Home >Companies >News >Indian hotel behemoth Oyo targets U.S. vacation-rental market

The giant Indian hotel company Oyo Hotels & Homes is expanding its vacation home-rental business to the U.S., another sign that competition in this corner of the lodging market is intensifying.

A number of venture-funded companies are looking to expand in the market for short-term rentals, either managing vacation homes or apartments for their owners, or renting apartments to sublet them as de facto hotel suites.

Companies like Portland, Ore.-based Vacasa focus on nonurban vacation homes, while companies like Sonder and Domio are more focused on urban apartments.

Oyo primarily manages low-cost hotels, but the firm is looking to bring its brand and economies of scale into the vacation-rental industry. It entered the European vacation-rental market last year when it acquired Amsterdam-based Leisure Group for $415 million.

The company said it operates more than 50 vacation homes in more than 15 U.S. cities and is looking to expand. Oyo said it hopes to expand its business by hosting not just leisure travelers, but also business travelers and groups.

“We don’t think of hotels and vacation homes as two different businesses," said Oyo’s chief executive, Ritesh Agarwal.

From a regulatory standpoint, the vacation-home rental business faces fewer obstacles than the equivalent short-term rentals in major U.S. urban centers, Mr. Agarwal said. A number of cities have banned certain types of commercial short-term rental listings over concerns that they reduce housing supply and push up rents. But vacation homes in smaller towns often face fewer restrictions.

Oyo, which was founded in 2013, has raised more than $3 billion in venture capital and counts Japan’s SoftBank Group Corp. and short-term rental listing company Airbnb Inc. among its investors.

While it has been one of the world’s fastest-growing hotel companies, more recently it has tapped on the brakes. Oyo is laying off 5,000 of its roughly 30,000 employees, pulling out of numerous cities and signaled that it needed to moderate its breakneck growth pace.

“There has been a significant amount of feedback among high-growth companies world-wide, basically saying that the market appreciates a trend towards profitability very significantly," Mr. Agarwal said in an interview.

He said that the company’s more mature Indian business has seen losses shrink, but that “there is a lot more to be done."

Oyo’s foray into the U.S. vacation-rental market comes as the novel coronavirus outbreak is upending the hospitality industry. The recent spread of the virus in Asia, Europe and the U.S. has led businesses to restrict travel and caused tourists in China and elsewhere to cancel vacation plans.

But the recent disruption aside, short-term rentals aimed at vacationers have been on the rise. Last year, there were 414,845 short-term rental listings in markets where leisure travel dominates, up more than a third from 302,220 in 2017, according to data firm Transparent Intelligence Inc.

Other startups also are competing in the vacation-rental field. Vacasa manages more than 23,000 listings in the U.S. The company raised $319 million in a venture funding round last year, valuing it at more than $1 billion.

Last month, former OpenTable Chief Executive Matt Roberts became Vacasa’s interim CEO, replacing founder Eric Breon. “At this point it really just makes sense to bring in somebody that has experience leading a company of this scale," Mr. Roberts said, citing the company’s rapid growth.

This story has been published from a wire agency feed without modifications to the text.

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