Skift Take
More than ever before, small independent hotels in Asia are in need of distribution and revenue management solutions. But Oyo and other budget hotel chains aren’t necessarily the ones that will be throwing them that lifeline.
Independent hotels in Asia far outnumber chain hotels but lag sorely behind when it comes to booking numbers.
Still, alternative technologies serving these smaller hotels are rising, with the likes of Zuzu Hospitality Solutions leading the tech movement in Asia.
Those with an e-commerce answer for unchained hotels are looking at more than $7 billion in market opportunity, based on Zuzu’s estimates. In Southeast Asia, there are 57,000 unchained hotels, led by Thailand with 15,700, based on online travel agency data alone.
Enter fast-growing budget hotel chain Oyo, which seems to be on a conquest of this massive but fragmented low-cost independent hotel sector. It's looking to round up unchained hotels with its proposition of management or franchising — complete with the full technology stack needed to get guests through their doors.
Competitors are not far behind, intent on following Oyo's path.
Lvyue Hotel Company just bagged several hundred millions in series A funding led by Chinese tech giant Tencent, attracting investors like Goldman Sachs. Like Oyo, Lvyue offers the full tech stack, from property management systems to revenue management, while operating and distributing hotels under seven of its brands. And like Oyo, Lyvue has ambitions in multiple big markets, starting out in China and recently entering India.
Sustainability in Question
These budget hotel chains talk a sweet deal. So what can go wrong? Based on the flurry of scathing press peppering Oyo’s meteoric rise — plenty.
Aiming to exploit some of those potential risks are former Expedia executives Dan Lynn and Vikram Malhi, co-founders of Zuzu. They say Oyo and its rivals are likely to be around in the next 10 years, but the big question is whether penetration can keep up with their valuations.
Considering the billions it raised from investors, Oyo is doing just $60 million in revenue, compared to Marriott’s $20 billion, Lynn pointed out. “How does Oyo keep on raising ever greater valuation to get to Marriott revenue numbers?”
“Their current valuation takes into account they can get to a large part of the 660,000–700,000 global independent hotel market. Based on what we see so f
