Hotel-booking startup Oyo is raising $1 billion to fund expansion into China and other global regions.

Existing investors including SoftBank Vision Fund, Sequoia Capital and Lightspeed Venture Partners have put in $800 million, with commitments for another $200 million, the company said.

About $600 million of the total will be plowed into China where Oyo began operations only 10 months ago. According to reports, the funding values the startup at $5 billion.

Ritesh Agarwal, founded Oyo five years after travelling around India on a shoestring budget. He discovered wildly unpredictable standards for hotels and guest houses, and decided to start an online service to bring more reliability to the travel experience. In the past two years, Oyo has expanded beyond India into China, Malaysia, Nepal and Britain.

OYO Founder Ritesh Agarwal

“With this additional funding, we plan to rapidly scale our business in these countries, while continuing to invest further in technology and talent,” Agarwal said in the statement. “We will also deploy fresh capital to take our unique model that enables small hotel owners to create quality living spaces, global.”

His startup, whose official name is Oravel Stays Pvt, signs on hotel owners and then gets them to upgrade everything from linen, toiletries and bathroom fittings to its specifications. It also equips hotels with staff training and standardized supplies. It then brings them on board its hotel website, and hotel owners pay Oyo a certain percent commission.

“Budget travellers are consistently shortchanged by the lack of trust, quality, and consistency,” said Bejul Somaia, managing director of Lightspeed India, explaining that Oyo can change that dynamic.

At a $5 billion valuation, Oyo would be India’s most-valuable startup after One97 Communications. The domestic hotel industry includes large chains with dependable hospitality experiences at the mid to top end. But the business also includes thousands of unbranded, ramshackle hotels and lodges with broken beds, yellowing linen and stinking bathrooms. Oyo is trying to make hotels easier to find through its site and more predictable as well.

Its criteria are exacting — from the thickness of the mattress to the placement of the light switches to the size of the showerhead in the bathroom. Agarwal has said that he wants the Oyo brand to convey a superior experience.

Oyo began with one hotel in Gurgaon and has grown to 1,25,000 rooms in India, where it says it’s tripling year-over-year in terms of transactions. In China, where it began operations last November, it has expanded to 171 cities with 87,000 rooms. It is now in over 350 cities with 2,11,000 rooms.

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OYO Hotels plans to invest € 40 million in the United Kingdom to expand its presence in 10 cities in the county during the next 18 months, marking its first foray beyond Asian markets.

It will start operations with four properties in London that offer more than 80 rooms and by 2020, OYO plans to hire 100 people in cities across the UK and host guests in over 5,000 rooms. The cities include Manchester, Birmingham, Glasgow, and Edinburgh.

“The UK has been the topmost international travel destination for several years and last year hosted over 19 million tourists from around the world,” said Ritesh Agarwal, founder CEO of OYO.

“Driven by its booming domestic and international travel and budget hospitality needs, the UK presents a multi-billion dollar opportunity for OYO,” he said.

The UK business will be led by British entrepreneur Jeremy Sanders, who co-founded the British restaurant chain, Coco di Mama. “Over the next year, they will aim to build out the team by hiring an additional 100,” people across the country, he said.

OYO will offer guests the OYO Townhouse experience — suited for the needs of millennial travellers, aspiring for high-quality accommodations.

OYO is backed by leading investors, including the SoftBank Group, Greenoak Capital, Sequoia India, Lightspeed India, Hero Enterprise and China Lodging Group.

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The onset of 1st April every year presents an opportunity for brands to ‘trick’ their consumers with generous doses of mischief and pranks through humorous and almost-believable campaigns. Brands capitalize on the event with many things – ranging from fake products and offers, to contests and basically anything that would help them with engagement.

This year was no different, as many brands jumped into the fray with some unique and clever deceptions. We bring to you a list of all the major April Fools Day campaigns from travel brands on social media this year.

Ixigo’s special ‘kavach’

Ixigo is one company that has never shied away from making a fool out of consumers on this special occasion. Over the years, they have mastered the art of deception and this year, they went a step ahead by announcing the launch of a new smart lock for travellers called Ixigo Kavach. Apparently, this smart lock automatically gave thieves electric shocks when pilfered bags were taken more than 5 meters away from their owners.

The brand didn’t wait for April 1 to announce the campaign, and instead tweeted the launch on March 29, making it all the more believable. While most people were smart to catch on to the fact that this might be a joke, the brand was lauded for its hilarious efforts.

Ola’s fake news

Ola has had some of the most elaborate pranks. In 2015, it claimed to launch a helicopter service called Ola Air, while in 2016 it had said it had launched Ola Rooms, a concept through which people could sleep in cabs. This year, Ola announced the launch of Ola News Network, or ONN, which it called India’s fastest news-on-the-go. It said ONN would utilize Ola’s driver partner network to report news, and that its drivers would double up as news reporters.

Ola was consistent with its posts on social media regarding the launch and people were quite happy to finally see some real on-ground reportage. Alas, it wasn’t to be.

Oyo’s cryptic moves

Hospitality giant Oyo went all out with the blockchain theme by announcing the launch of its very own cryptocurrency called Oyo Smart Coin, which would be used by its vendors, hotels and customers to seamlessly conduct transactions among themselves. Oyo even had a dedicated site and whitepaper for Oyo Smart Coin. They even had a registration forum with people lining up to get their hands on the latest currency. Kudos to the efforts at making the prank so elaborate and detailed.

Zoomcar’s home-like caravans

Zoomcar was yet another company that tricked people into believing that they had started rentals of caravan-like vehicles. With a promotional video and a hashtag #Zoomcaravan, the brand urged people to try out its latest offering and take the caravan around places, sleep in forests or the foothills of mountains, banks of lakes or unending tea gardens. One glance at the replies and it is evident that people fell for the ruse, with most consumers asking Zoomcar for details and showing excitement about the launch.

Emirates’ sky views

This prank from Emirates was as big and elaborate as anyone would rightly expect from the Middle-Eastern airline. They announced a new ‘SkyLounge’ – part of a plane where the entire cabin is windows. The airline posted renderings of the lounge to show how it would look like from inside and outside.

The announcement was no more than just a prank and even came with a punchline: the SkyLounge will be introduced on the “Boeing 777X fleet.” Emirates is known to share pranks on April 1st. Even last year, the airline pranked internet users with its life-changing plan to launch the world’s first triple-decker that will feature a swimming pool, game room, gym and a park.

Also read: These travel brands are raising the bar for April Fool’s Day pranks.

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Budget hotel startup RedDoorz has closed $11 million in new funding to expand its network of budget hotels and guest houses throughout the Southeast Asian region.

The round is described as being pre-Series B and it comes from existing investors Sushquehanna International Group (SIG), World Bank’s IFC, InnoVen Capital and Jungle Ventures, with new investors DeepSky Capital, FengHe Group and Hendale Capital joining.The cash will let the company expand operations into new cities and new countries, including Thailand, where there are plenty of young travellers looking for budget hotel rooms

The company, led by CEO Amit Saberwal, brings together budget hotel owners under the RedDoorz banner and books their rooms via an online marketplace. Through the site, hotel owners get access to guests, and travellers can rest assured that RedDoorz-branded hotel rooms have clean sheets, decent internet, and trained staff. This concept was initially pioneered by India’s OYO, which is backed by SoftBank’s Vision Fund, but RedDoorz is one of half a dozen or so venture-backed efforts bringing the model to Southeast Asia.

Image source: cnbc.com

The company launched in Indonesia, before using earlier funding rounds to expand to the Philippines and Singapore, where the company just leased its own hotel to run. The company had closed a $5 million Series A at the end of 2016. Initially, it closed a $1.4 million seed round and it added $1 million in venture debt last year.

As it stands in Indonesia, where RedDoorz has been the longest and where it has most of its 500 properties — it claims to offer 3,000 rooms across 16 cities — the vast majority of customers are local and using the company’s Android app, rather than the tourist crowd. That crowd is roughly split between those on business and on leisure.

The Southeast Asian budget hotel market is currently worth between US$15 million to US$20 million, according to reporting by The Edge Markets in 2017. The real beneficiaries of this market are booking platforms that redirect tourists to budget hotels that offer the best deals. Most booking platforms in the region employ a standardised model, aggregating available rooms in hotels within a certain city and forming a network of available rooms across multiple cities. Some booking platforms are trying to creatively improvise their services by innovating around evolving customer needs, such as speed of booking, that RedDoorz particularly focuses on. The RedDoorz website is optimised to ensure that the booking form is displayed prominently on the landing page, which keeps guests focused on completing their booking.

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Over the past decade or so, there has been a great deal of interest in the travel, hotels, and travel accommodations sectors, especially by startup investors. The travel industry has become extremely competitive and hundreds of startups have created entirely new markets for accommodations, even as many others work on new ways of booking travel and making it accessible to more people, primarily using technology.

This year was bigger and better for the global travel industry. According to CB Insights, while travel tech had an uneven year, emerging markets stood out as bright spots. As of October 2017, deal activity was on track to surpass last year’s record-breaking 316 deals, while equity funding in 2017 YTD had already nearly matched the 2016 total.

Let’s take a look at some of the top travel deals of the year:

1. Airbnb remained an investor favourite (San-Francisco, Online marketplace and hospitality service)

Sharing economy behemoth Airbnb claimed one of the top spots for the largest deals to travel tech startups, closing its Series F round raising roughly $450 million and taking their Series F total to a little over $1 billion. This valued the travel giant at approximately $31 billion.

2. Traveloka raised US$350 million (Indonesia, Online travel agency) 

Southeast Asia’s leading online travel company Traveloka raised US$350 million from Expedia. The round valued the company at $2 billion, making it the second most valuable tech startup in Indonesia.The partnership gave Traveloka travellers access to a diverse set of international accommodations, and conversely, Expedia managed to leverage Traveloka’s local knowledge to deepen its presence in Southeast Asia.

3. OYO closed a $250 million funding (India, Budget-hotel aggregator)

With plans to expand abroad, starting with countries in Southeast Asia, and hopes of doubling their revenue in 2018, budget hotel startup OYO continued to remain an investor favourite. The company closed a $250 million Series D funding round, backed by Sequoia Capital India and SoftBank Group, among others. It then followed this funding with an additional $10 million in funding from Chinese hotel management firm China Lodging Group.

4. Xiaozhu gets Jack Ma’s blessing with $120 million in funding (China, Home-sharing platform)

Another Chinese counterpart of Airbnb, home-sharing site Xiaozhu received $120 million in funding. Yunfeng Capital, run by famous investor Jack Ma, led the investment. Joy Capital, Morningside Ventures, and Capital Today also participated in the Series E round, and placed a more than $1 billion valuation on the company. This Beijing-based startup is more like the original peer-to-peer short-term rental model that Airbnb pioneered.

5. Klook net $60 million (Hong Kong, Tours and Activities marketplace)

Hong-Kong based Klook, a service for finding and booking travel activities, closed a $60 million Series B funding round led by Sequoia China. Existing backers Matrix Partners and Welight Capital, a firm founded by former Tencent executives, also took part in the funding round. The company, which introduced services such as local transfer options and WiFi device rental, would also soon add options for restaurants, wellness, shopping and more.

6. Goomo inched ahead with a $50 million investment (India, Omnichannel travel-tech)

Omnichannel travel-tech startup Goomo raised $50 million from a Mauritius-based fund manager, Emerging India, to build Goomo’s online platform, products, marketing, and establishing its offline partner network. Founded in March 2017 by Varun Gupta, Goomo has launched its services with bookings for flights and holidays, and trade fairs and will soon be expanding it to include hotels, trains, buses and visas online.

7. Trip.com raised $39 million; got sold to CTrip (California, Online travel agency)

CA-based travel planning and local discovery app Trip.com had raised $39 million in funding, from Expedia, Battery Ventures, Redpoint Ventures, Google Chairman Eric Schmidt’s Innovation Endeavors, TechCrunch founder Michael Arrington, MySpace founder Chris DeWolfe, Square CEO Keith Rabois and angel investor Oren Zeev. However, in probably one of the most spoken-about buyouts of the year, the startup was lapped up by China’s largest online travel agent, Ctrip for an undisclosed amount.

8. Treebo snapped up $34 million in funding (India, Budget Hotel Chain)

Budget hotel chain Treebo snapped up $34 million in fresh round of funding. The Series C funding came more than a year after Treebo had secured its Series B funding. Hong Kong-based hedge funds Ward Ferry Management and Karst Peak Capital led the latest round.

9. GoFro received a $10 million backing (India, Tours and Activities marketplace)

Holiday marketplace GoFro received $10 million in funding from Japanese major H.I.S. Co., Ltd., a travel agency with its headquarter in Tokyo and India’s largest OTA MakeMyTrip. The company said it plans to utilize these funds by building its tech platform, expansion to new geographies and growing its supply and agent network.

10. GuestReady added $3 million to its war-chest (London, Rental property management)

GuestReady, the close contender to Airbnb that manages rentals on behalf of property owners, closed a $3 million seed round to grow its presence in Europe and Asia. The round was led by Impulse VC, the Russian fund that is backed by billionaire Chelsea FC owner Roman Abramovich, with participation from Australia’s Xponova and Boost Heroes, a VC led by Lastminute founder Fabio Cannavale. Existing backers Swiss Founders Fund and Senn and Partner were among others in the round.

What are the other deals that grabbed your attention? Let us know.

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Majority of Indians kickstart the final month of the year with festivities, music, and a pristine location that we’ve all become so familiar with – Goa. While everybody loves the popular beach town, not many people know their way around it. Latching on to this insight, budget hotel-room aggregator OYO launched its #StayYourWay campaign, creating a handy guide to give visitors to Goa a uniquely beautiful bird’s eye perspective of one the world’s best-loved beach destination.
OYO has partnered with award-winning London-based illustrator, designer and artist, Rod Hunt Illustration, to create an interactive map that is part information and part art. When a traveller chooses to #StayYourWay in Goa, they can navigate their way using this interactive map, explore Goa’s best-kept secrets that are just a few strides away, and also find a stay at the nearest OYO Home, another category that the aggregator has launched this year.

To boost the campaign’s reach, OYO launched a couple of contests for its followers across social media platforms. By answering a few simple questions about Goa and its locales, participants stand a chance to win many prizes, including the coveted iPhone X.

The interactive map has been chalked out in much detail and is easy to navigate. Irrespective of whether you are familiar with the city or not, the map provides a much-needed guide of popular eateries and beaches. The main focus of the map, however, is on the more than 500 OYO Homes that dot the entire coastline. With this, the company has done well to tap into the growing number of travellers who now prefer homestays that offer a local flavour of the destination in terms of cuisine, experiences and location.

Apart from the map, OYO has also published blogs, as part of the campaign to familiarize people with Goa, and lay out detailed description of their properties. The company’s proposition to help travellers stay on their own terms by choosing between a variety of OYO Homes – from a rustic farmhouse to a beach-facing villa – not just serves as the perfect starting point to know Goa a little better but also strikes the perfect chord with millennial travellers. Additionally, to make the most out of this place, OYO has also prepared an itinerary of sorts that lists out things people can do in their properties.

While theoretically the campaign seems well-planned across platforms, covering all the essential touchpoints, social media traction paints a slightly different picture. OYO’s posts have received a lot of ‘likes’ on Facebook, but the comparative engagement on the contests is lower. These numbers are even lower on Twitter and Instagram. The content on posts is too verbose and doesn’t appeal in a way that would pull people to participate. So, while OYO has done its best to put out as much information as possible, the content doesn’t do justice to the idea.

Nevertheless, the map remains the highlight of the campaign and serves well to paint a very helpful picture of India’s favourite holiday destination. What do you think?

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August & September are turning out to be exciting months for funding deals in the Indian travel startup arena.

$10 million funding for GoFro (September 2017)

Earlier in the month, Holiday marketplace GoFro had received $10 million in funding from Japanese major H.I.S. Co., Ltd., a travel agency with its HQ in Tokyo and India’s largest OTA MakeMyTrip. To read more, visit this link. The company plans to utilize these funds by building its tech platform, expansion to new geographies and growing its supply and agent network.

Multiple rounds of funding for Hotel aggregator OYO (September 2017)

Budget hotel startup OYO followed its initial $250-million funding round with an additional $10 million in funding from Chinese hotel management firm China Lodging Group. Learn more here. Earlier in September, OYO had raised $250 million from SoftBank Vision Fund including a new investor, Sunil Munjal-led Hero Enterprise. More on that here.

Treebo snaps up 226 crore (August 2017)

Right at the end of August 2017, budget hotel chain Treebo’s parent company Ruptub Solutions, had raised $34 million (about Rs 226 crore) in fresh round of funding. The Series C funding comes more than a year after Treebo had secured 112cr in Series B funding. Hong Kong-based hedge funds Ward Ferry Management and Karst Peak Capital have led the current round. More on Treebo funding here.

The post Indian Travel Startups Funding Round-up (August & September 2017) appeared first on TravHQ.

Budget hotel aggregator OYO Rooms has reported a net loss of INR 351 crore (around USD 53 million) for the April-December period of FY16. According to a news report by Financial Express, the net loss for FY15 was INR 20.79 crore which say a rise of seventeen times. During the nine month period, the company reported a revenue of INR 13.93 crore. This went up from the INR 2.4 crore reported for FY15.

OYO Rooms has received multiple rounds of investments from various investors including SoftBank Group, Greenoaks Capital, Sequoia Capital and Lightspeed Venture partners. The budget hotel aggregator raised INR 413 crore (around USD 62 million) recently however no existing investors except SoftBank participated.

While in FY16 OYO spent heavily in expanding the network, it also faced competition from many other players that emerged in the Indian market in the same period. To shrug off some of the rivals and to attract hotel partners, the budget hotel aggregators were investing heavily on making it lucrative for hotels to work with them. The segment also saw interest from major OTAs including MakeMyTrip and Yatra bringing in their own budget hotel brands.

At this point, OYO Rooms has presence across 200 cities with around 6500 properties. The brand is also looking at alternative accommodation, a segment which is the focus area of Stayzilla in India. Stayzilla has also raised capital earlier this year to further push the alternative accommodation segment in India.

Source: The Financial Express

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Rocket Internet, a German internet company headquartered in Berlin, has established the newest startup called ZenRooms – a budget hotel aggregator for Southeast Asia.

Just like India-based OYO, ZenRooms will associate with the budget hotels to create a network of rooms that it audits in order to offer standardised service. Stating the eligibility criteria, ZenRooms pointed out that all the budget hotels need to have clean and pest-free rooms, comfortable bed, an in-room hot shower, air-conditioner, WiFi and television to be labeled under its brand. The rooms should also have goodie bags and other amenities provided by this startup.

What do the budget hotels gain from this association? Many independent budget hotels suffer from the lack of brand equity. In other words, although they are the hotels that are discovered and experienced by very few travellers, they are forgotten soon. ZenRooms intends to rebrand such hotels based on their locations. This might attract more international and domestic travellers.

Currently, ZenRooms does not consider OYO as its competitor and is launching in different countries. With the goal to become the biggest budget hotel brand network in Southeast Asia, it has already started operations in Indonesia, Thailand and Singapore. It plans to gain a foothold in the markets of Malaysia, Vietnam, Sri Lanka, and Pakistan. According to its own estimate, the brand’s accommodation market in Southeast Asia is worth $10 billion, with 100 million tourists each year.

Kiren Tanna, the co-founder and managing director of ZenRooms, quoted:

“Southeast Asia is very interesting because with a company like Foodpanda each country—Taiwan, Indonesia, Malaysia—is very different. But in terms of accommodation and travel, Southeast Asia behaves like one big country. There is a lot of inner-country travel. Indonesians travel from Jakarta to Bali, Malaysians from one city to another. There is a lot of inter-region travel, from Jakarta to Singapore to Bangkok to Kuala Lumpur, for example. You also see a huge influx of tourists from China and Australia, so it’s a very interesting market for traveler accommodation.”

ZenRooms aims to set itself apart from other competitors like Agoda by associating with businesses that are very small and might not even have their own websites. Such small businesses offer lower rates than hotel chains but are mostly not booked by the travellers because they are assumed to be unreliable. When ZenRooms associates with such businesses, it audits them every two weeks to make sure they meet the company’s criteria and eventually categorises them as part of their own network.

Presently, ZenRooms works with 220 properties in Indonesia and 50 in Thailand. It plans to be careful with its marketing budget by attracting customers through partnerships and keeping a track of the brand’s unit economics to verify that its costs per room are appropriate for the amount of revenue it generates.The ZenRoom rates start at about $9 to $10.

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Yatra, the leading online provider of travel services in India, has recently introduced TG Rooms and TG Stays. TG Rooms is their range of budget hotels while TG Stays includes verified homestays.

With 500 accommodations in 60 cities, TG Rooms and TG Stays will offer basic amenities to its budget travellers. TG Rooms will have free Wi-Fi and Air Conditioners while TG Stays will provide reliable and verified and comfortable homestays in prominent holiday destinations of the country. The starting price of such accommodations is INR 499.

According to the report, Sharat Dhall, the President of Yatra, quoted:

“Growing our hotel business is a key focus for us, and the launch of TG Rooms and TG Stays is another step in the same direction. With TG Rooms and TG Stays, we are looking to expand our inventory even further and offer travellers a diversified portfolio of budget accommodation options. TG Stays is targeting a new segment in the market by aggregating verified home stays, which are especially ideal for short vacations, weekend getaways and road trips that are gaining immense popularity amongst Indians…”

Dazzled by the kind of progress OYO Rooms is making in India, many small and big players have entered the budget hotel segment recently. After taking note of the opportunities in this space, almost everyone is trying to take a bite out of the pie. However there is more to it for the OTAs like Yatra or GoIbibo.

With brands like OYO Rooms and ZO Rooms expanding quickly, this was definitely expected from the OTAs (Read: Will budget hotel startups eat the OTA pie?). The comissions from hotel bookings drive large volume of business for the OTAs. With the kind of size these budget hotel startups are growing to, OTAs were under threat of being pushed out of the equation. With the entry in this segment, they will try to build up on their name and widespread network before the dust settles. GoIbibo recently introduced GoStays and there have been reports of MakeMyTrip working on something along the same lines. With the kind of reach Yatra has among hoteliers, reaching different geographies shouldn’t be Yatra’s biggest problem. The problem would be posed by budget hotel chains like OYO Rooms and ZO Rooms which have already grown big and are expanding aggressively.

Homestays are also starting to catch up and we will see them as a major trend in few years (Read: 5 upcoming travel trends in India). In India, Stayzilla is making most headlines in this space while Airbnb has been a party killer for hotels in many other countries. Over the years Yatra has built strong trust among Indian travellers and that can help drive people towards homestays with TG Stays. TG Stays has got huge potential as Airbnb isn’t a big name in India yet.

While they have made a move in homestays in time, we can’t say the same for TG Rooms. They will face stiff competition here and many others have a lead with the head start. Plus there will be more competition with other OTAs entering the picture and the price war might get even more aggressive.

What do you think will change with the entry of OTAs in this space? Do you think they can be a threat to brands like OYO Rooms and ZO Rooms?

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