OYO enters serviced apartment space, acquires Chennai-based Novascotia Boutique Homes
Online hotel aggregator OYO on Monday announced that it has acquired the Chennai-based service apartment Novascotia Boutique Homes. Novascotia will now be a part of OYO’s portfolio and help strengthen the latter’s operational expertise.
While the details of the deal were not disclosed, OYO stated that acquisition will fuel its growth in 2018, and will be the first in its series of launches, acquisitions and collaborations for the year. Acquisitions are aimed to fuel OYO’s vision of achieving 1,80,000 keys by the end of this year, while achieving 4.5 percent of the hotel market share.
A press statement released by OYO said that the acquisition will help boost OYO’s portfolio by 350 exclusive rooms across locations where Novascotia has its footprint, further strengthening OYO's position as the largest full-stack hospitality tech company in India.
OYO will now provide its capabilities and help corporate travellers get quality accommodation options, and focus on privacy and safety. Novascotia already claims to have a healthy EBITDA of 14 percent and has a strong portfolio, providing executive accommodations to corporates in Chennai, Hyderabad, Kochi, Thiruvananthapuram and Coimbatore.
Novascotia's founders G Madhu Manohar and Girja Madhu say that with OYO they saw a passion towards solving a problem and are convinced that with OYO's experience and expertise, Novascotia will further grow and scale. OYO now plans to expand these offerings to 12 cities by the end of 2018. These serviced apartments are located in the heart of business hubs equipped with spacious rooms, upscale interiors, meals, gym and dining area to cater all the requirements of business travellers.
According to a PwC report, the residential rental market in India is pegged at $20 billion, of which urban spaces account for $13.5 billion. The founders of CoHo, in fact, peg the co-living market at $10 billion. Tiger Global-backed NestAway has raised a total of $43 million in funding and is already present in eight cities.
However, corporate serviced apartments follow a different model. An IBEF report states that five-star hotel room rates in the cities of Mumbai, Bengaluru and Delhi are currently averaging at $500 a day. Many are looking at serviced apartments for a cost-effective solution. There also is the Mumbai-based Pajasa, which works with serviced apartments.
Ritesh Agarwal, Founder and CEO, OYO noted that while it is in the niche segment of boutique homes, Novascotia has been able to bring order to a tough segment. He said,
The acquisition forms an integral part of our inorganic growth plan, in line with our ambition to create beautiful and quality living spaces and adding value to every form of real estate. OYO is poised to deliver 180,000 keys by the end of 2018, and with Novascotia’s strength, we will be adding service apartments to our existing portfolio - which includes budget rooms, OYO Townhouse, OYO Home, enabling us to offer a wide range of choices to our customers.
OYO claims to have developed capabilities to add over 10,000 rooms per month, which will help it achieve the target of 1,80,000 keys by the end of the year.