A former Hooters casino resort in Las Vegas is the unlikely test-bed for a revolution in the hotel industry.
The 675-room property is this week being rebranded under the banner of Oyo, the Indian budget outfit that has reshaped its home market and is now opening a hotel a day in the UK and US.
Yet the ambitious plans — accompanied by a rapid increase in its valuation — have raised questions about the pace of growth for a company that might be SoftBank’s biggest bet yet.
Oyo says it is already the world’s third-largest hotel chain with roughly 1m rooms, including vacation homes, behind only Marriott International and Hilton Worldwide. Ritesh Agarwal, founder and chief executive of Oyo, says the group is on course to surpass its bigger competitors by 2023.
Oyo’s pursuit of scale is drawing comparisons to another SoftBank investment and fellow property manager WeWork, which postponed its planned initial public offering this week after investors baulked at the valuation, business model and governance. As they tried to save the deal, bankers floated valuations at about a third of the $47bn level attached to SoftBank’s last investment.
Oyo’s own valuation has drawn scrutiny. In July Mr Agarwal led a $2bn investment round into his own company in an unusual transaction, borrowing in order to buy shares from existing investors Lightspeed and Sequoia.
According to people with knowledge of the deal, a consortium of Japanese financial groups including Nomura and Mizuho, which count SoftBank as one of its biggest clients, helped to finance Mr Agarwal’s purchase.
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