Oyo to use partnerships to acquire, lease, and manage Indian hotels

June 26, 2019
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SoftBank-backed hotel room rental giantr, Oyo, is gearing up to start another funding round with a target range of $1-1.5 billion at a valuation of $12.5 billion.

Oyo Hotels & Homes wants a foothold in the four star hotels segment in India and is planning partnerships with other entities to acquire, lease, or manage four star hotels in India under a new brand name, people familiar with the developments explained. Oyo's partner companies will acquire these assets and Oyo will operate and manage them. 

Work has begun on this project and Oyo has set an internal target of reaching 5000 rooms (through acquiring, leasing or managing about 50 hotels with 100 rooms each) by the end of the year through such partnerships, sources privy to the developments said.

“Funded by SoftBank, this corpus kept aside for the partnership is for four star hotels in India. Oyo is getting into the four star hotels business in India via such partnerships. These hotels will be under a new brand name,” said a person familiar with the developments while another added, “They are extremely aggressive with the vision that they want to have 5000 rooms through these partnerships. This is not the aggregator model. 5000 rooms means that the average size of the room per hotel could be 100 rooms or 50 hotels by the end of the year.”

In a response to ET's queries, Oyo said it is exploring opportunities for expanding its existing inventory in the four-star/ upscale segment. "Currently, Oyo provides guests a premium experience at competitive prices via its upper-end leisure resorts category of Palette Resorts in India. The discussion is at an early stage and we have no further comments at this time,” a spokesperson said.

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