It seems India's Oyo Hotels & Homes is striking new deals each week. After aligning with Airbnb and forming a joint venture with Tokyo-based SoftBank Corp. and SoftBank Vision Fund to expand in Japan, the company has partnered with bedbank Hotelbeds, a company that negotiates rates with accommodations providers and act as a wholesaler for the accommodations. Hotelbeds is the first travel distributor to form an alliance with the India-based company.
The partnership will give Oyo access to more than 60,000 travel-buying intermediaries around the world that use the Hotelbeds platform, including tour operators, airline websites, points-redemption programs and loyalty plans from more than 140 source markets. Oyo will be able to distribute its hotel rooms via both the wholesale channel that operates under the Hotelbeds name and the retail travel agent channel, which operates under the Bedsonline brand, all under one contract.
At the same time, Hotelbeds’ clients will have access to Oyo’s portfolio of more than 18,000 franchised and leased hotels and more than 10,000 homes and villas across India, China, Malaysia, Nepal, the U.K., UAE, Indonesia, the Philippines, Saudi Arabia and Japan.
"Hotelbeds' distribution channel of B2B travel buyers helps us access new customer segments and geographies," said Maninder Gulati, chief strategy officer, OYO Hotels & Homes. "The bedbank company’s cost-efficient distribution channel makes them an ideal partner to achieve our goal."
Shake-Ups
At the same time, Mark Redmond, head of global chains at Hotelbeds noted Oyo has been "shaking up" the hospitality sector, and included this deal as an example. "As the largest budget-hotel chain, it represents a new offering for our 60,000-plus travel-buying clients using our platform, such as travel agents and tour operators, meaning our distribution channel sits perfectly with their needs."
While Oyo currently has an estimated 515,000 rooms, Redmond said the firm could reach a million rooms by 2020. "We’re looking forward to helping them find incremental and higher-yielding bookings for many of those rooms."
Late last month, Ritesh Agarwal, Oyo's 25-year-old founder and CEO, shared plans with regional financial site Nikkei Asian Review of the company's plans to overtake Marriott International as the world's largest hotel operator. Furthermore, Agarwal plans to accomplish this feat in fewer than four years. If the company achieves the goal of a million rooms by 2020, it would need to add a further 300,000 by 2023 to surpass Marriott's current total of 1.29 million room. (Marriott will likely add more rooms by then, putting Agarwal's goalpost further away.)
Agarwal acknowledged Oyo is still losing money, but told the financial site the company expects the loss (as a percentage of sales) to decline to 10 percent for the year ended in March, an improvement from 20 percent a year earlier.
And some insiders are wary of Oyo's plans to gain ground in developed countries. "They have been able to replicate [the business] in China and Southeast Asia," Ujjwal Chaudhry, associate director at RedSeer Consulting, told the site. "It would be competing with established players in more mature markets, so it may be more of a gradual evolution."