The investment brings to an end OYO’s nearly $1.1-billion Series E funding round that also earlier saw participation from Softbank Vision Fund, China’s Didi Chuxing and Singapore’s Grab.
By Asmita Dey
US-based home-sharing firm Airbnb has invested around $75 million (Rs 516 crore) in SoftBank-backed hospitality company OYO, documents sourced from business signals platform paper.vc showed.
The investment brings to an end OYO’s nearly $1.1-billion Series E funding round that also earlier saw participation from Softbank Vision Fund, China’s Didi Chuxing and Singapore’s Grab. The Airbnb investment was made at the same $5-billion valuation at which OYO raised $800 million led by Vision Fund and $100 million each from Grab and Didi Chuxing.
Analysts said the latest investment by Airbnb in OYO will create synergies between the two in the sense that the former will get access to OYO’s 173,000 rooms spread across 259 cities. As far as OYO is concerned, it will get access to Airbnb’s large traveller base which is spread globally.
It is also expected that this partnership will lead to synergies in China where OYO has expanded and is operating in 280 cities with 5,000 hotels and 260,000 rooms. China is a market where Airbnb has failed to gain a foothold and compete with local players.
“If the China synergy does not work out for Airbnb, it may not invest further in Oyo,” said Vivek Durai, co-founder at paper.vc.
In a statement issued last week, Maninder Gulati, global chief strategy officer at OYO, had said Airbnb’s established global presence will open up new opportunities for the Gurgaon-based firm. “Strong global strategic relationships that support this mission, help drive collaborative efforts in the right direction,” Gulati had said without elaborating on the amount or structure of investment made by Airbnb. Airbnb, which claims to provide access to over 6 million unique places to stay in more than 81,000 cities and 191 countries, is reportedly eyeing China as its largest market globally by 2020. The company aims to bring 1 billion users on its platform in the next 10 years and is looking at China and India as key markets to attain the same.
In the current year, Airbnb will double its marketing investment in India, Siew Kum Hong, regional director of Airbnb Asia-Pacific, said earlier this year, according to reports in international media.
SoftBank-backed OYO, which also views India and China as its core markets, said it would spend about $600 million in its China business. Founder and Group CEO Ritesh Agarwal earlier said the firm plans to expand to tier IV and tier V cities in China from the current tier II and tier III cities.
“This is a delicate investment, given OYO’s arrangement with Ctrip-backed MakeMyTrip,” paper.vc’s Durai said. Airbnb is fighting a massive battle with online vacation rental site Tujia in China which is backed by Ctrip, he explained.
As of 2018, Tujia has a 24.5% share in the Chinese short-term rental market while 46.8% is occupied by others.