 "IPO-bound OYO to expand its US presence with over 100 new hotels this year")
Softbank-backed hospitality firm OYO is planning to add over 100 hotels in the US in 2023. This is nearly double the number of hotels it added to its portfolio in 2022.
“Over the years, it (the US) has become one of @oyorooms most promising international markets…To cater to this growing demand, we plan to add over 100 hotels this year across the states of Oregon, Washington, Texas, Oklahoma, Georgia and Florida,” Ritesh Agarwal, founder and CEO of OYO Rooms, tweeted.
Texas continues to be the largest and fastest-growing market for OYO in the US, while it also has a sizable concentration of hotels in Oregon, South and North Carolina, Florida and Georgia.
“While the pandemic slowed down our growth in 2020 and ’21, 2022 was our best year with a 23 per cent growth in new hotels added to our portfolio v/s 2021,” Agarwal added.
The hospitality industry in the US, he said, faced a massive trust deficit and as a relatively new player, OYO had its fair share of challenges. “The biggest growth driver for us, however, was learning and delivering improved technological services. Our teams doubled down on solutions and products for hotel owners, and over 35 per cent of our new hotels came from recommendations or referrals by our existing hotel owners,” he said.
This has also led to better customer trust and brand affinity for OYO in the region. The firm claims its revenues per room are three-fold higher than the industry in most locations. Nearly 41 per cent of OYO's bookings happen directly through its app/website.
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“Our US operations have seen significant growth in 2022. But 2023 might just be the best year for us,” said Gautam Swaroop, CEO, OYO International Hotels & Homes. “We are taking measures to add hotels in high RevPar (per available room revenue) leisure markets such as the Pacific Northwest and will also focus on improving our presence along the East Coast. Over 15 hotels have already signed up with us so far in 2023 and we expect to add many more in the coming months,” he added.
In terms of scale and size for the tourism and hospitality industry, the US is a juggernaut with nearly 15 per cent of the global tourism spending emerging from the country.
OYO’s US business recently announced that it had outpaced the budget hotel segment’s growth in RevPar with an 18 per cent rise in 2022 versus the pre-Covid year of 2019. The budget hotel segment, meanwhile, grew by only 6 per cent in the US.
Oravel Stays, the parent firm of OYO, recently refiled its Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (Sebi) under the confidential pre-filing route.
The issue size for the company’s public listing was reduced by almost half to $400-600 billion, all of which will be raised through a primary issuance, in a bid to repay most of the firm’s debt, Business Standard had reported earlier. The company expects an issue timing of November this year, following approvals from Sebi.