Oyo is more than just a budget hotel operator these days. Investments into its vacation home rental business are proof of that.
Oyo Hotels & Homes recent purchase of revenue management company Danamica may have raised some eyebrows across the hospitality industry earlier this month. After all, the hotel chain hasn’t shied away from touting its dynamic pricing strategy as a focal point of its success story so far.
But the deal was made with Oyo’s European vacation rental business in mind, according to Maninder Gulati, the company’s chief strategy officer. Oyo was months into customizing algorithms for each country in the region, finishing at least four, before deciding to acquire the Danish company for an undisclosed fee.
Danamica, founded in 2016, has collected six years of home rental pricing data across Europe, according to Oyo. The chain, which is making its mark in the budget hotel sector, now intends to leverage Danamica’s artificial intelligence technology and business intelligence to improve revenue management for its entire home rental division.
“We realized Danamica would be a great fit after working with them in Scandinavia on our DanCenter brand,” said Gulati. DanCenter is one of Oyo’s full-service vacation rental offerings. “So rather than spending six months on building software out for each market, we opted to scale quickly.”
Lodging companies need lots of trend data, about three-to-four years worth, for revenue management software to be most efficient. “However, that becomes a challenge if you have not been in the [home rental] market for that long,” Gulati added.
Danamica’s tech stack, built for vacation homes specifically, is viewed as complementary to what Oyo has already built for hotels. The vendor’s methodology can also be used for more than just homes, and will be utilized in Oyo’s other major markets of India, China, and the U.S.
“There is already a lot of work in progress,” said Mads Westberg, one of Danamica’s co-founders. “First of all, we will continue to expand our main work on dynamic pricing across Oyo’s [vacation rental] brands. Secondly, we will work on producing better earnings estimates so Oyo can know how much to spend and offer homeowners who are considering renting out their properties.”
Oyo Vacation Homes currently offers rentals from 46,000 homeowners in 70 countries, its website says. Much of that inventory is a direct result of the India-based company’s acquisition of @Leisure Group in March for a reported $415 million. The agreement brought full-service brands Belvilla and DanCenter under Oyo’s umbrella. Oyo additionally announced it was earmarking $335 million towards growing its vacation rental business last month.
“Oyo Home provides a massive opportunity, with 100 million vacation and urban homes available in the world,” said Gulati. “This acquisition offers a massive global capability. All of the markets we are betting big on should benefit.”
“We believe Danamica’s machine learning models and data will be one of the key differentiators that will allow Oyo to better match demand and increase the value of its inventory,” added Rune Larsen, Danamica’s other co-founder. “OYO is dedicated to scaling its vacation rental business in Europe and beyond. Danamica’s data will help Oyo focus its efforts and invest in the markets and areas with the most potential.”
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Photo credit: Roughly 2.8 million people have stayed at an Oyo vacation home. Europe is the company's largest market. Oyo Hotels & Homes