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Hospitality Startups

OYO raises fund from Martin Söderström and brings him in as a director

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An OYO Holiday home

Hospitality unicorn OYO has secured fresh funds from Swedish billionaire Martin HP Söderström, who will join its board of directors.

Söderström will lead assist OYO in building strategic partnerships with other leading EU-based companies, in the vacation rental space. He will also guide the company through potential mergers and acquisitions.

OYO did not disclose the amount of investment, which follows last week’s fundraise worth $7.4 million (₹54 crore) from Hindustan Media Ventures.

Experience in Expansion

Söderström is the chairman of DIG Investments which focuses on direct investments in the global alternative markets. Martin is also the husband of Charlotte Söderström, heir of the fashion company Hennes & Mauritz (H&M).

DIG Investments backs tech-related companies in their pre-IPO phase. It has invested in consumer brands, shared economies, retail and hospitality across Asia, Europe and the US.

Speaking on the investment, Ritesh Agarwal, founder and CEO of OYO said “For OYO, its customers and homeowners in the EU region, especially in the Nordics, hold immense strategic importance.”

“Given Martin’s deep understanding of the region and strong business acumen, I am elated to welcome him as an investor and a fellow Board member at OYO Europe.” he said.

Drive to new verticals

OYO’s vacation homes business has become a vital part of the company’s global business. Last year it added 3,400 homeowners, which add up to the global count of a 5,000 homes network.

The company has been expanding its portfolio, to reorganize its business in these volatile times. It has been betting in the ‘drive to’ destination trend and holiday homes vertical in Europe. It has already pumped 350 to 400 million euros (₹3,120 crore to ₹3,566 crore) in the area.

OYO has seen recovery in hospitality business in China, which is its largest market outside India.

Also read: Oyo lays off 300 more employees

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Hospitality Startups

Oyo raises over $7 million from Hindustan Media Ventures

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Oyo logo

Hospitality unicorn OYO has raised $7.3 million (₹54 crore) from Hindustan Media Ventures. This was part of its Series F1 round of funding.

As per the regulatory filing to the Registrar of Companies, Hindustan Media Ventures subscribed to 125 Series F1 Compulsory Convertible Cumulative Preference Shares (Series F1 CCCPS). At the face value of ₹100 ($1.3) each for cash at an issue price of Rs 43.2 lakh ($59,087) per Series F1 CCCPS aggregating Rs 54 crore ($7.3 million) through private placement.

Hindustan Media Ventures is majorly owned by the HT Media Ltd which runs the news media Hindustan Times.

This fund will help OYO balance its business during these volatile time for the hospitality industry. In the middle of last year, Oyo had to let go and cut benefits of many of its employees. Just last month it laid off 300 employees and limited its operations to platform management and marketing.

Oyo has investor backing from heavyweights such as SoftBank Vision Fund, Sequoia Capital, Lightspeed Ventures, Airbnb, and Hero Enterprise. It is reported to have a liquidity of about $1 billion (₹7,337 crore).

Till last year, Oyo had been expanding globally. It has over 43,000 hotels and 1.5 lakh (150,000) homes in over 800 cities of 80 countries.

Also read: Cyber-attack on Juspay server leaks data of over 100 million Indian users

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Hospitality Startups

Oyo lays off 300 more employees

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Oyo logo

Oyo has laid off 300 employees from the renovation and operations department. The move is to reduce their cost and focus on the revenue sharing model.

Prior to the pandemic, Oyo had a massive workforce with 10,000 employees and cut to the end of 2020, they are estimated to have only 2,500 employees around the globe.

The pandemic which created a huge ruckus in the hospitality and tourism sector has made them shift gears to a lean model.

From now on the Oyo’s hotel partners will be responsible for maintenance and operations while Oyo will take care of the marketing.

The Gurugram based startup was found in 2013 by Ritesh Agarwal. It started out as a platform that used technology to make budget hotels easy to book.

Source:Oyorooms.com (In Phote – Ritesh Agarwal, Founder of OYO)

Soon their network grew exponentially with thousands of hotels offering millions of rooms on their platform in all major countries across the world.

The company was valued at $10 billion (₹73,661 crore) after the last round of funding led by SoftBank group, Lightspeed Venture Partners and Sequoia India in October 2019.

It had registered a revenue of $950 million (₹6,997 crore) in 2019, a 4.5X increase from the year before.

This year has been devastating for the company. In April, Oyo had asked some of its employees to go on a leave for 4 months with limited benefits.

And it had also asked all its employees to accept a cut of 25% in their fixed salaries.

Earlier the platform was very particular on how its customers are managed at the hotel. It had trained staff in all of the partner hotels to maintain quality and consistency.

Now the hotels will have to do their maintenance and share their revenue with the platform. We will have to wait and see, how this affects their customer experience.

The employees who are laid off will get benefits such as notice pay, leave encashment, earned incentives and gratuity.

They have also been given an option to surrender and offer cancellation of 25% of the invested deeply discounted ESOPs granted in June 2020. On average this would amount to be 25% of their salary in March.

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