INTERNATIONAL REPORT—Airbnb will invest in Indian hotel start-up OYO Hotels and Homes, the home-sharing company confirmed to Hotel Business.
“Emerging markets like India and China are some of Airbnb’s fastest-growing, with our growth increasingly powered by tourism to and from these markets,” said Greg Greeley, president of homes with Airbnb, in a statement to Hotel Business. “In many of these markets, OYO is empowering local hospitality entrepreneurs to provide more options to more travelers. We share a dedication to offering people more choices when traveling, and we’re excited to partner with OYO as we work to make Airbnb for everyone.”
Maninder Gulati, global chief strategy officer at Oyo Hotels & Homes, added, “Airbnb’s strong global footprints and access to local communities will open up new opportunities for OYO Hotels & Homes to strengthen and grow, while staying true to our core value proposition. We’re excited by the possibilities and committed to bringing benefits to the millions of travelers who can now rely on Airbnb and OYO Hotels & Homes to find a home away from home.”
According to various media reports citing sources familiar with the deal, Airbnb will invest between $150 million and $200 million in OYO, which was launched in 2013 by Ritesh Agarwal. The company claims to be India’s largest hospitality company, with a network that currently spans more than 230 Indian cities including all major metros, regional commercial hubs, leisure destinations and key pilgrimage towns. It also has an international presence with hotels in Malaysia and Nepal. OYO is backed by global investors, including the SoftBank Group, Lightspeed India, Sequoia Capita, Greenoaks Capital, Hero Enterprise and China Lodging Group.
The investment comes on the heels of Airbnb’s announced purchase of HotelTonight, which the industry viewed as unsurprising move for the company, as it moves to increase its presence into the traditional hotel space.
Cindy Estis Green, CEO/co-founder of Kalibri Labs, was not surprised by this move by Airbnb. “Given their clear intention to move into the hotel space and the fact that their average rates are more aligned with the economy and midscale hotel sectors, this seemed like a logical step,” she said. “I expect we will see more of Airbnb’s active approach to the hotel community to build out their inventory as they compete more directly with Booking.com and Expedia.”
Michael W. Nixon, chief development officer/president with Expotel Hospitality, views the move as a way to enhance the company’s eventual IPO. “I think that Airbnb is continuing the same strategy of incorporating the booking of hotel rooms into their business model to shore up the attractiveness of the company for their pending IPO,” he said. “Taking on a company like OYO at a relatively inexpensive price further strengthens their numbers of ‘properties’ that are available and with OYO’s reach into traditional lodging units (hotel rooms), it looks to be a continuation of what they did with HotelTonight. Interestingly, OYO’s business model again mimics the practices of domestic OTAs: big commissions being paid by hotel owners in exchange for reservations.”