OYO Rooms is reportedly scouting for a fresh round of funding, which could see the company being valued at a staggering $4 billion. If this turns out to be true, then not only the company would join the elite club of Unicorns but will be the third highest-valued Indian startup.
Oyo is reportedly looking to raise about $500 million to $1 billion, and if this gets successfully concluded, the firm’s value could cross $5 billion. The last known valuation of the company was $850 million about a year back.
The startup is currently holding discussions on the possible funding opportunity with two separate investor groups. One is Japan’s SoftBank Group (through SoftBank Vision Fund), which is already the largest stakeholder in OYO and the other is a US-based group which is engaged in the travels business. Existing investors, Sequoia Capital and Lightspeed Venture Partners are also reported to be in the list of investors in this new round.
Besides the funding for the parent or holding company, the firm is looking at making a wider expansion of its operations in China and part of the proceeds from this round of investment will be earmarked for that purpose.
OYO’s presence in China is being defined by 50 cities and 50,000 odd rooms under management, while in India, OYO has over 100,000 rooms spread over 230 cities. With over 17 million booked room nights, OYO claims it is close to reaching profitability in its Indian operation.
The profitability in the Indian operations could be more due to its move to double the commission it charges the hotels for providing its services from 10 to 11% to 20% in the span of the last one year. In addition, OYO has finetuned its basic business model itself where it takes complete properties under its franchise in place of the earlier practice of managing just a few rooms.