OYO to invest $300 Mn for targeted US expansion

Oyo had entered the US market with a single property in Texas in February this year. Now the firm wants to replicate the India and China growth in the country with a hefty investment.

The company has kept aside $300 million to renovate properties, build tech, design and operating teams to spread inventory across the US.

As a part of this plan, OYO has already spread its wings in 50 US cities including Atlanta, Houston, Dallas, and Miami. Ritesh Agarwal, founder, and CEO of OYO claims that they offer the lowest price in the areas with a little compromise on the design front and hence they occupancy rates are high in these hotels.

To illustrate, Agarwal told that in a hotel facility near a medical campus in Houston, the occupancy rate got up from 22% to 90% after OYO intervention, and the revenue increased from $17 to $43.

The rooms typically cost $60 to $110 per night, making OYO a competitor of both hotel chains like Wyndham and Hilton.

The model is to spend their own money on renovation and guarantee a set level of profits so that hotel owners would agree to the alignment with OYO, and then create a chic, comfort design based pop and lively hotels to specifically cater to American population with the unique offering.

The hotel that takes a month to open this way, is backed by a five-year contract between the owner and the startup.

Even with the fast-paced expansion across the globe, Agarwal tells DSA that they are more willing to do it right than do it fast, which for OYO means, 3 days instead of 5.

OYO had recently raised a $1 billion from SoftBank and is in talks to raise more - $1 billion at a doubled $10 billion valuation, to support these expansion plans and pace. Many backers are ready to take the offer, including SoftBank that already owns a 46% stake in the company.

The catch is obviously how speedily the firm is growing with already being world's sixth largest hotel chain, China's second largest, and India's second highest valued startup, well on its way to becoming number 1 in all aspects.