With Ctrip deal, Oyo a step closer to becoming “world’s biggest hotel chain”

Agarwal: excited about the potential impact that Oyo's continued expansion will bring

India-based Oyo Hotels & Homes, said to be world’s sixth largest hotel chain, is not letting up its aggressive expansion ambitions, if its recent moves are anything to go by.

The latest? Sealing a strategic partnership with Ctrip to distribute Oyo hotels in China, announced Oyo’s founder Ritesh Agarwal at Skift Forum Asia in Singapore on Monday.

Agarwal: excited about the potential impact that Oyo’s continued expansion will bring

With this latest partnership, both companies will collaborate across multiple areas of business, including demand generation by providing access to customers of both brands, online-to-offline services integration, data operation and branding.

The alliance will also enable both brands to leverage the synergies – Oyo’s large volume of design-oriented low-cost assets and refined operation capabilities along with Ctrip’s distribution network and platform ecosystem – and complement each other while offering travellers easy access to standardised, affordable living spaces, said Oyo in a press release.

Forming a deeper collaboration with the Chinese OTA giant clearly plays into Oyo’s ambitions of “becoming the largest hotel company by rooms, revenues and margins by 2023”, the 25-year-old entrepreneur declared at the Monday forum.

China is now the biggest market for the fast-growing company, where Oyo Jiudian (Hotels) – as what’s it’s known in the country – has emerged the second largest hotel group with over 450,000 rooms in 10,000 hotels across 320 cities.

Recognising the unique business ecosystem that China operates in, Oyo also deploys a differentiated strategy in the country from other markets.

“By design, a global company will never be successful in China versus a local company. If that’s the case, we should become the local entrepreneurs wanting to copy Oyo,” Agarwal remarked. “We thought of ourselves as rebels wanting to copy Oyo in China, and that mindset enables us to keep two levels ahead of everybody else.”

China, as well as India, are where the group is witnessing “rapid speed-up”, revealed Agarwal. “For example, we are opening two buildings a day in the UK; we’re opening roughly 10 hotel buildings a day in China and we’re opening roughly the same number in India.”

Oyo recently acquired @Leisure Group, while it also received funding from Airbnb and is backed by leading investors the likes of SoftBank Vision Fund and Sequoia Capital, among others.

Meanwhile, Agarwal wants to move the company into the black. “We were -40 per cent in the last three years and now -20 per cent in the last year. My goal is -10 per cent for this year.”

And with a current valuation of US$5 billion, is an IPO in the cards? Agarwal doesn’t rule that out. “We would consider it at some time in time.”

But if Sébastien Bazin, CEO of Accor offers to buy out Oyo for “10 million dollars, would you take it?” asked Skift founder Rafat Ali, moderator of the session.

“It’s a hard transaction to be had here,” Agarwal replied. “I would answer this to anybody else: The only reason I continue to be excited over what I’m doing is the potential impact it has across the world.”

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