Oyo has had plenty of success in its home market of India going direct to consumers, but if it’s to continue its global expansion plans it needs more routes to market.
Fast-growing Oyo Hotels and Homes has signed a distribution deal with accommodation wholesaler Hotelbeds as it looks to take a bigger slice of the global travel market.
The tie-up gives Oyo access to Hotelbeds’ network of 60,000 travel-buying intermediaries, including travel agents, tour operators, and airlines in more than 140 markets.
In turn, companies using the Hotelbeds platform will be able to sell Oyo’s portfolio of 18,000-plus franchised and leased hotels and 10,000 homes and villas.
“Hotelbeds’ distribution channel of B2B travel buyers helps us access new customer segments and geographies,” Maninder Gulati, Oyo’s global chief strategy officer, told Skift in an emailed statement.
Oyo’s strategy since Ritesh Agarwal founded the company back in 2013 has mainly been to deal directly with consumers, but as it expands beyond India and Asia it’ll need more routes to market.
The deal with Hotelbeds marks the first time Oyo has signed up with an accommodation wholesaler (also known as a bedbank), although it has agreements with individual companies such as Booking.com, Expedia, Airbnb, and MakeMyTrip.
“The volume of business coming from direct channels varies in different geographies based on Oyo’s vintage and other factors. In India, 90 percent of our demand is generated by direct sources and what’s even more interesting is that 90 percent of our online business, which is the most significant contributor of our direct business, is from organic acquisition and repeat users,” Gulati said.
Oyo currently has hotels in 10 countries: China, Malaysia, Nepal, the United Kingdom, the United Arab Emirates, Indonesia, the Philippines, Saudi Arabia, and now Japan.
Meanwhile, Hotelbeds is the number one player in its market, having grown through a series of acquisitions in recent years. It’s also a market leader in travel ancillaries such as transfers, activities, and car hire.
“Oyo Hotels & Homes is one of the most talked about hotel brands currently and is massively shaking up the entire sector. So, we at Hotelbeds are very pleased to be the first travel distributor given the privilege to work with them,” said Mark Redmond, head of global chains at Hotelbeds.
While there is some dispute over exactly what Oyo is — a hotel chain, online travel agent, a brand network, or a mix of all three? — there’s no denying the speed at which it’s growing.
If treated like the other big hotel chains, it would be number one in the market by number of hotels and in the top 10 in terms of rooms, according to STR. Oyo claims to be the sixth largest hotel chain globally.
“Oyo is not a room aggregator. Oyo is not an online travel agency. Oyo is not a certification company. Oyo is not a marketplace. Oyo is a hotel chain,” Gulati said.
Speaking at the International Hotel Investment Forum in March, STR’s managing director Robin Rossmann, put Oyo’s success down to a couple of things. The first is the quick rebrand and upgrade turnaround — around 14 days — from when a new hotel comes on board, and the second concerns pricing.
“They’re doing something very different to every other major hotel group, which is even franchise hotels are required to give 100 percent of their rooms inventory to Oyo. Why does that matter? Well it gives control over pricing that is beyond any other major group,” said Rossmann.
Oyo has raised about $1.7 billion in funding over the course of a number of rounds, according to Crunchbase, with Airbnb recently putting in $75 million.
“We will use this fresh capital to deepen and widen our footprints in India, by strengthening market leadership in the budget to mid-segment and entering in newer segments. We will continue to explore newer businesses through both organic and inorganic growth opportunities,” Gulati said.
What Does the Future of Lodging Look Like?
Get the latest news about hotels and short-term rentals delivered to your inbox once a week.
Photo credit: The Oyo 101 Click Hotel, Dubai. Oyo Hotels and Homes has signed a distribution deal with Hotelbeds. Oyo Hotels and Homes.