Gurugram-based hospitality unicorn OYO Hotels and Homes has been on a ride of its life. International expansions, billion dollar funding, leadership support, acquisitions, new investors and so much more has happened for the company since the last summer.
The latest update from the company sources says it may raise a fresh round of $1 Bn funding at a valuation of $10 Bn. This would be almost double its current valuation of $5 Bn.
Company sources told ET that the new round will hit the road in the July-September quarter. It is said that OYO is looking at a new lead investor and there is high interest from both financial and strategic investors.
However, an OYO spokesperson said in response, “This is speculation. Oyo Hotels & Homes has a very healthy balance sheet and we are not in talks with any investors. We don’t have any further comments.”
It is to be noted that OYO has been raising funds continuously and the company hasn’t yet closed its Series E round. It is still intent on keeping funds coming in. The $1 Bn round was led by Japanese conglomerate SoftBank, which now holds a little over 46% stake in the company.
SoftBank’s aggressive move to dominate the stakes in the Ritesh Agarwal-led company has been in direct contrast to its tough time in finding the same in ride-hailing unicorn Ola. It is notable that Bhavish Aggarwal and Ankit Bhati have been consciously trying to keep SoftBank away from increasing its presence on the cap table of Ola. However, in stark contrast, OYO has been seen cozying up to SoftBank.
In terms of OYO’s performance, the company has strongly expanded into global markets, especially in China and Europe. It claims to be the sixth largest hotel chain in the world. As the focus on international markets increase, a majority of the revenues for the company also come in from its presence in Southeast Asia and Japan.
OYO has recorded global sales run-rate of $1.8 Bn in December, 2018, growing at 4.3X. At the same time, its India business was growing at 3X with a sales run-rate of $1.2 Bn annually.
OYO also committed $200 Mn (INR 1,400 Cr) towards growing its business in India and South Asia. At the time, OYO had announced its plans to aggressively pursue its plan to become the world’s largest hotel chain by 2023 and becoming the dominant hospitality player in India and South Asia.
OYO’s focus has been on long-term growth, to expand and capture as much of the opportunity in existing markets, while also identifying new markets. As the hospitality sector continues to burn cash, another billion dollar funding in less than a year may just support the costs associated with running these big businesses.