The discount chain OYO Hotels, founded in India in 2013 and expanding rapidly around the world, including the U.S., says it is planning to raise about $1.5B in a new financing round. The new round values the six-year-old startup at $10B.
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Some $700M of that investment will come from the company's founder, Ritesh Agarwal, in the form of a buyback of shares from earlier investors in the company. Even before the new round, OYO is one of the largest hotel chains in Asia, Tech Crunch reports.
The latest investment will take Agarwal's stake to 30% of the company, and make OYO India's second-largest startup after digital payments company Paytm, CNN reports.
Another major investor in the new round (Series F) will be SoftBank Group, which supports a variety of startups it considers disruptive, though it is best known for its support of WeWork. Other existing investors that will participate in the new OYO round include Lightspeed Venture Partners and Sequoia India.
OYO operates in about 80 markets and manages more than 1.2 million rooms worldwide. Its strategy is to undercut hospitality pricing in any market it enters, while offering a higher-quality aesthetic for that price. OYO does so by taking over the operations of existing budget hotels and renovating them for a fee or revenue share.
"We truly believe that we will be able to build a truly global brand out of India, while ensuring that the business is run efficiently and with a clear path to profitability," Agarwal said in a statement.
Earlier this year, OYO allocated $300M to fund its American expansion. By the end of the year, the company aims to be adding five U.S. properties per day. If it is able to do so, that expansion would mirror OYO's rapid growth in China, where it became the second-largest hotel operator in China in only a year.
As of mid-September, the company counted more than 100 properties in the U.S. Through a partnership with Highgate, OYO will open the 657-room OYO Hotel & Casino in Las Vegas, formerly the Hooters Hotel, in 2020. OYO has other properties in Dallas, Houston, Los Angeles, Seattle, Atlanta and Miami.
