Oyo's Overseas Expansion Runs Into A Chinese Wall PDF

5/7/2020 Oyo’s overseas expansion runs into a Chinese wall
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Home > companies > start-ups > Oyo’s overseas expansion runs into a Chinese wall
Oyo founder Ritesh Agarwal has said that while the company was yet to list on Meituan, a large travel platform in
China, it was selling properties on smaller platforms—Alibaba’s Fliggy and Qunar. Photo: Bloomberg
Oyo’s overseas expansion runs into a Chinese wall

3 min read . Updated: 11 Oct 2018, 06:55 AM IST
Shrutika Verma, Mihir Dalal
Oyo has set aside $600 million for its expansion in China, but the start-up is still not available on
some key travel platforms and was finding it difficult to launch its own website
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New Delhi/Bengaluru: Internet giants Amazon.com Inc., Google (Alphabet Inc.) and
eBay Inc. have all failed in China. Now, India’s pioneering budget hotel start-up, Oyo, is
starting to find out just how tough it is to do business in Asia’s largest economy.
Owned and operated

Coronavirus Pivot Or Perishby Oravel Stays
Mint Covid Pvt. #WFHLife
Tracker Ltd, Oyo has setDashboard
Market aside $600Money
million for itsSeason 4
With Monika,
expansion in China. However, four people close to the development said the company
was still not available on some key travel platforms and was finding it difficult to launch
its own website. A large part of Oyo’s bookings in China came from offline channels, said
the people on condition of anonymity.
As a result, the company is yet to figure out how to get regular bookings for the 87,000
rooms it has listed in 171 cities across China.
“Currently, we lease or franchise 1,000-plus Oyo hotels through multiple platforms

including third-party distribution, WeChat (mini app) and we also host a large number
of guests through the walk-in channel," said Yufei Hu, senior vice president, self-
operated hotels and expansion at Oyo China. “We have a razor-sharp focus on improving
infrastructure and yield of our leased assets while ensuring a quality stay for our guests.
We enjoy a healthy relationship with all our partners, including OTAs (online travel
agents)," Yufei added over email, in response to Mint’s queries.
A lot is at stake for Oyo. In less than a year, its valuation surged from $850 million to $5
billion last month, when it raised $800 million from existing investors, led by SoftBank
Vision Fund. The sharp rise in valuation was driven partly by investor expectations that
Oyo would crack the massive Chinese market. According to Phocuswright, China’s travel
market is estimated to be over $134 billion in 2018.
If its China push goes well, Oyo will become one of the rare foreign internet start-ups to
succeed there. If it doesn’t, Oyo will join a long list of companies, including Amazon and
Google, which had to withdraw from China due to various reasons.
Unlike the US and India, China’s internet sector is strictly regulated and international
companies are either explicitly banned or forced out. COVID-19
Oyo enjoys strong backing from SoftBank’s influential founder, Masayoshi Son. INDIA
But the
company is facing formidable challenges. Oyo is currently unavailable on a large52,952
online
travel agent, Meituan.
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While it is trying to launch its own platform in China, industry experts said it would be
an uphill battle, given China’s highly regulated and tightly guarded internet space.
Currently, even Oyo’s own website does not allow one to book properties in China. The
properties
Coronavirus are also
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Or Perish Mint Covidon other #WFHLife
Tracker OTAs suchMarket
as Expedia
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Booking.com.
With Monika, Season 4
In an interview on 25 September, Oyo founder Ritesh Agarwal said that while the
company was yet to list on Meituan, it was selling properties on smaller platforms—
Alibaba’s Fliggy and Qunar.
According to the four people cited earlier, the company currently gets a large part of its
bookings via offline channels such as walk-ins, in the hotels it has signed up with. It also
gets some bookings through its call centre.
Oyo, which employs more than 1,000 people in China, pays hotel owners to renovate
their properties before listing them under the Oyo brand. The company is currently
focused on Tier II and III cities, but plans to expand deeper into China over time.
Gurugram-based Oyo is present in five countries—China, Malaysia, the UK and Nepal,

besides India.
Founded in May 2013, the recent fundraise has given the young founder the necessary
firepower to continue his aggressive international expansion.
According to Agarwal , India has 4.3 million unbranded rooms and China 35 million, but
there is only a 25% occupancy rate and his company is aiming to change that.
Earlier this week, Mint reported Oyo is all set to launch its operations in Japan as it eyes
a dominant market share in the budget hotel market ahead of the 2020 Olympic Games.
Click here to read the Mint ePaper
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