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Home / Investment / News
India’s hotel chain Oyo plans US$50 million investment in Vietnam
Ngoc Mai 10:22, 2019/07/03
In the past three months Oyo has opened 90 hotels with 1,500 rooms in six cities in Vietnam.
India’s leading hospitality Oyo Hotels & Homes said it would invest US$50 million to expand in Vietnam, targeting to grow 20,000 rooms in 10 cities by the end of next year, Skift reported. 
 
Illustrative photo.
Illustrative photo.
In the past three months Oyo has opened 90 hotels with 1,500 rooms in six cities in Vietnam, namely Hanoi, Ho Chi Minh City, Danang, Phu Quoc, Vung Tau, and Nha Trang, revealed Oyo’s Country Head for Vietnam Dushyant Dwibedy in a statement. 

Vietnam is an important market for Oyo in Southeast Asia, said Dwibedy, adding the company’s priority is to ensure that it brings Oyo’s top-notch service to the country, with the goal to become Vietnam’s most loved hotel chain.

According to Dwibedy, Oyo’s rapid expansion in Vietnam was down to several factors. For one, Vietnam is unique for having many “mini” hotels, that is, buildings with 20 to 40 rooms, often even smaller than 20 rooms. 

What’s more, having entered Indonesia, Malaysia, and the Philippines, Oyo now has Southeast Asia learnings. The support of its teams in the region was invaluable in identifying hotel conversions, he added.

Currently the company achieves an average room rate of US$17 in Vietnam currently, he said. While this may seem low, the other side of the revenue coin, occupancy, rises dramatically with an Oyo franchise. He cited the Oyo Center Danang as an example of occupancy rising 150% after a full-scale Oyo redesign and branding. This, along with Oyo’s suite of technology tools such as pricing and revenue management, resulted in a 50% increase in revenue in three months for the hotel owner, he said.

“We are able to show such case studies to asset owners, which helped with the conversions of properties to Oyo in Vietnam in the past three months,” Dwibedy said.

The question however remains whether Oyo’s claim of doubling revenues will translate to profitability for owners and could be achieved across the board for its franchisees.

Competition is also getting more fierce in Vietnam. The country does not lack good budget hotels. There’s everything from guesthouses and mini hotels to boutique hotels and hostels, run by enterprising Vietnamese who want a share of the country’s booming tourism industry.
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Homesharing is also growing massively, as reported by Skift, adding by now 40,000 active listings to Vietnam’s accommodation pool. On top of this is an impending 40% increase in hotel room supply, although these rooms are largely in the three-star to five-star segments.
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