Oyo’s overseas expansion runs into Chinese wall
NEW DELHI/MUMBAI: Internet giants Amazon, Google and ebay have all failed in China. Now, India’s pioneering budget hotel start-up, Oyo, is starting to find out just how tough it is to do business in Asia’s largest economy.
Owned and operated by Oravel Stays Pvt. Ltd, Oyo has set aside $600 million for its expansion in China.
However, four people close to the development said the company was still not available on some key travel platforms and was finding it difficult to launch its own website. A large part of Oyo’s bookings in China came from offline channels, said the people on condition of anonymity.
As a result, the company is yet to figure out how to get regu- lar bookings for the 87,000 rooms it has listed in 171 cities across China.
“Currently, we lease or franchise 1,000-plus Oyo hotels through multiple platforms including third-party distribution, Wechat (mini app) and we also host a large number of guests through the walk-in channel,” said Yufei Hu, senior vice president, self-operated hotels and expansion at Oyo China. “We have a razor-sharp focus on improving infrastructure and yield of our leased assets while ensuring a quality stay for our guests. We enjoy a healthy relationship with all our partners, including OTAS (online travel agents),” Yufei added over email, in response to Mint’s queries.
A lot is at stake for Oyo. In less than a year, its valuation surged from $850 million to $5 billion last month, when it raised $800 million from existing investors, led by Softbank Vision Fund.
The sharp rise in valuation was driven partly by investor expectations that Oyo would crack the massive Chinese market. According to Phocuswright, China’s travel market is estimated to be over $134 billion in 2018.
If its China push goes well, Oyo will become one of the rare foreign internet start-ups to succeed there.
If it doesn’t, Oyo will join a long list of companies, including Amazon and Google, which had to withdraw from China due to various reasons.