By Surya Suresh
In April 2017, Oyo Rooms raised $250 million in a round of funding from an illustrious list of investors, that included SoftBank and Sequoia India. Livemint reports that the company might have initiated talks for another round of fresh funding to strengthen its presence and expand its operation and services in India. Reports suggest that the company has approached the SoftBank Group and two new investors for this funding round.
Oyo: A growth story
Oyo Rooms has been a major player in India’s booming hospitality industry over the past couple of years and currently operates over 70,000 rooms in cities across India, Nepal and Malaysia. The company expanded into several verticals in 2017 such as Oyo TownHouses and Oyo Home s. Further, they also transitioned from a hotel aggregator business model to a franchising model to facilitate geographical expansion. In January 2018, Oyo Rooms founder Ritesh Agarwal said, “Today, over 90 percent of our rooms are under the franchised model, and soon it will be 100 percent.”
The launch of Oyo TownHouses has enabled the company to target the ‘millennial travellers’ by providing a richer customer experience and better hospitality. Unlike Oyo Rooms, these townhouses are owned by Oyo and completely operated by the company’s staff, thus enabling the company to ensure customer satisfaction. In 2018, the company aims to further its market share in the hospitality industry and strengthen its existing verticals. Further, Oyo plans to become stronger in the food, beverage and banquet segments.
A fresh round of investment
The company is looking to raise $500-800 million in this investment round, according to the report by Livemint. However, the same report also notes that an Oyo spokesperson emailed the newspaper denying any plans for an investment round. The spokesperson pointed out that the company was well funded and was completely focused on their existing assets in India, Nepal and Malaysia.
A new funding round, if it happens, would add Oyo to India’s burgeoning list of unicorn startups. The fresh funds could be used to solidify the company’s presence in India and also facilitate their expansion plans in other countries. Oyo recently launched operations in China and a fresh round of funding would certainly enable them to expand their Chinese operations aggressively.
What does the future hold?
The talk regarding another investment round is just another indication of Oyo’s steep rise in the Indian hospitality industry. The company has ambitious plans for the future and another round of funding would certainly boost their future prospects.
2017 saw major investments in the Indian startup scene by international firms such as SoftBank and Tencent. Flipkart, PayTm and Ola benefited the same and Oyo could be the next company to join the list. Investor sentiment towards Indian startups appears to be improving and this is a good sign for the future.
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