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India-based disruptor Oyo makes big move into UK

Oyo Hotels, India’s largest and fastest-growing tech-enabled budget hotel group, is about to take the UK by storm with a newly announced plan to franchise 300 independent hotels before 2020, its 24-year-old founder Ritesh Agarwal told Reuters on Wednesday.

Marking its first expansion outside Asia, the franchiser said it planned to invest £40 million (US$53 million) to launch in 10 British cities in the next 18 months via a smartphone-based service for franchise owners and guests. The first four hotels, branded as Oyo Townhouse hotels with a total of 80 rooms, are set for London. The group currently offers approximately 211,000 rooms in 349 cities across South Asia.

Agarwal said his company, founded in 2013, will select hotels from among Britain’s 35,000-40,000 independent operators, offering redesign, property management and marketing to help them compete.

This announcement has been in the works for the past few weeks, according to Manav Thadani, founder of Gurugram, India-based consultancy Hotelivate. “Oyo is just about five years old. The last two years the focus has shifted to expansion overseas and Ritesh is keen to expand this footprint beyond just India and China,” Thadani told HOTELS on Wednesday. “They have seen early and very strong success with their partners China Lodging Group and this growth has been unprecedented even by Chinese standards of growth. With the backing of strong financial partners in the form of Soft Bank it is but natural for them to test waters in UK and potentially before long also in the U.S… They clearly are the disruptors of the business currently. I think some brands are still ignoring them at their own peril, but Oyo is here to stay.”

Oyo has raised more than US$$450 million and is backed predominantly by SoftBank Group’s Vision Fund, the world’s biggest private tech investor, which views the hotel chain as a prime example of how data and technology driven companies can disrupt entrenched industries such as the hospitality sector. Oyo believes its member hotels will benefit from its partnerships with Expedia, Booking.com and other travel platforms.

It has hired London restaurateur Jeremy Sanders, who co-founded and sold Italian fast-food chain Coco di Mama, to run its British business. By 2020, Oyo said it aimed to hire 100 staff in Britain and offer 5,000 hotel rooms.

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