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Oyo sets up operations in Nepal

Softbank funded hotel aggregator OYO has set up its operations in Nepal, a year and a quarter after it set up operations in Malaysia, where it claims to have a network of 200 hotels. Its first hotel in Nepal is expectedly in the capital city of Kathmandu, but oddly enough is referred to as “Oyo 001 Kathmandu” on the website; the listing on Oyo says that the hotel name will be shared after booking. The price for the room is Rs 1600, and there’s an automatic discount of 25% applicable in this case.

According to the Department of Immigration, of the 174,803 tourists that visited Nepal in 2016, the highest number of travellers were reported from India. Kathmandu is the company’s second international foray, after Malaysia. When it launched in Malaysia last year, it had mentioned that it is targeting South East Asia, Africa and South America next; clearly something changed, since the company hasn’t launched in those regions, and focused closer to home.

Unlike AirBnB, which aggregates bed-and-breakfast options for users, Oyo aggregates small hotels, and typically rents out space from these hotels, standardises the experience, and rents it out to users. Earlier this year, it launched properties which it operates in their entirety, called Townhouse. It also has OYO Captains, to provide personalized on-ground local assistance to guests.

Note that AirBnB, which recently raised $450 Millionlaunched its Trips business in India last month. Oyo competitor Stayzilla has recently been in the news for all the wrong reasons: first, it shut down operations, and then its founder was jailed following a police complaint regarding non payment of dues to a vendor.

Regulation of hotel aggregators

India is currently working on guidelines for accommodation aggregators, which Oyo will be impacted by, along with entities such as MakeMyTrip, Yatra, Goibibo and Tripvillas.

Funding

According to unconfirmed reports in the Times of India, Oyo is close to raising $250 million from Softbank, at a reduced valuation of $850 million. This would be its second round of funding from Softbank, after it had raised $100 million in August 2015, led by Softbank, but with participation from Greenoaks Capital, Sequoia Capital and Lightspeed India. Previous rounds of funding:

  • July 2016: Oyo raised Rs 413 crore via rights issue of shares to its shareholders
  • March 2015: Oyo raised $20 million in a funding round led by Greenoaks Capital and other existing investors.
  • March 2014: In its previous avatar of Oravel, it had raised funding from DSG Consumer Partners, and Lightspeed Venture Partners.
  • Seed round: From angel investors which included Shravan Shroff, founder of Fame Cinemas, and Ravi Kiran, former CEO – South East & South Asia – Starcom MediaVest Group and angels Anand Ladsariya, managing director of Everest Flavours, Amit Patni, co-founder and chairman of Nirvana Venture Advisors and Bharat Banka, CEO of Aditya Birla Private Equity invested in the firm.

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