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How OYO Hotels is winning the hotel war in China

3 months ago by Joshua Fruhlinger in Facts, Trends
Oyo founder Ritesh Agarwal

If Luckin Coffee ($LUCKINCOFFEE) is growing in China at alarming speed, we present to you Oyo Hotels ($OYOROOMS). In just its first year and a half, the India-based hotel chain has signed more than 10,000 franchises, totaling 500,000 rooms in 300 cities. And now it's expanding in China, where it's become the fastest growing brand in the country.

It also makes Oyo the world's largest hotel network at roughly twice the size of Wyndham Hotels & Resorts in terms of total number of properties.

As of last count, our database reflects 10,400 Oyo locations in China, most of which are in the country's more populated eastern cities.

Oyo hails from India, where 25 year-old founder Ritesh Agarwal persuaded tens of thousands of unbranded, cheap hotels and hostels to rebrand and hop on board as franchises. It's a relatively simple transition for new franchises: add WiFi, clean (and branded) linen, air conditioning, and re-paint the exterior to reflect the new branding. Almost overnight, small hotels gain a brand mark that allows travelers to know to expect a certain level of quality all while handing hotel managers a marketing advantage.

The model is proving to be a perfect match for China, which, like India, is already rife with inexpensive hotels looking for a similar advantage.

City

City

Franchises

Tier

西安

Xi'an

2,880

New Tier One

重庆

Chongqing

2,390

New Tier One

深圳

Shenzhen

2,080

1

成都

Chengdu

1,710

New Tier One

武汉

Wuhan

1,640

New Tier One

哈尔滨

Harbin

1,540

2

广州

Guangzhou

1,440

1

大连

Dalian

1,360

2

长春

Changchun

1,350

2

昆明

Kunming

1,220

2

Oyo openings are particularly active in "New Tier 1" cities like Xian and Chongqing, where economic and manufacturing centers experiencing massive growth are in need of overnight accommodations, where Oyo's slight step up in quality and recognizable branding are proving to be attractive to consumers and hoteliers alike.

Softbank Group, Sequoia Capital, Lightspeed Venture Partners, and even Airbnb have all taken notice, combining for over $1.5 billion in investments, putting Oyo's value at $5 billion.

Agarwal told the Wall Street Journal that he believes Oyo's room count could reach 2.5 million worldwide by 2023.

“Doing these things at a consistent scale for hundreds of thousands of rooms today and millions of rooms in the future is where the big challenge comes,” he said.

And when it comes to scaling out, Ritesh and Co are busy hiring professionals to assure that expansion is kept on pace. As of today, Oyo is hiring for 705 positions. Just two weeks ago, it had 660 openings.

That means Oyo is adding as many as 10 new openings per day. Oyo's workforce growth is even more staggering when accounting for franchisees who are adding the company to their LinkedIn profiles as they hop on board.

Since June 17, 300 LinkedIn users have added Oyo as their employer to LinkedIn profiles. That's a pace of 30 new Oyo employees per day.

Join the businesses who have begun to edge out competitors by scouring the web for alternative data.

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Joshua Fruhlinger

Joshua has been writing about technology, lifestyle, and business for over 20 years. He's one of the original writers and editors for Engadget, and still writes a...

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