Oyo confirms its launch in China with over 11,000 rooms in 26 cities

Putting all speculation to rest, Oyo on Wednesday announced its entry into the China market. The team is looking to build well-designed small hotels while introducing best-in-class training and education in the sector. 

The Gurugram-based hotel aggregator currently claims to have over 11,000 exclusive - franchised or managed - rooms in 26 cities including Hangzhou, Xian, Nanjing, Guangzhou, Chengdu, Shenzhen, Xiamen and Kunming among others.

In a press note shared by the company, Ritesh Agarwal, Founder and CEO, OYO said after OYO’s successful overseas expansion and operations in Malaysia and Nepal, it is thrilled to offer OYO hotels' hassle-free and standardised stay experience to guests in China. 

Ritesh added that China’s tourism industry is at the cusp of a book and and is seeing a strong influx of domestic and international tourists. “Also, the China market is as fragmented as the Indian hotel market. With our expertise in managing a chain of hotels backed by technological innovations, we will continue to strengthen our footprint while empowering neighbourhood hotels to emerge in the same league as the big boys of hospitality,” Ritesh said. 

China is Oyo’s third overseas market expansion. Late last year, the team had ventured into Malaysia and Nepal. Oyo is now present in over 150 cities across China, India, Malaysia, and Nepal. It claims to have over 5,000 exclusive hotels under its Oyo Townhouse brand, which works in close proximity with its asset partners while exercising full control over the hotels for ensuring a quality experience for travellers. Its network includes major metros, regional business hubs, top leisure destinations, as well as pilgrimage towns.

Since last year, Oyo has been launching different verticals. Early last year, the team launched Oyo Townhouse, and also ventured into the homes segment with Oyo Homes. 

Speaking about OYO and its choice of venturing into different verticals, Ritesh said, 

"OYO's mission is to create and offer good quality living-spaces at the right price and location. To enable this, we intend to tap existing supply and repair/upgrade to add to the overall inventory pool. We observed that locked homes represent a significant supply opportunity across top holiday destinations in the country. We are confident about the potential and our teams have a considerable head start in this direction.”

Ritesh added that at the end of last year, the company had targeted 85 percent-plus revenues from franchise and non-aggregation business. Now, 90 percent of our business either comes from 100 full inventory exclusive - OYO Townhouse, Oyo homes or OYO rooms. 

In the fiscal ending 2016-17, Oyo raised about $260 million in a funding round led by SoftBank, which included participation from existing investors, and new ones like China Lodging Group and Hero Enterprises. The company is also backed by investors like the Lightspeed India, Greenoak Capital, and Sequoia India. 

According to Oyo’s RoC filings, its revenue rose over four times from around Rs 32 crore in 2015-16 to Rs 140 crore in 2016-17. Losses narrowed for the financial year ended March 2017 to Rs 325 crore from Rs 496 crore in the previous year. 

Ritesh added that this expansion is in line with the company’s mission of creating beautiful living spaces by empowering hotel owners to become better hospitality players while ensuring an end-to-end controlled experience for their guests. 

“The launch will provide an affordable and trusted stay option for both Indian and international tourists, business travellers, and local city-dwellers” says Ritesh.

This is the second major foray this year by an Indian startup into international markets. Ola has been aggressively expanding and growing in Australia, and now Oyo is pushing its presence in China.

However, it will be difficult to break into China, as the market is notorious for being closed.