Budget hotel platform OYO launches asset management to trim losses
With losses of over USD 50.6 million in FY17, OYO launched asset management service to bring losses under control and enhance business growth.
To further bolster its 12x growth, budget hotel booking marketplace OYO has recently launched OYO Asset Management. Unveiled on August 26, the service is geared towards building a nationwide network of hotels through partnerships with real estate asset owners.
As part of OYO Asset Management service, the hotel booking platform will turn all types of properties into modern, fully-furnished hotels under its brands OYO Townhouse, OYO Rooms, and OYO Flagship.
The OYO Asset Management service is aimed at deploying, operating, maintaining, and upgrading assets cost-effectively. To that end, the budget hotel aggregator is looking to partner with owners of hotels and commercial spaces across the country. The service will also help commercialise previously-unmonetised homes and real estate assets.
As per the website, properties under the management of OYO will likely see up to 100% increase in revenue over six months. The service also promises 80% occupancy as well as 50% customers from corporates.
Founded by Ritesh Agarwal in 2013. OYO currently operates over 70,000 rooms in 200 cities in India, Malaysia, and Nepal. In the quarter ending June 2017, the company claims to have witnessed the highest grossing months. The total booking value for this period was a little less than $100 Mn.
OYO originally raised funding from VentureNursery and a Seed round from Lightspeed Venture Partners and DSG Consumer Partners in 2014. Later in October 2014, it raised $4.5 Mn (INR 30 Cr) from Sequoia Capital at a valuation of $100 Mn. In August 2015, the budget hotel booking startup raised $100 Mn funding led by SoftBank Corp and its existing investors Lightspeed Venture Partners, Sequoia Capital India, and Greenoaks Capital.
A year later, in April 2016, OYO Rooms secured $100 Mn in its fifth round of funding from existing investors. The investors included SoftBank, Sequoia Capital, Lightspeed Venture Partners, Greenoaks Capital, DSG Consumer Partners, and Venture Nursery.
This was followed by an infusion of over $62 Mn (INR413 Cr) in a new round in August 2016 led by – Japan’s SoftBank Group Corp. In September last year, OYO opened a new training campus in Gurugram, Haryana. As per reports, the move was aimed at training 100K people in order to create a pipeline of skilled workforce for the hospitality industry.
Most recently, in April 2017, it was reported that Softbank is in talks to invest about $250 Mn in OYO Rooms, at a valuation of around $850 Mn.
In FY17, OYO incurred losses of over $50.6 Mn (INR 325 Cr), which is one thing the budget hotel booking platform is looking to bring under control with new initiatives like the OYO Asset Management. The ultimate goal, according to Agarwal, is to enhance business growth through diversification across different avenues.
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