This SoftBank-funded startup was founded by a 24-year-old to glam up budget hotels, and it's just launched in the UK
- Indian hotel marketplace Oyo has expanded into the UK. It aims to partner with budget British hotels to standardising their decor and service.
- Oyo offers a marketplace of mostly budget hotel rooms via its app, hoping to create a level of standardisation of service and decor at low-cost hotels.
- The company was founded by 24-year-old Indian entrepreneur Ritesh Agarwal, and has raised $450 million to date from investors such as SoftBank's Vision Fund, Lightspeed, and Sequoia.
Indian startup Oyo has launched in the UK to try and raise the standards of budget hotels across the country.
The UK is Oyo's first market outside of Asia, where it has racked up a network of more than 200,000 rooms across India, Malaysia, China, and Nepal.The startup has appointed Coco di Mama cofounder, Jeremy Warner, to run its British business, and plans to invest £40 million ($53 million) in the UK.
The startup will become available in 10 cities over the next 18 months, and already has several hotels in its launch city of London.
Oyo is like a mix of Airbnb and WeWork. The premise in the UK is that Oyo takes unloved budget hotels, brings them into its franchise under the Oyo brand, and then renovates them to a particular standard.
The startup promises to take the management load off independent hotel owners, and to boost their bookings. It takes a cut from room bookings, and benefits from adding to its huge network of rooms around the world.
The upside for hotel customers is that they can travel to a particular city and expect a consistent type of decor and service from an Oyo hotel.
The startup already has a physical presence in London and is targeting a mix of locations in the city. It has one "townhouse" in Paddington and another in Ilford, an unglamorous location in east London.Customers can book rooms through the Oyo app, or through third-party aggregators like Booking.com.
Oyo has generated major hype in its home market, not least because of its youthful founder, 24-year-old Ritesh Agarwal, who bases himself Gurgaon, on the outskirts of Delhi, India.
While at university, Agarwal won $100,000 from the Thiel Fellowship, a grant for budding entrepreneurs that requires them to drop out of college. He has raised $450 million to date from top-tier backers including Sequoia, Lightspeed, Greenoak, and SoftBank's Vision Fund.
The company is rumoured by the Indian media to be in the process of raising a further $800 million to $1 billion, at a valuation of $4 billion, although Agarwal was tight-lipped about this in a call with Business Insider.
"We continually get inbounds," he said. "There is no specific view on capital raising right now."
He added that Oyo wasn't a particularly capital-intensive business and had a "healthy balance sheet," though he didn't provide further financial detail.
Agarwal bills Oyo as a way to rejuvenate struggling local hotels and, by extension, their neighbourhoods. The messaging has echoes of WeWork founder Adam Neumann, another SoftBank entrepreneur who regularly draws on the importance of "community."Agarwal said: "If you think about London, every [area] had its own neighbourhood hotel, a butcher's... these are all slowly disappearing in the face of big businesses showing up. Oyo's goal is to try and keep the originality of the neighbourhood hotel while upgrading them with great quality design and customer service.
"At the same time," he added. "[Hotel] owners see significantly more return when franchised or leased by us. That's the principle we've taken."