing 4,50,000 rooms across 13,000+ properties under one ambit

Blenders Pride Reserve Collection presents Entrepreneur's 35U35 list, which includes some path-breaking names from the field of entrepreneurship. At just 25, Oyo founder Ritesh Agarwal, who made it to the cover of the magazine, has become a sensation capturing markets in Japan, US, China, Singapore and England and as you are reading this, he may be overtaking yet another market in another continent augmenting to his recent valuation of 5-billion dollar.

There is something unusual about Ritesh Agarwal. His looks don’t carry the fancy tags typically associated with a hotelier. His simplicity charms you the most and enthralls you about keeping splash offs to the bare minimum. The man who has been in the media limelight would always be on roads to check out on one of his Oyo hotels or expanding to markets like China. Building a startup which matches with his personality of being surreal and giving employment to not just a 10,000 oyopreneurs but partners all over to build a vision of the world’s largest hotel network is a journey he says, which has just begun.

When you are toying with an idea as a teen entrepreneur, how far can it take you? The answer is it can take you to more than 500 cities across India, China, Malaysia, Nepal, the UK, UAE and Indonesia with more than 4,50,000 rooms across 13,000+ hotels. From a child prodigy to becoming a teen startup sensation to becoming an entrepreneur building the largest hotel network in the country, Agarwal has come of age. A look at Agarwal’s earlier graph as a child would tell you something innate. “I have always had that fire in the belly to do something different from the norm, something that I can look back on and feel proud of. It was never about making it big, it was about finding something that I truly believed in and can commit to for years to come,” Agarwal shares about his early tryst with entrepreneurship.

About his idea of entrepreneurship, Agarwal says, “Ever since I was a kid, I dreamt of having a business of my own and grew up working toward fulfilling this dream. From the very beginning, I had an inclination towards travelling and always wanted to explore even the most unexplored places. During my travels, I realized the lack of standardized and predictable options for accommodation as were missing in some cases. Finding the ideal accommodation at an affordable price was a huge challenge.” That’s how the Oyo journey started, from one property in 2013 to becoming the largest hotel network in the country.

The turning point for Agarwal founder was the fellowship he received from Peter Theil prior to embarking on his entrepreneurial journey with Oyo. Sharing his most invaluable learning from the journey, he says, “I learned to trust the power of a unique idea, rather than trying to build an Indian version of a US or Chinese company.” Getting mentored by Peter Theil really changed his worldview and gave him a new perspective to entrepreneurship. “He taught me to partner with the right people who shared the same values,” adds Agarwal.

Oyo has truly been a story of an Indian startup taking the world by storm. The man is on a mission to build the world’s largest hotel network. After conquering India, Oyo has already become the fifth largest player in China. Agarwal avers, “We are among the top five hotel chains in China. Currently, our footprint spans across 285 cities in the country with over 260,000 exclusive rooms and 5,000 franchised and leased hotels.”

Delving on his vision, he says, “We can foresee an enormous opportunity for us to become the largest hotel chain in the world in the years to come. Hence, there is no stopping for us.” Southeast Asia has become an extremely lucrative market as Oyo plans to invest over $200 million across the region by 2023 for expanding its footprint, plus the Middle East. Agarwal says, “We are using technology extensively to sustain and increase the quality of operations. We have been able to deliver good hospitality, which has helped us to scale up rapidly.” Last year, Oyo checked in the unicorn club after raising $1 billion from Softbank at a valuation of $5 billion.

(This article appears in the February 2019 issue of Entrepreneur Magazine. To subscribe, click here. You can buy our tablet version from Magzter.com. To visit our Archives, click here.)

Content Courtesy = Entrepreneur.COM