US-based Airbnb maybe eyeing a deal with homegrown hospitality unicorn OYO to enter the hotel business, in India and China according to a media report. The news comes just weeks after Airbnb bought US hotel booking startup HotelTonight for more than $400 Mn.
Citing people close to the matter, news website The Information reported that the travel giant is in discussions to invest in Indian hotel management startup OYO. If completed, the investment would likely be in the $100 Mn to $200 Mn range.
Airbnb operates an online marketplace for homestays, bed and breakfast hotels and tourist experiences. With an investment in OYO, Airbnb may be looking to expand reach to OYO’ close to 180K hotel rooms in India and about 500K rooms all over the world.
The move could signal Airbnb’s shifting interest from enticing backpackers and tourists looking for offbeat travel experiences to business travellers who prefer hotels and do not mind paying extra for the additional comforts. Towards this, aside from buying HotelTonight, Airbnb also acquired a French property management startup called Luckey Homes in December, 2018.
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While the company has said that India and China are two of its most promising markets, Airbnb’s presence in both places is relatively small.
Meawhile flush with funds from its $1 Bn fund raise, OYO has been busy forging ahead with its international expansion plans. As of March 2019, the company has already expanded to nine other countries beyond India and operates in 500 cities with half a million rooms listed.
It had recently committed $200 Mn (INR 1,400 Cr) towards growing its business in India and South Asia. The company recorded a 3.5x jump in revenue from its India operations and a 4.3x Y-o-Y global sales growth for the year ended March 2018.
The Gurugram-based company has recently raised $1Bn in its latest funding round led by SoftBank Investment Advisers (SBIA) through SoftBank Vision Fund, with participation from existing investors Lightspeed India Partners, Sequoia Capital, and Greenoaks Capital.
Prior to this, OYO has raised $450 Mn in funding from key investors such as Sequoia Capital India, Lightspeed India Partners, DSG Consumer Partners, and SoftBank, among others.
OYO Hotels’ sales run-rate globally at December ended 2018 was at $1.8 Bn, growing at 4.3X – and its India business was growing at 3X with a sales run-rate of $1.2 bn annually.
OYO has recently acquired Gurugram-based coworking startup Innov8 in an all-cash deal worth about INR 220 Cr ($31.84 Mn). According to Inc42 sources, the founders and investors of Innov8 have taken an exit as part of the buyout.