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A roomful of dollars: OYO raises $1 billion from Soft Bank, others

The funds, according to the company statement, will support its efforts to further strengthen its market position in India and China, and support international expansion

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Ritesh Agarwal
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OYO founder and chief executive officer Ritesh Agarwal Tuesday made a major mark in the Indian start-up space when the new-age firm for booking reliable rooms announced raising $1 billion in the Series E round.

South Asia's largest hotel chain with 125,000 rooms, OYO raised $800 million in the latest round led by SoftBank Investment Advisers (SBIA) through SoftBank Vision Fund. Existing investors viz. Lightspeed Venture Partners, Sequoia and Greenoaks Capital also participated in this round. The hospitality chain also confirmed receiving a commitment of an additional $200 million taking the total to $1 billion.

The funds, according to the company statement, will support its efforts to further strengthen its market position in India and China, and support international expansion.

According to Agarwal, OYO Hotels has grown to become the most preferred brand in both economy and mid-market segments in a short span. "We have already started expanding our presence to newer segments, with OYO Home, OYO Townhouse and more recently Palette Resorts by OYO. We will continue to explore newer businesses while remaining focused on both organic and inorganic growth," said Agarwal, a 24-year college drop out from Bissamcuttack, a census town in Rayagada district, Odisha.

In the last 12 months, the company has increased international footprint to countries like China, Malaysia and Nepal. Its most recent foray was in the UK market. "With this additional funding, we plan to rapidly scale our business in these countries, while continuing to invest further in technology and talent. We will also deploy fresh capital to take our unique model that enables small hotel owners to create quality living spaces, global," said Agarwal.

The company claims that it is witnessing three times growth in transactions year-on-year with net take rates of over 20%. While attaining unit-level profitability, it is getting 90% of the demand from direct channels, thus improving operating efficiencies. "Over 67% of the top line in India is coming from repeat customers," the company said.

In a short span of 10 months, OYO has established its presence in 171 Chinese cities with over 87,000 rooms. Continuing with its efforts to expand its presence in the country, OYO will direct approximately $600 million to strengthen its position in China market that is still in the early stages of growth. "The balance $400 million will go into maintaining its leadership position in India and expansion into new markets," the company said.

Launched in May 2013, OYO is present in 350 cities with over 10,000 asset partners spread across five countries including India, China, Malaysia, Nepal and the UK.

PREMIUM BOOKING

$800mn 
OYO has raised in the latest round led by SoftBank Vision Fund

$200mn 
Of additional fund the chain will receive in future, taking the total amount to $1billion

125K 
rooms OYO has, making it South Asia’s largest hotel chain

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