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Why OYO and Ctrip need each other: bigger reach in Asia

05/28/2019| 6:09:34 PM| 中文

Oyo founder Ritesh Agarwal pointed out that Ctrip is focused on secondary and smaller cities in China, which complements Oyo’s supply.

Oyo has inked a strategic partnership with China’s Ctrip, Oyo founder Ritesh Agarwal announced at Skift Forum Asia in Singapore on Monday. The deal is meant to help elevate the budget hotel chain’s business in China, where Oyo has more rooms than it does in India but sees a lower yield in the mainland than in its homeland.

In an interview after his session at Skift Forum Asia, Agarwal said he expects Ctrip, China’s largest online travel player, to generate demand for Oyo in China and globally.

“Oyo is becoming very popular with young people there (in China),” said Agarwal. “How do we create a unique experience at a price point of 100 to 150 yuan ($15) per night, which is what they appreciate? So it makes sense for Oyo Jiudian (Oyo’s name in China) and Ctrip to form a deeper relationship.”

Agarwal pointed out that Ctrip is focused on secondary and smaller cities in China, which complements Oyo’s supply.

“Ctrip gets access to our quality inventory in tier two to tier five markets in China,” he said. “Additionally, China is the world’s fastest-growing outbound travel market, so we expect more traffic for India, UK, Southeast Asia, and other markets where Oyo is present.”

In China, Oyo said it has become the second largest hotel chain in room count over the past 18 months. It claims 450,000 rooms in China from 10,000 hotels in 320 cities, surpassing the scale of traditional and established hotel chain brands in the country such as Home Inn and Hanting.

Agarwal said Oyo enjoys a good relationship with online travel agencies in China, including Fliggy. “Ctrip is a completely new size and impact,” he said.

He claimed that Oyo’s occupancies in China are going up “roughly twice in every three months” now, and expects a further increase in occupancy, which in turn will generate new supply. Even though it has 450,000 rooms, that figure is less than 2 percent of China’s accommodation market, which stands at more than 35 million rooms, according to Oyo.

Sam Shih, the chief operating officer at Oyo China, said in a statement: “With Oyo Jiudian, we’ve built a brand that is synonymous with quality accommodations. Our multi-brand strategy enables us to meet the needs of every type of traveler and this partnership with Ctrip gives us an opportunity to extend our offerings to millions of discerning Chinese travelers looking for standardized, quality offerings.

During his session onstage at the forum, Agarwal completely sidestepped the possibility of Accor taking a stake in Oyo when queried by Skift founder Rafat Ali.

Accor is speculated to be keen on investing in Indian budget hotel brand Treebo, but is also believed to be in talks with Oyo. Michael Issenberg, Accor Asia-Pacific’s CEO, declined to comment when approached by Skift on Monday.

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TAGS: OYO | Ctrip | Accor
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