Disruptive Indian hotel group OYO eyeing German market

by | Jun 17, 2019 | Chains

After OYO’s rapid expansion in Asia, the ambitious founder now wants to expand his company globally

Bremen-based Traum-Ferienwohnungen to partner with OYO to win over owner-managed mid-range hotels in Germany, putting pressure on small franchise brands and big chains alike

OYO, India’s leading hotel chain, now wants to gain a foothold in Germany and a partnership with a Bremen-based company should be the first step.

The making of a powerful, new hospitality player

Meanwhile, the company has raised more than $ 1.5 billion from investors.

The story of OYO is one of rapid growth and expansion. Recently, Airbnb invested just under $150 million in OYO. The deal complemented OYO’s (then) $1 billion Series E round. The transaction, announced last September, put OYO at around $5 billion after only six years of operations.

The only 25-year-old founder Ritesh Agarwal is behind this success story. Instead of attending university, he decided to start a business as a teenager. Now his business is changing the Asian hotel market.

OYO’s principle is as simple as it is unusual: OYO doesn’t build its own hotels but works with small hostels and hotels as franchisees. Thus, these properties benefit from a strong parent company with a large brand which attracts guests. In addition, OYO takes over marketing and certain management tasks.

OYO commits partners to standards

On the other hand, the franchisees agree to abide by OYO’s rules. This means certain standards such as cleanliness, air conditioning or Wi-Fi are to be kept, otherwise the hotel will quickly be debranded again. This strict approach has helped build trust in the brand among customers.

Currently, the company is cooperating with 9,000 hotels in 260 Indian cities, making it the country’s largest hotel provider in terms of bed count. In China, OYO has risen to number two at lightning speed.

Founder looks beyond India and China for growth

After OYO’s rapid expansion in Asia, the ambitious founder Ritesh Agarwal now wants to expand his company globally. A company spokeswoman has confirmed that Germany is also part of the expansion plan.

Here, OYO wants to win over owner-managed mid-range hotels in Germany. This will not only put pressure on the small franchise brands but also the big chains.

Having a strong parent company as a partner could help these smaller businesses successfully navigate struggles they have been facing with OTAs and other forms of quickly changing online distribution.

Strong partner in Germany on the horizon

The Bremen-based company Traum-Ferienwohnungen has been identified as a key partner for OYO’s growth in Germany. The online portal has more than 140 employees and their business model is to bundle holiday apartments from different providers on one platform.

Like OYO, Traum-Ferienwohnungen is also a young company. It was founded in 2001 by two students and later bought by the Axel Springer Group and finally the Dutch @Leisure Group which was recently taken over by OYO. A short time later, employees of Traum-Ferienwohnungen were presented as new members of the OYO family at a management meeting.

Both companies’ corporate philosophies are very similar. Combining different overnight accommodation providers under one brand, fast growth, flat hierarchies – the chemistry is likely to be right between the young companies.

 

Let’s take a look at a few other projects currently underway in Germany:

Überseequartier Hamburg

InterCity Hotel Herford

Landhaus Spatzenhof

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