OYO Acquires Danamica: Top-line Growth By Leveraging Dynamic Pricing In Pipe Line

Gurugram-based hospitality unicorn OYO Hotels and Homes on Monday announced acquisition of Copenhagen-based data science company Danamica for an undisclosed amount.

With the acquisition, OYO expects to be able to drive top-line growth by leveraging dynamic pricing across all its brands— OYO Home, Belvilla and DanCenter. Also, OYO and its real estate partners around the world will benefit using data sciences for improved yield.

The company believes that starting with Europe, Danamica’s technology innovations will benefit OYO’s global vacation homes business.

What Is Danamica?

Founded by Mads Westberg and Rune Larsen, Danamica is a machine learning and business intelligence company specialising in pricing time-expiring inventory such as rental of vacation homes.

Danamica’s core strength is the application of economics and machine learning. Danamica’s technology makes it possible to dynamically set optimal prices for vacation home stays as supply/demand changes – to the benefit of both guests and owners.

Maninder Gulati, global head, OYO Vacation and Urban Homes, and chief strategy officer, OYO Hotels & Homes, said, “We are glad to have found Danamica, which has built expertise in these areas. Both Rune and Mads are extremely talented individuals and together with their team, they have built a valuable IP that analyses many years of data and pricing trends and provides logical and scientific recommendations, which will help us scale our vacation and urban homes business across Europe and other parts of the world.”

OYO Leveraging Danamica For Growth

OYO is now looking to leverage the same to further develop its dynamic pricing model. OYO’s pricing, inventory allocation, and revenue management are driven by a machine learning-based algorithm for prediction and dynamic pricing.

The algorithm analyzes 144K data points every hour and makes 60 Mn price changes every day globally with a prediction accuracy of 97%. It allows each asset to drive max RevPAR based on its micro-location. It allows pricing to adjust dynamically to supply and demand.

In peak times, pricing adjusts to deliver high RevPAR and in low times, it also goes down to still allow for maximum customers to experience the product while increasing overall yield for owners.

Mads Westberg and Rune Larsen, founders, Danamica said, “OYO and Danamica have a shared understanding of the importance and impact of AI and data science. Like OYO, we recognize the untapped potential in the vacation rental industry that can be fulfilled with a data-driven approach. We are therefore confident that we have found the right home for us in OYO and are excited about the prospect of using our expertise in pricing and machine learning to further help OYO’s continued growth and success.”

Since its launch six years ago, OYO has moved from a hotel aggregator to a franchisee model. The company has expanded its services to more than 800 cities in 80 countries, including the US, Europe, UK, India, Malaysia, Middle East, Indonesia, Philippines, and Japan. The company has raised $1.7 Bn of funding from investors such as Airbnb, SoftBank Vision Fund, Greenoak Capital, Sequoia Capital, and Hero Enterprise.

The company has also acquired multiple portfolios such as @Leisure Group and Innov8 coworking to expand its branded offerings. Recently, it acquired Hooters Casino Hotel in Las Vegas to expand its presence in the city.