Airbnb invests $150M-$200M into OYO

Home-renting giant Airbnb has backed hospitality chain OYO Hotels & Homes, as it dives deeper into the hotel-booking business.

While the terms of the investment were not disclosed, sources briefed on the developments told ET, Airbnb had invested $150-$200 million into the SoftBank-backed OYO, with the latest investment also believed to be part of the company’s mammoth $1 billion Series E funding round.

With Airbnb’s investment, OYO will have now raised $1.1-$1.2 billion, overshooting its initial target. Both parties confirmed the transaction. With this deal, Airbnb will be joining a clutch of high-profile investors in OYO like SoftBank, Sequoia Capital, Didi Chuxing and Grab.

SoftBank had earlier led an $800 million capital infusion into the six-year-old company, with OYO’s other existing investors, Lightspeed Ventures, Sequoia Capital and Greenoaks Capital, also participating in the round. Grab and Didi Chuxing also joined OYO’s investor cap table, having put in $100 million each into the company, developments that were first reported by ET in December last year.

The latest funding round also comes a little over three months after OYO Group Chief Executive Ritesh Agarwal, in an internal email to employees, said that the company was well-capitalised, and did not have any plans of raising further capital. While Didi’s investment was to be the final tranche of the $1 billion funding round, It is now unclear if the company has in fact closed the round, or is expected to continue onboarding new investors.

Airbnb’s investment in OYO, which was first reported by The Information earlier in March, follows its announcement to acquire the last-minute hotel-booking app HotelTonight for $400 million, ahead of a much anticipated initial public offering.

OYO, which operates six brands under its portfolio - Oyo Rooms, Townhouse, SilverKey, Capital O, Palette Resorts and Collection O - has emerged as one of the largest providers of rooms and keys, across segments in India. It is currently present in over 259 cities across the country, with 8,700-plus buildings, and manages over 173,000 rooms under its brand.

Airbnb, which entered the India market in 2012, said it will look at ways to make the OYO accommodation available on its platform, a move that will significantly boost its inventory of 45,000 listings in the country.

The San Francisco-based firm has been looking to ramp up its operations in the country after witnessing significant growth in the number of guests and listings last year. In February, Airbnb co-founder and chief strategy officer Nathan Blecharczyk had told ET that India is among the five fastest-growing nations for the company.

"Emerging markets like India and China are some of Airbnb's fastest-growing, with our growth increasingly powered by tourism to and from these markets," said Greg Greeley, president of homes, Airbnb.

Once direct rivals, both OYO and Airbnb have acknowledged each other as partners in recent months, after the former shifted its model from being a pure hotel aggregator to a hospitality player.

"If you look at what we do, it is very different from what Oyo does or anyone else for that matter. I think we each have our own approach to the market, and we each have a loyal following, and a sizable following," Blecharczyk had told in an interview to ET last month.

Airbnb is also expected to benefit from OYO's growing footprint in China, a geography that the Gurugram-based firm has begun referring to as its second home market. OYO's China business Oyo Jiudian operates more than 5,000 hotels and 260,000 rooms across 280 cities as of January 2019.

On the flipside, Airbnb's backing will accelerate OYO's global expansion spree. Over the past year, it has entered markets like the United States, Saudi Arabia, Philippines, United Arab Emirates, and Sri Lanka among others. The company claims to have over half a million rooms across the world.

"Airbnb's strong global footprints and access to local communities will open up new opportunities for OYO Hotels & Homes" said Maninder Gulati, global chief strategy officer at OYO Hotels & Home in a statement.