Oyo set to enter Japan, tap into 2020 Olympic Games demand

New Delhi: Oyo Rooms, the newest unicorn in India, is all set to launch its operations in Japan as it eyes a dominant market share in Japan’s budget hotel market ahead of the 2020 Olympic Games, according to two people close to the development.

Japan is also the home market for Oyo’s largest investor SoftBank. According to one of the two people mentioned above, the recent round of investment from SoftBank will be part dedicated to Oyo’s aspirations in Japan.

Earlier this month, Oyo raised $800 million from Japan’s SoftBank Vision Fund and other investors, taking the company’s valuation to about $4 billion.

Of the $800 million, Oyo said it would invest around $600 million to strengthen its position in China.

Oyo’s website already lists at least two properties in Shinjuku, Tokyo.

The company has started recruiting for the Japan operations, according to sources who requested anonymity.

However, it is not going to be an easy battle in Japan. According to a recent article in Japan Times, several local and international companies are jumping into the hotel business and concerns of an oversupply are on the rise.

Oyo, run by Oravel Stays Pvt LTD, has been on an international expansion spree. The Gurugram-based company has set up operations in five countries within the last 12-18 months.

The company is now present in India, China, Malaysia, the UK and Nepal.

Oyo recently announced its presence in 26 Chinese cities, including Hangzhou, Xian and Guangzhou. The hotel chain employs more than 1,000 people in China.

Founded in 2013 by Ritesh Agarwal, Oyo was one of the breakout startups from the funding boom of 2015, raising a surprise $100 million from SoftBank. However, poor service by hotels slowed its aggressive expansion plans. Oyo, which began as a marketplace, today controls room inventory and is bullish on its new brand, Townhouse.

The brand was launched in January 2017 and played a key part in improving Oyo’s image with customers. Townhouse properties are owned by Oyo and fully managed by the company’s staff, working like any other branded budget hotel.

Oyo is among the few startups creating a global brand from India. Zomato, Ola and Practo are some of the others that have expanded into international markets in the last few years.

Zomato’s rapid international expansion turned out to be expensive for the company as it ended up rolling back operations in about nine countries.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.