IPO-bound OYO looks to double number of premium hotels in India this year

IPO-bound OYO has announced plans to double the number of its premium hotels in India in 2023.

The firm plans to add about 1800 premium hotels this year, with a focus on key business cities such as Bangalore, Hyderabad and Chennai in south India, Delhi, and Noida in north India, Kolkata in east India, and Mumbai in west India.

The company says it plans to support the surge in business travel by increasing its footprint across all the major business cities.

“We are seeing a clear trend of people's willingness to spend more on experiences. Therefore, hotels are now offering additional services and amenities to enhance the travel experience and make it more convenient for guests. Our expansion plan focusing on the growth of premium hotels is aligned with this trend,” said Anuj Tejpal, chief merchant officer, OYO.

OYO’s premium hotel brands include hotels such as Townhouse Oak, OYO Townhouse, Collection O, and Capital O. The company’s focus on premium hotels started in the last quarter of 2022 when it added more than 400 new premium hotels between October to December.

The hospitality major claims that hotel owners will benefit from a host of specially curated services, such as enhanced exposure of the hotel to potential guests with the help of OYO’s network of over 15,000 corporate accounts and more than 10,000 travel agents across India, and payment flexibility.

The demand for premium segment hotels, the firm says, has picked up significantly in the last few months. OYO attributes this to the surge in domestic leisure travel, transient travel, pent-up demand from meetings, incentives, and weddings segment, and gradual recovery in business travel and foreign tourist arrivals (FTAs).

A report by credit rating agency ICRA says that India’s hotel room supply pipeline is expected to grow at a 5-year CAGR of 3.5-4 per cent, adding approximately 15,000 rooms to the pan India premium inventory of approximately 94,000 rooms in the financial year 2023.

Furthermore, pan-India premium hotel occupancy is expected to be 68-70 per cent for FY2023. The service industry is anticipated to lead the demand for business travel in the first quarter of the year 2023.