4/4/2020 India's Oyo Enters UK Hotel Market With First Expansion Outside Asia – Skift

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Rooms, Hotels

India’s Oyo Enters UK

Hotel Market With
First Expansion
Outside Asia
Patrick Whyte, Skift - Sep 19, 2018 10:35 am

O
yo’s surprise move represents a big threat to the
likes of Whitbread-owned Premier Inn, which
Skift
has been a dominant force in the UK scene
Take
over the past few years. We’ll have to wait for more details
to see just how serious a player it might become.
— Patrick Whyte

OYO, India’s fast-growing hybrid online travel agency hotel company, is entering
the UK market with a plan to open properties in 10 cities over the next 18 months.

The company will use a franchising and marketing strategy in the hope of signing
up 300 independent hotels, according to Reuters.

The announcement marks the company’s first expansion outside of its Southeast
Asian heartland where it has a presence in India, China, Malaysia, and Nepal.

OYO’s first opening will be in London with four properties and it has plans for other
cities, including Manchester, Birmingham, Glasgow, and Edinburgh. 

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By 2020, OYO intends to hire 100 people and offer more than 5,000 rooms with an
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4/4/2020 India's Oyo Enters UK Hotel Market With First Expansion Outside Asia – Skift
initial investment of $53 million (£40 million).

The company started life as a room aggregator but quickly grew into something
resembling a traditional asset-light hotel operator. It claims to be world’s largest
digital hotel chain and has a slightly different model compared to traditional hotel
chains.

“The UK has been the topmost international travel destination for several years and
last year hosted over 19 million tourists from around the world,” said Ritesh
Agarwal, founder and CEO of Oyo.

“Driven by its booming domestic and international travel and budget hospitality
needs, the UK presents a multi-billion dollar opportunity for Oyo. We are thrilled to
now be able to offer Oyo’s affordable, hassle-free and quality living experiences to
guests across the UK,” he said, “and to be empowering the UK independent
hoteliers with the technology and operational expertise that helps them focus on
customer experience and thereby generate increased, sustainable incomes.”

A THREAT TO PREMIER INN

Whitbread-owned Premier Inn is the dominant player in the UK budget market

and Oyo’s move presents something of a threat. The likes of private equity-backed
Travelodge, as well as the bigger hotel chains with a strong footprint, such as
InterContinental Hotels Group, will also no doubt keep a close eye on proceedings.

“Oyo’s brands mainly target this budget segment and is aiming for 300 hotels,
which would make it the number three player and provides a new challenger to
Premier Inn,” Richard Clarke, senior analyst at Bernstein, said in a note to investors.

“Notably for Whitbread, management’s description of the structural opportunity in

the UK is about winning share from independents, and Oyo will provide another
option for independents.”

WHAT IS OYO’S MODEL?

Clarke calls Oyo a “hybrid online travel agency/brand network”. It runs an online
marketplace called Oyo Rooms, and although the hotels on it are independently
owned, Oyo offers design standardization services and has its own loyalty scheme.

The company has since moved into franchising and some properties will carry the
Oyo brand.

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Oyo has raised $446 million to date with investments from the likes of SoftBank
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4/4/2020 India's Oyo Enters UK Hotel Market With First Expansion Outside Asia – Skift
Group and China Lodging Group.

Tags: online travel agencies, oyo, premier inn, whitbread

Photo Credit: Oyo is expanding into the UK. the company wants properties in a number of cities. Oyo

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