OYO to set up fund to manage properties; reorganizes to focus efficiently

After already taking up franchise, leasing, and managed models, OYO is now in talks with asset managers all over the world to set up a hospitality property fund.

In lieu of its global expansion plans OYO has decided to set up this fund that will acquire properties and then lease them out to OYO at a certain mutually decided yield. The few asset management firms that the company has had the initial discussions with are likely to join the fund as co-managers.

But that is based upon the actualization of these plans which is not a guarantee, as per ET sources.

Although, if the plan does go through the fund will help OYO financially in its expansion of operations. To set up this fund, the company is likely to raise the capital from investors across the globe.

The plan is also to purchase set up special purpose vehicles via this fund. These SPVs will house the asset OYO acquires.

This comes at a time when OYO is also reorganizing its operations to segregate its Indian and infrastructural operations from international and tech functions.

Till now, OYO has two entities where Oravel Stays managed both Indian and international tech and operations of the tech side of budget hotel chains by distributing them online. Alcott Town Partners managed all the properties - hotels, townhouse, home stays, life, etc. and trained the staff with technical know-how and hotel management tactics.

Now since the international and tech operations are ever expanding, with Indian business being a different space, the company is shifting the Indian hotel business from Oravel Stays to Alcott Town Partners, and keeping the tech and international business under Oravel Stay. This is to create divide focus appropriately and consolidate Indian business under one name.

Opening a separate fund for asset management here makes sense in these attempts by OYO to divide its functions to be able to properly allocate focus and increase efficiency in all areas of operations. The fund also gives it financial leverage.