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Oyo to partner with other companies for acquiring, leasing or managing four star hotels in India

SoftBank backed hospitality chain Oyo Hotels & Homes wants a foothold in the four star hotels segment in India and is planning partnerships with other entities to acquire, lease, or manage four star hotels in India under a new brand name, people familiar with the developments told ET. Oyo’s partner companies will acquire these assets and Oyo will operate and manage them.
Work has begun on this project and Oyo has set an internal target of reaching 5000 rooms (through acquiring, leasing or managing about 50 hotels with 100 rooms each) by the end of the year through such partnerships, sources privy to the developments said.
“Funded by SoftBank, this corpus kept aside for the partnership is for four star hotels in India. Oyo is getting into the four star hotels business in India via such partnerships. These hotels will be under a new brand name,” said a person familiar with the developments while another added, “They are extremely aggressive with the vision that they want to have 5000 rooms through these partnerships. This is not the aggregator model. 5000 rooms means that the average size of the room per hotel could be 100 rooms or 50 hotels by the end of the year.”
In a response to ET’s queries, Oyo said it is exploring opportunities for expanding its existing inventory in the four-star/ upscale segment. “Currently, Oyo provides guests a premium experience at competitive prices via its upper-end leisure resorts category of Palette Resorts in India. The discussion is at an early stage and we have no further comments at this time,” a spokesperson said.
As per some media reports, anchored by SoftBank, Oyo is in talks to raise another round of funds in the range of $1-1.5 billion at a valuation of $12.5 billion.
People familiar with the matter said Rohit Kapoor CEO of the new real estate businesses is heading this project for Oyo. Kapoor, a former McKinsey consultant and former executive director at Max Healthcare joined Oyo in December last year.
The midscale segment constituted 71% of overall brand signings in the sector last year, followed by the upscale segment at 15%, as per some industry reports.

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