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OYO signs MoU with China Lodging Group and secures $10M investment

Online budget hotel aggregator, OYO has signed a Memorandum of Understanding (MoU) with Chinese multi-brand hotel group China Lodging Group Limited. As a part of this MoU, China Lodging Group has also invested $10 million in OYO, which is a follow-up on OYO’s $250 million Series D round of funding announced last week.

As per the MoU, OYO and China Lodging Group will explore co-learning opportunities that are of interest to both parties, including employee exchange programs, sharing of technology and intellectual property. The MoU is also expected to include joint loyalty programs. OYO will provide technology and operational expertise, while China Lodging Group will bring to the table its extensive coverage and development capability in China.

There’s no mention of OYO expanding its network of hotels by aggregating China Lodging Group’s hotels on its platform, but that would be the natural progression for the company. It already aggregates hotels from Malaysia and Nepal, and post the Series D round of funding Ritesh Agarwal, founder & CEO of OYO, had said that the company will deploy fresh capital to expand in international markets which have India-like supply-demand imbalance in real estate and hospitality.

As of June 2017, China Lodging Group had 3,541 hotels with 359,530 rooms in operation across 369 cities. The hotels include leased and owned, manachised and franchised properties, mostly in the economy and mid-scale hotel segments. 24% of the rooms are under the lease and ownership model, while 76% are under the manachise and franchise model. On the other hand, OYO currently operates in over 230 cities across India, Malaysia and Nepal.

OYO in India

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Unlike AirBnB, which aggregates bed-and-breakfast options for users, OYO aggregates small hotels, and typically leases space from these hotels, standardises the experience, and rents it out to users. In January this year, it launched its self-operated hotel brand Townhouse. At the time of launching the fifth Townhouse property in Hyderabad, the company had claimed that it plans to launch 25 Townhouse hotels in Telangana, and expand to 60 Townhouse hotels across 7 cities in Southern India by end of 2017. It also has OYO Captains, to provide personalized on-ground local assistance to guests.

Regulation

The hotel aggregation space is currently unregulated in India. However, earlier this year the Indian government began working on guidelines for accommodation aggregators, which would include the likes of OYO, Hotels.com, AirBnB, FabHotels and Tripvillas, as well as offerings from OTAs such as MakeMyTrip (including GoIbibo GoStays), Cleartrip, and Yatra.

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