OYO checks into China, opens 8 hotels in Shenzhen: report

Much has been said about Chinese companies looking at India as the Promised Land and rapidly gaining a footprint in the country. But over the past two years, it is slowly turning into a two-way street with Indian startups like InMobi, Patanjali, Pocket Aces and more foraying into the world's second-largest economy.

The latest to join this bandwagon is online hotel aggregator OYO. Citing sources The Economic Times said that OYO has launched its services in Shenzhen, one of the busiest and fastest growing container ports in the world, with eight hotels boasting a room count of around 400. The Gurugram-based firm has reportedly also hired 60-70 employees to run its China operations in the country, and the the number of hotels as well as the headcount are likely to go up "substantially" over the next few months.

To remind you, last September, OYO has signed a five-year Memorandum of Understanding ("MoU") with the China Lodging Group to facilitate and strengthen collaboration in order to build a global market leading hospitality business. Under the MoU, both parties were to explore opportunities for mutual collaboration in various fields like knowledge and technology sharing, strategic alliances - including but not limited to local sourcing and procurement and joint loyalty programs - and investments. To start off, the leading Chinese multi-brand hotel group had made a $10 million equity investment in OYO to become a minority shareholder (less than 5 per cent), just a week after the latter raised $250 million in a round led by Japan's SoftBank.

"We are very excited about this partnership - both in terms of potential opportunities and existing synergies through our complementary strengths and capabilities," OYO founder and CEO Ritesh Agarwal had said at the time, adding "Addressing consumers in India and China - two of the world's fastest-growing markets - through our combined strengths opens up a very large and significant growth opportunity."

This latest move by OYO seems to be proof of that. However, the daily maintained that China Lodging Group's involvement is still unclear. What's clear is the big bet OYO has placed on foraying east. It has also launched operations in Indonesia's capital Jakarta with three hotels, after previously setting up a presence in Malaysia and Nepal through its brands OYO Rooms, OYO Townhouse and OYO Home. That's not to say that OYO is not looking West. Next on the cards is United Arab Emirates. The five-year-old company is reportedly slated to begin operations in Dubai next month.

The aggressive global expansion is matched by OYO's domestic game plan. "Our target is to grow from 70,000 keys to 1,80,000 keys by December next year," Agarwal had said last December. In other words, the company is targeting a 157 per cent jump in its hotel rooms in the country. Its network currently spans over 230 Indian cities. In March this year, in order to broaden its portfolio and proceed towards the stated target, OYO also notched up its first major acquisition, Chennai-based service apartment company Novascotia Boutique Homes. The latter is now known as OYO Silverkey.

OYO is also fast moving towards turning profitable. In December, the company had claimed that it had narrowed its losses by 27 per cent to Rs 363.7 crore in 2016-17, mainly on account of a high degree of operating leverage in the business model.

With PTI inputs