Chinese ride-hailing behemoth Didi Chuxing has invested US$100 million in Indian hospitality startup Oyo Hotels & Homes, India’s Economic Times newspaper reports.
The investment came amid a US$1 billion financing round led by Oyo’s existing backer Softbank Vision Fund, according to the report, which cited sources familiar with the matter.
Oyo, which is valued at US$5 billion, plans to use US$600 million of its fresh capital in China, doubling down on its fast-growing business in the country, with the rest directed towards other overseas markets.
Founded in 2013, Oyo partners with hotel owners to standardize their rooms to Oyo’s specs, with requirements in hospitality facilities. It offers its branding to the hotels and drives business to them via the Oyo platform.
Focused on India and China, the budget hotel network also covers some other countries in Asia including Nepal, Malaysia and Indonesia. It claims to have over 10,000 franchised or leased hotels in its network.
The fast-growing hotel room aggregator is well-funded. According to CrunchBase, the company has raised US$1.7 billion since its founding in 2013, from entities such as SoftBank and China’s Huazhu Hotels Group and venture capital firms Lightspeed Venture Partners, and Sequoia Capital.
Singapore-based ride-hailing unicorn Grab invested US$100 million in Oyo’s US$1 billion Series E funding round last December.
Oyo launched its services in China in November 2017, and has entered into a strategic marketing and branding partnership with Didi.
As of this January, the hotel reservations startup claims to have a presence in 280 cities across China, including Hangzhou, Xian, Guangzhou, Chengdu and Shenzhen, operating over 5,000 hotels and 260,000 rooms.
Last September, media outlets reported that Didi, along with co-working space operator WeWork, was in talks to invest in Oyo Rooms’ operations in China.
The investment by Didi comes as the Chinese firm seeks new avenues for growth, diversifying its business as the core ride-hailing operation faces a potential slowdown amid stricter scrutiny from authorities.
Last October, Chinese media reported that Didi was considering entering the hotel booking service business, which would leverage on its driver network and huge user traffic of its mobile app.
By incubating new businesses, Didi would transform itself from a transportation agent to a company providing lifestyle O2O services, a similar positioning to Tencent-backed neighborhood services behemoth Meituan Dianping.
Last July, Didi received a US$500 million investment from Booking Holdings, which owns multiple online hospitality brands including Booking.com, Agoda, OpenTable, and Kayak. With the investment, Didi will be available on Booking’s apps, and Didi customers will be able to book accommodations on Booking.com and Agoda.
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