Indian hotel chain OYO to enter Chinese market

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Indian budget hotel chain OYO Rooms has announced its entry into the Chinese market, offering travelers 11,000 rooms across 26 different cities in the startup’s third overseas market.

Founded in 2013 by teenage entrepreneur Ritesh Agarwal, the chain – which stands for On Your Own – has spread rapidly across 230 Indian cities after receiving over 450 million US dollars in funding, including a 250 million US dollar capital injection from SoftBank Group last year.

According to Techcrunch, OYO will cover several second and third tier Chinese cities, operating a “combination of franchised and managed hotels.”

The company has already expanded beyond India into Nepal and Malaysia, and prior to officially launching operations in China secured 10 million US dollars’ worth of funding from China Lodging Group last September.

According to the company’s website, OYO’s success in India came from exploiting “the fragmented and legacy-driven budget hospitality space in India by enabling standardization of services, amenities and in-room experience.”

C‍o-founder of FlipKart, Sachin Bansal, flanked by Chairman and Managing Director of Bicon India Limited, Kiran Mazumdar Shaw (L) and CEO of OYO Rooms, Ritesh Agarwal at the Odisha Investors Meet in Bangalore, August 2016. /VCG Photo

Like other hospitality startups disrupting the hotel industry, OYO has been able to spread so rapidly in just five years thanks to its use of mobile technology – the OYO app has been downloaded more than 10 million times in India.

Despite the huge potential in China’s tourism market – the holiday rental sector is set to triple in size by 2020 – the domestic hotel and accommodation industry will likely be hard for OYO to crack, given the number of domestic and international competitors present.

Chinese platforms like Xiaozhu and Tujia have hundreds of thousands of rooms available, with the latter valued at 1.5 billion US dollars after raising 300 million US dollars last October.

Airbnb has also invested heavily into the Chinese market, with 150,000 properties now listed on its platform. The company has earmarked the country as one of its most important markets, with plans to make it the biggest source of rental properties by 2020.

In the last three months of 2017, more than one million guests checked in at Chinese Airbnb properties, triple the amount seen the year before. Since 2015, the company claims its Chinese business has grown more than 100 times in size.