India's Biggest Hotel Chain and International Hotel Franchise Is Now Worth $10 Billion

Founded in 2013, budget hotel service OYO has quickly risen as one of the largest players in India’s hospitality industry. In a short span of six years, the business—which operates on a franchise structure—has skyrocketed to a whopping $10 billion valuation according to CNN. The company is majority-backed by SoftBank, a multinational conglomerate company that has struggled with two of its marquee investments, WeWork and Uber Technologies, Inc.

OYO entered the U.S. hotel market in February of 2019, and established a home base in Dallas, Texas, according to the Dallas Morning News. The company operates on an attractive business model which partners with existing hotels, turns them into OYO franchises, and streamlines services such as booking, wifi access and pricing. Essentially, OYO gives each hotel a facelift, offers tech-savvy booking services and takes a cut of the revenue in return. As of July, the company had already signed franchise deals with 50 hotels in 10 states.

Much like other franchise models, OYO provides franchisees with access to global brand recognition and existing, more efficient systems. According to Dallas News, OYO’s U.S. hotels have seen occupancy increases of 30% to 40%.

"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," said OYO’s 25-year-old founder Ritesh Agarwal. CNN reported that OYO is currently focusing its efforts on increased expansion into Europe and the United States. CNN reported that competitor Airbnb has even signed on as an investor.

Considering the franchise’s already exponential growth, it is looking like OYO could change the landscape of the budget hotel industry—many of which are already franchise brands—as we know it.