China Lodging to invest in Oyo Rooms' global expansion plan

Beijing, China(Image: IQRemix / CC BY-SA 2.0)

Chinese hotel operator China Lodging Group has signed a Memorandum of Understanding to invest $10 million as equity in hospitality firm Oyo Rooms, claiming a less-than 5-percent stake. According to the MoU, Oyo will combine its technology and operational expertise with China Lodging Group’s coverage and development capability in China.

As per the agreement, China Lodging and Oyo will develop knowledge and technology sharing projects of mutual interest to learn about other fields of technology and hospitality. These projects could include an exchange program for employees, sharing of technology and intellectual property. “The partnership is also expected to leverage benefits for economies of scale, not limited to, sourcing and procurement and joint loyalty programs,” the firms said in a statement.

This new investment follows a previous Series D funding round where the startup secured a $250-million investment from Japanese investor Softbank Vision Fund, Sequoia India, Lightspeed Venture Partners, Greenoaks Capital and Hero Enterprise. Oyo raised another $186 million in an earlier three rounds of funding

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All of this funding will go towards Oyo’s plan for expansion across India and in other Southeast Asian markets. Ritesh Agarwal, Oyo founder and CEO, told Firstpost that Oyo will use the funds for “higher penetration in the markets that we are present in and to expand in the new markets, customer service, research and development, training and also on technology.” The company will also utilize capital to export its business model to international markets with a similar supply-demand imbalance in real estate and hospitality.

Oyo currently operates in over 230 cities across India, Malaysia and Nepal with 8,500 hotels and 70,000 guestrooms in major metros, regional hubs, leisure destinations and pilgrimage towns. Delhi’s Oravel Stays runs the economy hotel brand along with the Townhouse hotel brand.