OYO (India) Plans its Foray into China
25 Jun 2018 - SoftBank Group is doubling down on its bet on hospitality chain OYO with chairman and chief executive Masayoshi Son calling it a “next-generation hotel company” and saying that it planned to support the Gurgaon-based company through a joint venture for its foray into China.
Speaking at the Tokyo-headquartered strategic holding company’s 38th annual general meeting on Wednesday, the 60-year-old billionaire, who has ploughed billions into India’s startup ecosystem, said OYO was growing “exponentially” and heaped praise on founder Ritesh Agarwal. “I would really like to introduce this company to all of you,” Son said. “The founder, as of today, is only 23 years old. He founded the company when he was only 19 years old. Only four years have passed but it is growing exponentially.”
The CEO of SoftBank, which has invested in OYO through its $93-billion Vision Fund, was speaking in Japanese that was translated for viewers.“It is the biggest player in the hotels business. It owns about 100,000 rooms,” he said. “It is also growing exponentially. I think, on a per-month basis, the number of rooms, or net growth, is going to continue to grow at the pace of more than 10,000. It is a next-generation hotel chain using the internet service.”
A SoftBank spokesperson told ET: “SoftBank continues to be invested in India over the long term and remains bullish on OYO.” The company didn’t respond to queries seeking comment.
A joint venture with OYO will not be the first time that SoftBank has entered into such a partnership with a portfolio company. It has done so with WeWork and was also reported to be setting up one with ride-hailing giant Didi.
The comments come at a time when OYO has launched services in China, making it a rare instance of an Indian consumer technology company setting up operations in the world’s second-largest economy.
Last month, ET was the first to report that the company had launched operations in Shenzhen, in southeast China, home to one of the busiest and fastestgrowing container ports in the world.
The company has opened eight hotels with a room count of about 400 in the city. The latest developments come about eight months after the Gurgaon-headquartered OYO brought Shanghai-based China Lodging Group, one of the world’s largest multi-brand hotel groups, on board as an investor.
OYO’s Chinese operations also include more than 11,000 exclusive — franchised or ‘manchised’— rooms in 26 cities including Hangzhou, Xian, Nanjing, Guangzhou, Chengdu, Shenzhen, Xiamen and Kunming among others. Manchise refers to a franchise relationship that includes a management contract.
“After our successful overseas expansion and operations in Malaysia and Nepal, we are thrilled to offer OYO hotels’ hassle-free and standardised stay experience to guests in China,” Agarwal said in a statement released on Wednesday.
The company currently operates about 70,000 rooms in more than Indian 230 cities and has a target of 180,000 rooms under its brand by the end of 2018. Digital payments solutions provider Paytm, another portfolio company of SoftBank, also got a mention in Son’s speech.
“This (Paytm) is the number one payments company in India… It is ahead of us, and it is supported by Alibaba,” Son said. “Alipay became a leading player in the world in the area of payments, Paytm will follow that trend.”
OYO, along with Paytm, are among Son’s “Cluster of No. 1” strategy, which according to the billionaire, will not only see the strategic investor pick up stakes in market leaders, ranging between 20% and 30%, but will also see the self-styled unicorn hunter stay relevant for the next 300 years. “Progress is unstoppable. And it will come to you,” Son said.
The Economic Times