OYO Hotels & Homes, the fast-growing India-headquartered hotel chain backed by SoftBank, officially launched in Vietnam today, rolling out potentially a USD 50 million investment in the country over the next few years to capture its booming tourism sector.
OYO started operating in Vietnam several months ago ahead of this launch to explore the market and to “reach a certain scale and perfect the model,” said OYO Global Chief Technology and Product Officer Anil Goel in an interview with KrAsia.
The chain now claims it has already over 90 hotel partners across 6 major cities in Vietnam, which are Hanoi, Ho Chi Minh City, Da Nang, Phu Quoc, Vung Tau and Nha Trang – with the goal to become the largest hotel chain in Vietnam by the end of 2020 with presence in 10 cities and 20,000 rooms. Its competitor, Reddoorz, which only operates in Southeast Asia, was also launched in Vietnam back in March.
OYO Vietnam Country Head Dushyant Dwibedy noted that most hotel partners of OYO in Vietnam are mid-range and budget hotel owners with a smaller number of rooms, who are willing to adopt OYO’s technology-based solutions to transform their hotel operations. Dwibedy does not disclose the fees that hotel owners have to pay in order to join OYO in Vietnam but said such fees can be “flexible” with OYO’s commitments to generate more revenues back to the hotel partners.
In China, OYO is shifting to a guaranteed revenue model where hotel owners are promised a fixed income no matter the actual occupancy, while OYO takes commissions if revenues exceed this target.
Vietnam’s online travel agency, or OTA, market has been primarily dominated by foreign players, such as Booking and Agoda. There have been concerns as reported by local media that hotel owners in Vietnam are too dependent on these channels and therefore are subject to higher listing fees.
That’s an opportunity for OYO to jump in to encourage individual users to book directly on OYO’s app and website that list its hotel partners, said Goel.
Launched in 2013, OYO has been credited to revolutionize the budget hospitality market by supporting small and independent hotel owners to use technology to improve the hotels’ efficiency–a combination of hotel franchising and online booking.
OYO became a unicorn within six years after raising USD 1 billion led by Softbank’s Vision Fund in 2018 and other big-name investors that also include Sequoia Capital and Grab. In January, OYO announced that it would double investment in Southeast Asia to USD 200 million to achieve the goal of 2.5 million rooms by 2023.