Amazon, Uber, Google Struggles in China While India’s Oyo Succeeds

Hotel Alima Palace, Oyo
Français : Au bord de l'alima (Photo: Wikimedia Commons/Jomako)

Oyom, a fast-growing Indian hotel chain, is succeeding in China while tech giants Amazon, Uber, Apple, and Google struggled to operate in the world's largest market.

Oyo's has been successful since the launch of its Chinese arm, Oyo Jiuduan, in November 2017. The hotel is now ranked second-biggest budget hotel in China. The hotel chain currently has more than 400,000 rooms across 290 cities. The number of rooms in the hotel chain in China surpassed India. Oyo dominates India with no nearest threat.

Ritesh Agarwal, Oyo's founder and chief executive, said during an interview with This Week in Asia that they are considering both India and China as home markets. Mr. Agarwal, a 25-year-old college dropout who launched the company when he was a teenager, said that his success in China is because of his localized business strategy.

The executive said that of the 6,000 Oyo staffs, less than 20 speaks English. He said that his staffs helped overcome major constraints in the company.

According to him, they entered China with the thought of how a Chinese company would run itself if it wanted to emulate Oyo. The executive's business model has been hugely successful in India and he now wants to replicate the model across the world. The company acts as an intermediary linking property owners under its brand with customers.

The company plans to invest $960 million as it expands in Asia over the next five years. The company plans to allocate $600 million for its operations in China.

China is the world's fourth-largest destination. The company plans to invest the rest of the amount to its operations in Japan, India, Indonesia, and the Philippines. The World Tourism Organization said that they are expecting 535 million tourists in Asia by 2030.

The expansion of Oyo in China aligns with its goal to dominate the globe by 2023 as it surpasses the leadership of Marriott that manages around 1.23 million rooms.

Oyo is valued at $5 billion. The company is backed by the Japanese conglomerate Softbank. China's Didi Chuxing, Singapore's Grab Ventures, and the United States' Sequoia Capital and Greenoaks Capital are among the investors of the company. The American firm Airbnb also invested $100 million in Oyo.

The company said that they are only scratching the surface of the international accommodation market. The company estimated a $3.6 trillion in the opportunity provided by the availability of 160 million rooms globally.

The executive said that they are looking at the largest 15-20 markets of the world which are characterized by fragmented inventory.

© 2019 Business Times All rights reserved. Do not reproduce without permission.
Sign Up for Newsletters and Alerts