OYO makes first acquisition, buys service apartment firm
Budget hospitality chain OYO said on Monday that it had made its first acquisition by buying Chennai-headquartered service apartment company Novascotia Boutique Homes. The deal value was undisclosed.
“The acquisition forms an integral part of our inorganic growth plan," said OYO founder and chief executive officer Ritesh Agarwal. "OYO is poised to deliver 180,000 keys by the end of 2018 and with Novascotia’s strength, we will be adding service apartments to our existing portfolio.”
Novascotia Boutique Homes was founded by married couple G Madhu Manohar and Girja Madhu. It manages rooms in cities including Chennai, Coimbatore, Hyderabad, Kochi and Thiruvanathapuram.
Around 350 of its rooms across locations will now be added to OYO's portfolio as it bolsters its presence in the corporate housing segment.
OYO's earlier attempt at an acquisition had ended in failure as it announced its intention to buy rival Zo Rooms, but eventually decided against it. That decision triggered a legal spat between the two companies, with Zo recently filing a petition accusing OYO of stealing data about employees, assets and hotel properties under the garb of speeding up the acquisition.
OYO currently operates in 230 cities across India, Malaysia and Nepal.
Operated by Gurgaon-headquartered Oravel Stays Pvt. Ltd, the startup initially aggregated hotel rooms under the OYO brand and blocked a few rooms in partner hotels. Under this model, OYO had around 70,000 rooms under its umbrella in just three years.
In January, Agarwal told VCCircle that OYO was on-boarding 10,000 rooms a month.
He said OYO had repositioned itself as a franchisee/hotel operator and was moving its whole inventory in that direction.
OYO is the firm's budget brand which follows the marketplace model. Townhouse, which OYO launched last January, is a managed hotel brand positioned as a friendly neighbourhood accommodation. OYO Home is its homestay arm.
Last September, OYO raised $250 million (Rs 1,600 crore) in a Series D round led by existing investor SoftBank. Its post-money valuation when it raised funds in 2016 was $500 million.
That same month, Chinese hotel operator China Lodging Group Ltd picked up less than 5% stake in OYO for $10 million (around Rs 63.9 crore) as part of a strategic partnership.