Oyo Rooms in talks to raise up to $800 million in fresh capital
BENGALURU:OYO Rooms has initiated talks to raise $500-800 million in fresh capital, six months after the company raised its last round, four people aware of the development said.
Oravel Stays Pvt. Ltd, which operates Oyo Rooms, is in early talks with existing investors led by Softbank Group and two new investors to raise its next round in order to increase its presence in the country as well as accelerate its international expansion, the people cited above said on condition of anonymity.
Mint could not ascertain the names of the new investors Oyo is talking to. Oyo didn’t respond to emails seeking comment. Softbank declined to comment.
In September, Oyo had raised $250 million, mostly from Softbank Vision Fund. Sunil Munjal-led Hero Enterprise had also invested in the round, along with Oyo’s previous shareholders Sequoia India, Lightspeed Venture Partners and Greenoaks Capital.
Oyo was one of the breakout start-ups from the funding boom of 2015, raising a surprise $100 million from Softbank in August that year. But after an expansion spree, the company, which started out as a marketplace, struggled to keep pace as customers complained of poor service and many rooms remained unoccupied.
Over the past year, Oyo has seen a turnaround, driven by its effort to gain full control of the room inventory on its platform.
Its occupancy rates and net promoter score (a measure of customer satisfaction), have both improved significantly over the past year, the people cited above said.
The launch of its Townhouse brand in January 2017 played a key part in improving Oyo’s image with customers. Townhouse properties are owned by Oyo and fully managed by the company’s staff — they work like any other branded budget hotel.
Townhouse has helped Oyo improve customer service and address the problems of fake bookings and high cancellation rates that it faced under the marketplace model.
Last month, more than two years after removing Oyo from its platform, the country’s largest online travel website Makemytrip said it will once again offer the company’s hotel rooms, a move that is likely to further boost Oyo’s sales.