The SoftBank-backed Indian hotel aggregator OYO that entered China in 2017, has acquired its competitor Islands Hotel. This paves the way for the Ritesh Agarwal-led company to expand its presence in Beijing and Shanghai, where it hasn’t stepped in yet.
This is OYO's first acquisition in China.
In a span of 16 months, OYO has procured 310,000 rooms in 292 Chinese cities, and according to media reports it has more rooms in China than it has in its hometown.
Shanghai OYO Investment Ltd now holds 100% shares in Beijing Beikeyoujia Technology Ltd, which operates Islands Hotel — aka Qianyu. According to the National Enterprise Credit Information Publicity System of China, the deal was approved on March 19. Its price has not been disclosed yet.
According to a report in 36Kr, Islands Hotel will remain independent in terms of business, operation, finance, strategy and team. Wilson Li, OYO China's chief financial officer and partner, will now serve as Beikeyoujia’s executive director and legal representative. Tejpal Anuj, VP operations of OYO Hotels, will be the supervisor, while the founder of Islands Hotel, Gan Yizhe, will remain the CEO of the company.
The business model of Islands Hotel is similar to OYO — integrating unbranded offline hotels by franchising and entrustment management, branding them after refurbishment and holding them to one standard.
Founded in August 2017, Qianyu was operating in almost 100 cities in China. With around 20,000 rooms under its belt, it was called the Didi of the hotel market before OYO entered China. While Islands Hotel mainly focuses on the budget to medium segment, with its daily room price in Beijing going up to 400 CNY it also overlapped with OYO’s 100-200 CNY segment.
A star in the Chinese startup ecosystem, Islands Hotel was until now functioning as a traditional hotel chain company that required franchise fee to refurbish rooms, manage them and set up online booking. OYO, on the other hand, seeks zero investment for the same.
Qianyu founder Gan Yizhe is a graduate from Peking University and was selected for the ‘JD.com Entrepreneurship Program’ guided by founder Richard Liu. In just two years of its existence, Islands Hotel has closed four rounds of funding and got Vision Capital, Zhen Fund, 01 VC and Didi’s investor Wang Gang on board.
After this latest acquisition, OYO is on its way to expand its presence across all segments in China, like it did in India by acquiring ZO rooms and Novascotia Boutique Homes. It was also reportedly in talks with its nearest rival Treebo Hotels in India. In China, it faces competition from Meituan’s sub-brand Qingzhu, China Lodging Group’s Yisu Hotel and H Hotel, BTG Homeinns’ Cloud Hotel, and Sunmei’s AAroom.