OYO is cutting costs in Japan by merging its hotel and rental apartment business

An OYO hotel in JapanOYO
  • An OYO spokesperson confirmed the move and said that both the businesses are ‘complementary’ and that the move is along the lines of the startup’s global operations.
  • The merged entity will be then called OYO Japan.
  • OYO had launched in Japan in 2019 through OYO Life – its rental apartment business.
OYO in Japan is merging its hotel business and its rental venture – OYO Life. The merged entity will be then called OYO Japan.

OYO had launched in Japan in 2019 through OYO Life – its rental apartment business. Riding into the country on the back of its investor – SoftBank, OYO was hoping to make a splash. Yahoo had also bought 30% shares in OYO’s subsidiary company in Japan – OYO Life in March 2019. However, within seven months in November, Yahoo sold those shares back to OYO.

An OYO spokesperson confirmed the move and said that both the businesses are ‘complementary’ and that the move is along the lines of the startup’s global operations.

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“This is the right time to merge operational capabilities and technology that have been built by our teams in Japan. Globally, we operate a diverse portfolio of hotels, homes and rental accommodation under the umbrella of OYO Hotels & Homes and similarly, we are integrating both our businesses in Japan with the belief that this will strengthen our value proposition for our asset partners and guests,” said the spokesperson.

The spokesperson further said that the OYO team in Japan has built technologies including an instant home leasing platform, local revenue partner integrations, on-demand cleaning services, real estate services vendor network, dynamic pricing engine, among others.

Hit by the coronavirus pandemic, OYO in Japan had been looking at ways to cut costs. A report by Nikkei Asian Review in April 2020 said that Oyo Life had ‘already started transferring employees, mainly in sales, to other SoftBank affiliates in Japan, such as WeWork and mobile payment company PayPay.’ OYO was said to be following a secondment scheme in Japan to cut costs.

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During the SoftBank earnings call in May, Masayoshi Son had given a shoutout to OYO and talked about the opportunity to capture smaller hotels. “Some of the small hotels, rather than spending their own money during this current circumstance, they could join the OYO group. By connecting online they can take advantage of the new technology developed by them to acquire customers,” Son had said.

Right before the lockdown, the hospitality startup had said it was scripting a turnaround story in Japan. OYO Life had booked 4,000 rooms in January 2020, said a blog post by Kavikrut and Prasun Choudhury, board members, for OYO LIFE, Japan and OYO Hotels, Japan respectively. This is high occupancy for the geography where OYO has 5000 apartments and 200 hotels in total.

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