OYO Hotels & Homes is growing faster in China than in its home market, as the hospitality chain backed by Japan’s SoftBank accelerates the pace of expansion in the world’s second-largest economy. OYO manages more rooms in China than in India.
The Gurgaon-based company, which was valued at $5.5 billion after its last funding round in September, currently manages 180,000 rooms across 4,000 leased and franchised properties in China, chief executive Ritesh Agarwal told ET. This marks a two-fold jump over the 87,000 rooms under management that it reported in September. In contrast, the six-year-old company manages 149,000 rooms in India and South Asia.
“India and China are our home markets… In just one year, we are now among the top-10 hotel chains in the latter. Our assets there have been seeing an average occupancy jump, ranging from 25% to 60%-70%, after the hotels lease or franchise the properties to us,” Agarwal said.
OYO officially launched operations in China during November 2017 and is now present across 265 cities.
Experts who track the online commerce sector are of the view that OYO’s rapid expansion in China marks a first for the Indian internet sector.
“It’s probably the first successful Indian internet company that’s gone to the lion’s den, and scaled to this size,” said Ankur Pahwa, national leader, e-commerce and consumer internet, EY, adding that “one must take into account the size and dynamics of that market, which is simply mind-boggling”.
OYO’s intense focus on China is underlined by the pace at which it is building a local leadership team, often by poaching a number of senior executives from some of the largest consumer technology companies. The company has hired Wilson Li as a chief financial officer for its operations in the country. Prior to joining OYO, Li used to be the finance and operations head at a listed car rental major Car Inc.
5,500 full-time staff in China
Separately, it has also brought on board Google and Uber executive Jia Zou as its technology head and Tony Liang, formerly with Wanda, SF Express and Dianping, as its chief human resources officer.
Agarwal, however, declined to provide all the names, citing confidentiality, as some of the CXO-level hires are yet to be finalised.
All these guys have the experience of operating with the wisdom and maturity of large valuable organisations, as well as the passion and energy of growing meaningfully fast,” he said.
Earlier this month, the company named former IndiGo president Aditya Ghosh as its chief executive for India and South Asia. Agarwal has been elevated to the Group CEO position.
They’ve (OYO) had a “distributed leadership” form of management that empowers a lot of folks, which is probably what’s needed for the company, given its focus on China and expansion into other overseas markets. The businesses require top management to have their feet on the ground,” EY’s Pahwa said.
OYO currently employs about 5,500 in China as full-time employees, and a further 60,000 on a contractual basis.
We have 600 supply chain partners and over 100 warehouses, which allows to keep our infrastructure availability very easy… Secondly, we can provide this quality of product at 20-30% lower price compared to the market,” Agarwal said.
OYO’s rapid growth has also come in a market regarded as notoriously difficult for international companies, including for some of the world’s largest technology and consumer internet corporations like Google, Uber and Amazon.
“We get close to 15-20% of our revenue from third-party distributors, which includes multiple online travel operators. We have a different partnership agreement with each one of them,” the Group CEO said.