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IPO listing still a distant dream for Ritesh Agarwal's OYO Hotels

Karan Choudhury and Neha Alawadhi/Bengaluru/New Delhi 09 Jul 19 | 08:56 PM

It is still a long way to an IPO for OYO Hotels & Homes, the young hotel startup, which also happens to be one of the world’s fastest-growing hospitality companies. While speculation is rife that the Ritesh Agarwal-led company is heading for a NASDAQ listing, sources in the know said that the company is still thoroughly evaluating the US market and everything would depend on how its business does in the country.

The company wants to first ensure that OYO has adequate brand recall and the company is able to make a dent in the hospitality sector in the country before it even thinks of listing in US. Sources said that the company does not want to be in a situation where post NASDAQ listing its shares are not able to get any traction.

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“See there have been other Indian firms who have listed in the US but there shares have not been able to do well. The reasons are many but mostly it is because the companies do not have brand recall. OYO is trying to avoid making similar mistakes and jump the gun. The company will first ensure that the brand is well known and then go for an IPO on a strong note," said the source.

Over the last few months the company has been trying hard to set up a base in the US. It recently announced plans to invest $300 million over the next few years in the US. The company currently offers living spaces throughout its 50 plus OYO Hotels in 35 cities and 10 states.

Abhinav Sinha, COO, OYO Hotels & Homes, is leading the whole initiative along with his team across 15 states in US. At present, OYO Hotels & Homes offer service across cities including Dallas, Houston, Augusta, Atlanta and Miami and plans to soon expand its presence to cities such as New York, Los Angeles and San Francisco.

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The company is facing a different set of challenges in the US. As the market is mature and already there are a number of major chains of hotels and motels operating in the US, it is still trying to create a niche for itself. “Also in India it was able to gain ground on the back of value for money proposition. It brought in a model which made lower ticket hospitality uniform and with set standards in a highly unorganized sector. However in US it can use the same model," said the source.

The company is still trying to carve out that niche and find properties which are willing to take chances with a new entrant. Sources said that the company might in the longer run go via the acquisition route in the US to not only gain properties, but also help create brand awareness. 

It has already done that to gain a foothold in the US. In one of the biggest acquisitions by an Indian unicorn of a foreign firm, OYO, in May this year, acquired Amsterdam-based @Leisure Group a vacation rental company in Europe which manages holiday homes, holiday parks, and holiday apartments for a little over Euro 369.5 million.

OYO, which over the last one year has been on an acquisition drive, had been in talks with @Leisure for the last six months. The SoftBank Group-backed firm which has been trying to establish a base in Europe and UK would use this acquisition to make its move into these regions smoother. 

@Leisure Group, through its Belvilla, DanCenter, and Danland brands, offers more than 30,000-fully managed holiday homes across 13 countries in Europe and through its Traum-Ferienwohnungen brand, offers a subscription-based home management service with over 85,000 homes across 50 countries.

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