India's no-frills hotel giant eyes European markets

An Indian startup is turning its attention towards usurping the West's largest hotel chains after establishing itself as India's biggest player and shaking up the Chinese market.

Oyo Rooms, which specialises in no-frills accommodation, was only formed in 2013 but is already worth an estimated $5 billion after receiving funding from international venture capitalists.

The app-based company has quickly become India's largest hotel firm by number of rooms and one of the biggest in China as it pursues an aggressive expansion abroad.

Oyo, as it is commonly called, entered the British market in September and is eyeing other European countries, fuelled by money from Japanese group SoftBank and America's Sequoia Capital.

"We are seeing great results in all our global markets and are growing aggressively in London," Oyo's founder, 25-year-old Ritesh Agarwal, told AFP.

"We will definitely consider expanding into the broader European region," he added in the telephone interview.

Oyo teams up with owners of budget hotels to help connect them with tourists looking for cheap but clean accommodation that meets certain hygiene standards.

Oyo staff carry out inspections of hotels. If they are deemed to be up to scratch then they are made available for booking on Oyo's website and mobile app.

Many offer hot water, free wifi and regular laundry services for as little as 1,800 rupees ($25) a night, well below what mid and high-range hotels charge. The startup takes a commission for facilitating bookings while the hotels -- often small, independent ventures -- are re-branded as an "Oyo hotel".

The company's distinctive red and white logo has been put up outside thousands of Indian hotels across the vast Asian country over the past five years.

Those signs could soon become omnipresent across Europe's main cities, unsettling major hotel chains like Marriott International if Agarwal has his way.

"We want to bring quality affordable spaces for travellers and help neighbourhood hotels beat the big hotel chains," he said.

"Small asset owners are finding it hard to survive while the big hotel companies are continuing to win in every neighbourhood.

"We want to lead and empower those small franchise owners and make sure that they thrive," Agarwal added.

The entrepreneur, now one of India's youngest billionaires, founded Oyo when he was just 19 years old.

He had seen enough dingy hotels promising services that they didn't offer to know that there was a gap in the market for a company that would give accommodation a stamp of approval.

It started with a tie-up in New Delhi and now vouches for 164,000 hotel rooms in India and 180,000 in China.