Oyo raises $1.5 billion at $10 billion valuation; to focus on US market

Oyo Hotels & Homes is raising $1.5 billion from founder Ritesh Agarwal (pictured) and investors led by SoftBank, valuing it at $10 billion, reaching a big milestone in its 6-year history.
Of the $1.5 billion, Agarwal’s RA Hospitality Holdings will spend approximately $700 million and the rest will be supplemented by existing investors.
A significant part of the Series-F funding will be diverted in boosting the US footprint, and in strengthening the position in the vacation rentals business in Europe.
“On a year-on-year basis, we have seen that not only are we operating profitably at the building level but at the same time our Ebitda (earnings before interest, tax, depreciation and amortisation) has also improved by 50 per cent. The losses as a percentage of NRV have also been on a steady and significant declining curve.
Our immediate goal is to make forward-looking investments so we can achieve our mission, while delivering on our fiduciary responsibility to our investors by building a sustainable business,” Agarwal, founder and CEO (global), Oyo, said.
Agarwal’s investment will be part of the $2-billion plan, announced earlier, to treble his ownership stake. Lightspeed Venture Partners and Sequoia are selling part of their shareholding in Oyo to help Agarwal increase his stake.
Oyo claims to have a strong balance sheet, with over $2 billion.
Oyo had raised over $1 billion in September 2018. This fundraising saw participation from SoftBank, Lightspeed Venture Partners, Sequoia, and Greenoaks Capital, and new strategic partners like Airbnb.
Oyo has undergone wholesale corporate restructuring, setting up several subsidiaries and bifurcating operations globally. Agarwal has moved from executive director to a non-executive director in Oyo’s India operation to allow him to take up a more active role in the global operations of Oravel Stays Singapore.
“It is our ultimate holding entity for all our global operations. My deeper engagement in the global business is a natural progression, given our continued growth over the last couple of years and the opportunities in the US, Europe, China, and Southeast Asia,” Agarwal had recently told Business Standard.
Fast Facts
Number of countries where present: 80 plus China: 338 cities and over 590,000 rooms Indonesia: 100-plus cities and over 27,000 rooms US: 60 cities and over 7,500 rooms
3.8x YoY growth in revenue in Aug 2019 (vs Aug 2018) Total rooms: 1.2 mn under management

Oyo to rebrand Las Vegas-based Hooters, bring a 35,000 square-foot casino

Oyo Hotels & Homes said on Friday that it was going to rebrand Hooters Casino Hotel in Las Vegas as Oyo Hotel & Casino. In partnership with hospitality investment and management company Highgate, it plans to bring a 657-room and 35,000 square-foot casino.
“Highgate will handle the management of the hotel, and Paragon Gaming will continue to operate the casino,” Oyo said.
Additional amenities include two signature restaurants, four bars, a fitness centre, and an outdoor pool. The property will undergo an exciting transformation, which will be completed this year. “We are excited to be here as we believe Las Vegas is an exciting city, in which to invest, as the market continues to evolve with projects such as the new Las Vegas Raiders NFL stadium and the $1-billion expansion of the Las Vegas Convention Centre. As we continue to focus on bringing to life our popular concept of ‘comfort design’ and delivering chic hospitality experiences, we are increasingly exploring new ways to connect with our customers, from millennials, to young executives and families, in every city we enter,” said Abhinav Sinha, COO and partner, Oyo Hotels & Homes USA.
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Hooters, whose restaurant was famous for its chicken wings, shut shop in May 2017 after nine years of operations at the location. It was originally built as a Howard Johnson Hotel in 1973, and went through at least four more rebranding exercises, before being run as Hooters.
“We will be undergoing a renovation and will come up with some of the most loved amenities and experiences that are sure to Las Vegas visitors from around the world. We can’t wait to welcome you to our first hotel in Las Vegas,” Sinha said. The announcement is a part of the Oyo’s recent plan to invest $300 million over the next few years in the US.
Sinha is leading the initiative along with his team across 15 states in US, which plans to expand its presence to cities such as New York, Los Angeles and San Francisco after already establishing a presence in cities across Dallas, Houston, Augusta, Atlanta and Miami.

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“In June, we announced our plan to invest $300 million in the US. As a new-age hospitality firm, we currently offer great living spaces throughout our 112 plus Oyo Hotels in more than 60 cities and 21 states. With our newest hotel in Las Vegas, we are excited to cater to a completely different audience segment and are certain that this will be the perfect start to Oyo’s journey in Las Vegas,” said Ritesh Agarwal, founder and CEO, Oyo.
Paragon Gaming is a gaming company based in Enterprise, Nevada that owns and manages casinos in the US, and earlier in Canada. It managed the Hooters casino as well. “We’ve had great success managing the Hooter’s casino and look forward to continuing on as the Casino Manager and partnering with Highgate to introduce OYO’s hotel brand in Las Vegas,” said Diana Bennett, Paragon Gaming Chairwoman.
Highgate is a hospitality investment and management company operating in markets like the US and Europe.

Ritesh Agarwal to deploy $2 billion in his hotel startup OYO to boost stake

OYO Hotels and Homes, on Friday, said that its founder and chief executive Ritesh Agarwal, will invest $2 billion in the hospitality startup. Agarwal, who founded the hotel chain in 2013 at the age of 19, would make this investment through RA Hospitality Holdings (Cayman). He has signed a $2 billion primary and secondary management investment round and is supported by global institutional banks and his financial partners, subject to regulatory and shareholder approvals, according to the firm.
The SoftBank-backed company said its strong growth, improved margins, superior improvements in customer experience were behind this move. This makes it one of the first founder and executive-led management purchases in the technology and hospitality sector, globally. Lightspeed Venture Partners, and Sequoia India, OYO’s early supporters, are selling part of their holdings in order to help the founder increase his stake, and thereby commitment, while remaining invested significantly in the company’s long-term mission.

“It is a very exciting time for OYO right now as we make great living spaces come alive across all corners of the world from Texas to Tokyo. Our endeavor continues to be to become the most loved hospitality brand in the coming years,” said Agarwal. “I am deeply humbled and delighted to have gotten the support of all our investors, the board and above all the institutionalized financial partners that have provided the necessary financial support towards realizing this vision. Needless to say, the deal remains subject to shareholder and regulatory approvals,” said Agarwal.
The capital received through the forthcoming primary round will help boost OYO’s expansion plan in India, US, China, UK, EU, and Southeast Asia markets. OYO is increasingly evolving into a real estate service platform with 1 million-plus rooms under its management, globally.
Ankur Pahwa, partner and national leader, e-commerce and consumer internet at EY India, said that a move like this served a couple of purposes in a single stroke. This includes providing the entrepreneur greater shareholding and rights of the company and enabling him or her to capture greater gains as the firm achieves scale and success. “It also provides early investors an exit opportunity with substantial gains having reaped the fruits of their early commitment with capital to the company,” said Pahwa. “These structures with similar construct and differential voting right instruments are certainly going to be used (by other Indian) fast growing companies as well,” said Pahwa.
OYO said this year it has seen a 4.4x year-on-year growth in revenue in June 2019 (vs June 2018), with 1 million rooms under management across hotels and homes; with over 200,000 rooms in India.
The firm continues to bring its model of combining design, hospitality, and technological expertise to real estate owners around the world. This enables the firm to get a higher return on investments and transform their hotels, thereby significantly increasing occupancy and profitability – in every OYO building. There are over 20,000 of these buildings worldwide.
OYO has attracted marquee investors, including accommodation platform Airbnb, SoftBank Vision Fund, Lightspeed Venture Partners, Greenoaks Capital, Sequoia India, and Hero Enterprise.
“We have confidence in Ritesh’s (Agarwal) vision for OYO and how the team has come together to build a truly global brand from India. It has been an exciting journey so far and we hope to achieve many more milestones together in the time to come,” said Munish Varma, managing partner, SoftBank Vision Fund.
In June this year, SoftBank Group Corp founder Masayoshi Son said he was expecting OYO to become the largest hotel network in the world. At a general shareholders' meeting in Tokyo, Son had said that OYO was one of the largest hotel networks in India and had become the second biggest hotel network in China in just one year. The company is growing its market worldwide in regions such as the US, UK and Southeast Asia.
“As the company’s first institutional investor, Lightspeed is fortunate to have been part of OYO’s journey from a fledgling start-up in India to a transformative company in the hospitality industry globally,” said Bejul Somaia, partner, Lightspeed India Partners Advisors. “We remain committed to supporting Ritesh and the OYO team as the company embarks on its next phase of growth globally,” he added.
OYO Hotels & Homes said it is the world’s third-largest chain of hotels, homes, managed living and workspaces. The portfolio combines fully operated real estate comprising of more than 23,000 hotels and 46,000 vacation homes. OYO along with Vacation Homes categories managed by the company under OYO Homes, Belvilla and Dancenter brands can be found in more than 800 cities in 80 countries. These include markets such as the U.S., Europe, India, Malaysia, Middle East, Indonesia, Philippines, and Japan.
“This is the kind of stuff start-ups and ventures investing dreams are made of,” said Mohit Bhatnagar, managing director, Sequoia Capital India Advisors. “We remain committed to supporting this world-class management team as they continue to create living spaces across the world.”