In a bid to expand its business to China and other parts of the world, Indian start-up Oyo has raised £0.76 billion (£760.55 million).
Oyo is an Indian hospitality company for booking cost-effective standard hotel rooms.
The existing investors including SoftBank Vision Fund, Sequoia Capital, and Lightspeed Venture Partners have sanctioned £608.44m, with assurance for another £152.11m, the company said in a statement on Tuesday (25).
About £456.33m of the sum will be pushed into China where the company started its operation only 10 months ago. The funding values the company at £3.80bn, sources said.
Indian youth, Ritesh Agarwal, a 24-year-old college dropout, started Oyo five years ago after travelling around India with a limited budget.
During his travel, he found widely unpredictable standards for hotels, lodges, and guesthouses. Following his experience, he decided to start an online service to bring higher reliability to the customers.
In the last 24 months, Oyo expanded its business into China, Malaysia, Nepal, and Britain.
“With this additional funding, we plan to rapidly scale our business in these countries, while continuing to invest further in technology and talent,” Agarwal said in the statement.“We will also deploy fresh capital to take our unique model that enables small hotel owners to create quality living spaces, globally,” he added.
The official name of Agarwal’s start-up is Oravel Stays Pvt, makes an agreement on hotel proprietors and then gets the owner and management to upgrade everything from linen, toiletries, and bathroom fittings to its specifications. It also equips hotels with staff training and supplies which meet good standards.
After converting the hotels into a standard hotel, Oyo brings them on board its hotel website, where rooms start at £19.01 a night. The hotel pays Oyo a 25 per cent commission.
At a £3.80bn valuation, Oyo is expected to be India’s most-valuable start-up company after One97 Communications, the parent company of the digital payment firm, Paytm.
India’s hospitality industry has large chains to provide a remarkable experience to the customers from the mid to the top level. However, the businesses also consist a number of unbranded hotels, lodges with poor facilities who often fail to meet the expectations of the customers.
Oyo started its operations with a single hotel in Gurgaon, and has expanded to 125,000 rooms in India, where tripling year-over-year in terms of transactions, the company states.
In China, where it started the business in November 2017, it has expanded to 171 cities with 87,000 rooms. The company is now in more than 350 cities with 211,000 rooms.