China Lodging Group, OYO announce strategic alliance

OYO and China Lodging Group on Wednesday announced signing of an MoU to facilitate and strengthen collaboration to build a global market leading hospitality business.

As part of this, China Lodging Group is investing USD 10 million in OYO as a follow-on to OYO's recently announced Series D financing of USD 250 million led by Softbank Vision Fund.

This partnership will combine the technology strengths and operations expertise of OYO with China Lodging Group's extensive coverage and strong development capability in China.

"We are delighted to announce our strategic alliance with OYO. The MoU signifies the shared aspirations of China Lodging Group and OYO to explore growing opportunities in the global hospitality industry and to create synergies by working together," said CEO - China Lodging Group, Jenny Zhang.

"The partnership will draw on the strengths of China Lodging Group's visionary and experienced management team, market leadership through a multi-brand strategy, extensive hotel operations expertise and strong loyalty program and OYO's advanced technologies in the hospitality industry that enable transformation of hotel operations," added Jenny Zhang.

"We are very excited about this partnership - both in terms of potential opportunities and existing synergies through our complementary strengths and capabilities. China Lodging Group has a visionary and experienced leadership team and hotel operations expertise especially in managing large properties," said founder and CEO - OYO, Ritesh Agarwal.

"OYO is a new-age technology company disrupting the hospitality industry with category-leading capabilities of using technology to onboard and transform existing supply, standardize operations and distribute these through online and offline channels. Addressing consumers in India and China - two of the world's fastest-growing markets - through our combined strengths opens up a very large and significant growth opportunity," added Agarwal.

Under the terms of the MoU, China Lodging Group and OYO will, among others, explore initiating knowledge and technology sharing projects of mutual interest to enable a co-learning opportunity in the fields of technology and hospitality.

This could include exchange program for employees, sharing of technology and intellectual property. The partnership is also expected leverage benefits from economies of scale, not limited to, sourcing and procurement and joint loyalty programmes.

China and India are among the fastest-growing travel markets in the world with an emerging domestic travel opportunity. According to Deutsche Bank, nearly two-thirds of India's rooms supply in 2020-21 will comprise of budget hotels.

Criteo expects online travel market in Asia Pacific to be worth USD 446 billion in value by 2020, witnessing a 72 percent growth between 2016-2020. OYO estimates mid-market accommodation alone to be worth USD 20 billion by 2020.