OYO is struggling in Japan due to coronavirus, but announces a new brand in the country, along with funds for hoteliers

• OYO Hotels Japan announced on March 18 a new brand "OYO Ryokan”.
• The company also announced that it would provide funding to hotels and inns that were struggling to attract customers because of the new coronavirus.
• The scale of deployment in Japan has been reported to be 75,000 rooms by March 2020, but as of December 2019 it is far short of 5762 rooms.

OYO Hotels Japan, a joint venture established in Japan by OYO Hotels & Homes, a hotel venture from India, announced on March 18 a new brand "OYO Ryokan" based on the concept of "hospitality". At the conference, he talked about OYO's future strategy in the hotel business, where demand is continuing to shrink due to the impact of the new coronavirus.

New Corona Countermeasures "We're Ready"

With the spread of the new coronavirus, hotel operators across the country have been hit hard by a significant drop in occupancy rates. At the conference, the company announced a strategy to strengthen its entry into the inn business, along with a new brand called OYO Ryokan.

He hopes to raise awareness by using digital advertising in the future.

"There was a debate over how to invest when the demand is shrinking, but it's important to get as many people to know the ryokan in terms of supporting partners (which are in trouble),” said OYO Hotels Chief Operating Officer Ryota Tanozaki.

On March 13, the company announced that it would provide funding to hotels and inns that were struggling to attract customers because of the new coronavirus.

In response to an interview with Business Insider Japan, OYO Hotels Japan's operating partner, Business Partner, Prasn Chaudhry said, “"In addition to technology and operational support, in the coming months (until the new coronavirus converges), we will support a few percent of that based on the profits of the previous year, a decision made because of our long-term commitment to the Japanese market. We don't have a clear budget, but we're very equipped to do that.”

Global revenues 4.5 times higher, Japanese market struggling

OYO Hotels was launched in 2013 and is a huge hotel chain with the number of rooms in the world in just under 10 years. One of its features is a business innovation that utilizes artificial intelligence (AI) to analyze hotel vacancy data and optimize hotel rates according to supply and demand.

Entered Japan in 2019. Following the apartment leasing business, it has also started a hotel business in Japan. In October 2019, it was reported that the company raised $ 1.5 billion (approximately 160 billion yen) from SoftBank Vision Fund and other sources. .

However, with the rapid growth of the global market, troubles with hotel owners who have franchise contracts have been highlighted in the Japanese market. Some reports have also raised the issue of OYO member hotels not paying from OYO or reducing the guaranteed minimum income.

The scale of deployment in Japan has been reported to be 75,000 rooms by March 2020, but as of December 2019 it is far short of 5762 rooms.

At a press conference on March 18, there was a precautionary note that "the details of the individual contract with the hotel owner have not been disclosed, so we may refuse to answer questions on the day." Also avoided the statement.

Aim for cooperation and strengthening with SoftBank

According to Tech Crunch, OYO Hotels & Homes, which operates OYO Hotels, announced in March 2020 a 5,000 job cuts, more than 15% of the global workforce.

Business Insider Japan asked at a conference about this reason, said OYO Hotels Japan operating partner Chordley, "Our advancement in machine learning has enabled many things to be replaced by technology. We decided to go for more efficiency (layoffs). "

In December 2019, the apartment rental business "OYO LIFE", which bears the OYO brand, canceled its partnership with Yahoo, which had been working to enter the Japanese market.

Still, the press emphasized that it would like to strengthen cooperation with SoftBank Group, the largest shareholder of Yahoo's parent company (Z Holdings).

"We also want to collaborate with various services provided by SoftBank's investments, such as Yahoo, LINE, PayPay, and DiDi. We are also considering providing coupons that can be used when staying at OYO Hotels to these partner companies," said Tanozaki.

See Also:
Ritesh Agarwal ready to offer OYO rooms as quarantine centres as Coronavirus spreads

By: Rio Nishiyama, Business Insider Japan