OYO has officially announced its foray into China and said that it has about 11,000 rooms in 26 cities including Hangzhou, Xian, Nanjing, Guangzhou, Chengdu, Shenzhen, Xiamen and Kunming among others. Back in May, it had been reported that OYO had silently begun operations in Shenzen, with prices starting around ¥100 (Chinese Yuan) which is around Rs 1000.
In September 2017, OYO had signed a Memorandum of Understanding (MoU) with Chinese multi-brand hotel group China Lodging Group Limited. As a part of this MoU, China Lodging Group also invested $10 million in OYO. As per the MoU, OYO and China Lodging Group will explore co-learning opportunities that are of interest to both parties, including employee exchange programs, sharing of technology and intellectual property. The MoU also includes joint loyalty programs. OYO was to provide technology and operational expertise, while China Lodging Group will bring to the table its extensive coverage and development capability in China. As of June 2017, China Lodging Group had 3,541 hotels with 359,530 rooms in operation across 369 cities. The hotels include leased and owned, and franchised properties, mostly in the economy and mid-scale hotel segments. 24% of the rooms are under the lease and ownership model, while 76% are under the franchise model.
China is the third overseas market for OYO, after international expansion in Malaysia and Nepal earlier. The hotel brand and aggregator currently operates in 150 cities across India, China, Malaysia and Nepal.
OYO which raised $250 million in Series D round of funding in a round led by d by SoftBank through its SoftBank Vision Fund, with the participation of Sequoia India, Lightspeed Venture Partners, Greenoaks Capital, and Hero Enterprise in September 2017, is a loss-making entity owing to its operating expenses such as commissions to partner hotels, and other expenses. According to this ET report, OYO reported a loss of Rs 330.97 crore in FY 2017, representing a decrease of 33% from Rs 496.31 crore in FY 2016.
Competition in China
OYO is going to face competition with the likes of Airbnb, and Tujia. According to Bloomberg, Airbnb is seeing double growth in the number of guests staying at Airbnb properties in China and its listings in the country have grown by 125% with 200,000 from a year before. China’s local player Tujia, which is backed by a Chinese travel operator Ctrip.com, has about 700,000 listings in 300 cities in China.
