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Airbnb continues to expand its business beyond "unconventional" hotels as it prepares for a highly anticipated IPO. Following the acquisition of HotelTonight last month, the company chose today (April Fool's Day) to confirm that it had invested in the Indian company OYO, a start-up that manages hotels and other economic stays.
The agreement was announced a few months ago and is in addition to the OYO (at the time) E series, led by SoftBank Vision, which included the participation of Grab duo of South-East and Didi Chuxing, in China. The deal, announced last September, also included Lightspeed, Sequoia and Greenoaks Capital and valued OYO at around $ 5 billion.
Neither side has confirmed the scale of the deal announced today, but an industry source told TechCrunch that it was between $ 150 million and $ 200 million. A spokesman for OYO declined to comment in response.
To date, the company has raised more than $ 1.5 billion from investors, including this new capital.
More than just money, the deal is highly strategic for both parties.
OYO and Airbnb had already competed, but OYO turned more to hotel services than to simple hotel networks. Airbnb, with the acquisition of HotelTonight, has shown that it wants to become a booking destination for different types of vertical markets.
Geographically, the agreement is even more logical. Airbnb is keen to take a larger share of India for quite some time. He began to see progress, with co-founder and civil society leader Nathan Blecharczyk, who recently revealed that the country is one of its five most dynamic markets in the world. With this in mind, companies are exploring collaboration opportunities that could see OYO properties – more likely, villas and Airbnb-like properties – listed on Airbnb service.
This exhibition could help OYO – which means "On Your Own" – in the prospect of breaking into the overseas traveler market, having been more popular with local or regional travelers. It could also seek to break the US market that entered the UK market at the end of last year.
Finally, OYO is all the more attractive for Airbnb as it saw signs of promise in China, which were an essential part of its goal after the E series. In total, OYO claims to cover nearly 500,000 rooms in 13,000 hotels and 6,000 homes in eight countries: India, China, Malaysia, Nepal, United Kingdom, United Arab Emirates, Indonesia and the Philippines.
OYO is also targeting Southeast Asia, where it hopes an alliance with Grab will help it to enter the region.
Airbnb recently registered its 500 millionth customer and the company claims to be profitable for two years. Although he does not give precise financial details – it will change with an IPO – Airbnb stated that the third quarter of 2018 was the strongest quarter in its history, with revenues "well above" $ 1 billion over the three-month period.
It's a long road for OYO, TechCrunch first walked in 2015 with a $ 25 million fundraiser. CEO and founder, Ritesh Agarwal, is comrade Thiel who founded the company in 2012 when he was just 18 years old. His initial venture, Oravel, was an Airbnb clone that later spun to become OYO. It's funny what can happen with time.
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