Airbnb’s Potential Investment in Oyo, Explained
Skift Take
This year is shaping up to be the year when Airbnb gets all of its ducks in a row before the big IPO. Investing in adjacent businesses like Oyo is a major part of that strategy. But will any of this ultimately matter — or make a difference — once the company goes public?
Recent news that Airbnb was considering an investment in fast-growing discount hotel chain Oyo, with mostly a footprint in Asia, underscored the homesharing giant’s quest to build greater global scale — and sent a message that it’s not planning to tap the brakes anytime soon even as it prepares for an eventual IPO.
The Information on Monday reported that Airbnb was considering investing anywhere from $100 to $200 million in Oyo Hotels & Homes.
Spokespeople for Airbnb in the U.S. and in Asia declined to comment on the report but did not deny the news either.
A spokesperson from Oyo was a little more circumspect and gave Skift the following statement: “As the seventh largest hotel chain operator in the world, Oyo Hotels & Homes is working closely with a range of global distribution partners such as Airbnb and other regional and global players. Our mission is to create quality living spaces and offer those to guests and travelers across the world, and global strategic relationships support that work. None of these relationships are exclusive in nature as Oyo will always strive to offer its accommodation spaces to every potential guest. We don’t have anything further to share at the moment.”
The Oyo news came less than two weeks after Airbnb said it would be buying HotelTonight, a deal that sources told Skift was worth more than $400 million. These notable, back-to-back investments clearly demonstrate Airbnb's drive to become a comprehensive travel marketplace.
Oyo may not be as recognizable or ubiquitous a name as Airbnb is on a global scale, but it has been catching the attention of a number of travel and technology industry executives for some time, recently raising a $1 billion round of funding with major help from SoftBank.
And it, too, like Airbnb, has grand ambitions to dominate travel and accommodations. In January, Oyo founder and CEO Ritesh Agarwal told Skift he believes Oyo will become the world’s largest hotel chain in terms of scale, revenue, and margin by 2023.
The company, which was launched in May 2013, today has more than 8,500 hotels in more than 230 different cities, but anticipates having more than 25,000 hotels by 2023. Its business model is an interesting, tech-driven twist on the traditional hotel franchise: Oyo signs up hotel owners and gets them to upgrade everything according to Oyo’s standards, offers them training and supplies, and then features those hotels — which often operate in the
