Hardly a week after raising $250 million from SoftBank Vision Fund, hotel aggregator platform OYO Rooms has today announced another $10 million in funding from Chinese hotel management firm China Lodging. This is a follow-on for the Series D funding announced earlier this month.
According to a press release, the two parties have signed an MoU to facilitate and strengthen collaboration to build a global market-leading hospitality business.
Jenny Zhang, CEO, China Lodging Group, has said in the statement,
“The partnership will draw on the strengths of China Lodging Group’s visionary and experienced management team, market leadership through a multi-brand strategy, extensive hotel operations expertise, and strong loyalty programme, and OYO’s advanced technologies in the hospitality industry that enable transformation of hotel operations.”
OYO Rooms, backed by Sequoia Capital and Lightspeed Ventures, has now raised a total of $450 million. About the new development, OYO Rooms Founder and CEO Ritesh Agarwal tweeted:
“Looking to an enduring relationship where we share technology, innovation, operational capabilities for a well-run hospitality company.”
He has stated in the press release that addressing consumers in India and China — two of the world’s fastest-growing markets — through combined strengths opens up a very significant growth opportunity. Valued at $6.8 billion, China Lodging Group, like OYO Rooms, focuses on budget hotels.
China and India are among the fastest-growing travel markets in the world with an emerging domestic travel opportunity. According to Deutsche Bank, nearly two-thirds of India’s rooms supply in 2020–21 will consist of budget hotels. Criteo expects the online travel market in Asia-Pacific to be worth $446 billion in value by 2020, witnessing a 72 percent growth from 2016. OYO estimates mid-market accommodation alone to be worth $20 billion by 2020.
The two parties will explore initiating knowledge- and technology-sharing projects of mutual interest to enable a co-learning opportunity in the fields of technology and hospitality. “This could include exchange programmes for employees and sharing of technology and intellectual property. The partnership is also expected to leverage benefits from economies of scale, not limited to sourcing and procurement and joint loyalty programmes,” the statement added.
Currently, OYO Rooms functions in 230 cities across India, Malaysia, and Nepal. China Lodging Group, with 3,541 hotels, is spread across 369 cities in China.