OYO resumes self-operated hotels after three-year break

IPO-bound hospitality startup OYO has revived its 'self-operated hotels' business after a three-year pause. It has already started operations in 35 hotels, and targets onboarding 200 hotels on a management contract, which will be run by professional hotel operators.

It is actively seeking partnerships with real estate developers to identify properties for the vertical.

OYO will onboard properties under the company’s mid-market hotel brands such as Townhouse, Townhouse Oak, and Collection O. The company will have leasing arrangements with the owners of the properties, enabling them to start a hotel without the associated overhead costs.

The hospitality unicorn will assign dedicated relationship managers and provide access to OYO’s network of corporate accounts and travel agents to the hotel operators.

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"OYO will secure annual to long-term management contracts on a revenue share basis of 200 premium hotels across Indian metros," the company said in a statement.

"These hotels will be tagged as ‘Managed by OYO’ on the company’s App and Website to signal OYO’s active involvement in their operation," OYO added.

The company will focus on its pilot programme in Delhi, Mumbai, Bengaluru, Hyderabad, Kolkata, Goa, Chennai, and others.

"By offering hoteliers and property owners the opportunity to participate in this programme, OYO aims to create a win-win situation that benefits landlords, professional hotel operators, as well as travellers. We are getting encouraging responses from our top hoteliers and planning to increase the current target of 200 hotels under this programme,” commented Anuj Tejpal, OYO's Chief Merchant Officer.

OYO had reportedly started phasing out contracts with property owners around 2020 as these businesses were not EBITDA-positive. As per reports, SoftBank had given OYO a deadline of March 31, 2020, to phase out contracts/businesses that were not EBITDA-profitable.

OYO, led by Ritesh Agarwal, resubmitted its Draft Red Herring Prospectus (DRHP) to the Securities and Exchange Board of India (SEBI) using the newly introduced advance filing procedure in September this year.

In October 2021, the company initially filed for public listing with a goal to raise up to $1.6 billion at a $12 billion valuation. However, the listing was delayed, and the targeted fundraising amount has been adjusted to $600 million.