Indian budget hotel startup Oyo expands to the UK

Oyo
founder Ritesh Agarwal.
Oyo

• Indian hotel marketplace Oyo has expanded into the UK.
  It aims to partner with budget British hotels to standardising
  their decor and service.
• Oyo offers a marketplace of mostly budget hotel rooms
  via its app, hoping to create a level of standardisation of
  service and decor at low-cost hotels.
• The company was founded by 24-year-old Indian
  entrepreneur Ritesh Agarwal, and has raised $450 million to
  date from investors such as SoftBank’s Vision Fund, Lightspeed,
  and Sequoia.

Indian startup Oyo has launched in the UK to try and raise the
standards of budget hotels across the country.

The UK is Oyo’s first market outside of Asia, where it has racked
up a network of more than 200,000 rooms across India, Malaysia,
China, and Nepal.

The startup has appointed Coco di Mama cofounder, Jeremy Warner,
to run its British business, and plans to invest £40 million ($53
million) in the UK.

The startup will become available in 10 cities over the next 18
months, and already has several hotels in its launch city of
London.

Oyo is like a mix of Airbnb and WeWork. The premise in the UK is
that Oyo takes unloved budget hotels, brings them into its
franchise under the Oyo brand, and then renovates them to a
particular standard.

The startup promises to take the management load off independent
hotel owners, and to boost their bookings. It takes a cut from
room bookings, and benefits from adding to its huge network of
rooms around the world.

The upside for hotel customers is that they can travel to a
particular city and expect a consistent type of decor and service
from an Oyo hotel.

The startup already has a physical presence in London and is
targeting a mix of locations in the city. It has one “townhouse”
in Paddington and another in Ilford, an unglamorous location in
east London.

Customers can book rooms through the Oyo app, or through
third-party aggregators like Booking.com.

An Oyo Townhouse in
Paddington.
Oyo

Oyo has generated major hype in its home market, not least
because of its youthful founder, 24-year-old Ritesh Agarwal, who
bases himself Gurgaon, on the outskirts of Delhi, India.

While at university, Agarwal won $100,000 from the Thiel
Fellowship, a grant for budding entrepreneurs that requires them
to drop out of college. He has raised $450 million to date from
top-tier backers including Sequoia, Lightspeed, Greenoak, and
SoftBank’s Vision Fund.

The company is
rumoured by the Indian media to be in the process of raising
a further $800 million to $1 billion, at a valuation of $4
billion, although Agarwal was tight-lipped about this in a call
with Business Insider.

“We continually get inbounds,” he said. “There is no specific
view on capital raising right now.”

He added that Oyo wasn’t a particularly capital-intensive
business and had a “healthy balance sheet,” though he didn’t
provide further financial detail.

Agarwal bills Oyo as a way to rejuvenate struggling local hotels
and, by extension, their neighbourhoods. The messaging
has echoes of WeWork founder Adam Neumann, another SoftBank
entrepreneur who regularly draws on the importance of
“community.”

Agarwal said: “If you think about London, every [area] had its
own neighbourhood hotel, a butcher’s… these are all slowly
disappearing in the face of big businesses showing up. Oyo’s goal
is to try and keep the originality of the neighbourhood hotel
while upgrading them with great quality design and customer
service.

“At the same time,” he added. “[Hotel] owners see significantly
more return when franchised or leased by us. That’s the principle
we’ve taken.”