OYO Plans £50 Million Investment in UK for Premium Hotel Expansion

OYO has announced a significant expansion of its UK operations, with plans to invest £50 million (approximately Rs 536.95 crore) over the next three years. This marks a strategic shift toward the premium hotel segment in one of its key international markets.

The hospitality major is pivoting its UK strategy toward premiumization by acquiring high-end inventory and securing long-term leases and management contracts. The company is currently in advanced negotiations with major hotel chains and real estate firms for asset management deals.

According to Punit Yadav, country head of the UK, "OYO entered the UK in 2018, growing to 200+ properties across 65 cities. While serving the budget segment, it now focuses on premium expansion through leasehold and management contracts. The company also plans to introduce popular European brands to the UK market."

The investment is expected to create 1,000 direct and indirect jobs over the next three years while attracting more international travelers, boosting the local hospitality sector. OYO has already begun executing its premium expansion strategy, with plans to open over 40 premium self-operated hotels in the current financial year. The company has already onboarded 18 hotels and aims to add 22 more across key cities, including London, Birmingham, Manchester, Liverpool, Glasgow, Bristol, Cardiff, and Edinburgh.

This expansion follows OYO's initial entry into the UK's premium segment with the launch of SUNDAY Lansbury Heritage in Canary Wharf last year. The investment announcement comes a month after the company secured Rs 650 crore (approximately $65 million) from Redsprig Innovation Partners, an affiliated entity of founder Ritesh Agarwal, who also led a $175 million round through his Singapore-based fund, Patient Capital, in August last year.

The IPO-bound company's financial performance shows signs of improvement despite flat revenue growth. In FY24, OYO reported revenue of Rs 5,389 crore, slightly down from Rs 5,464 crore in FY23. However, the company achieved profitability with a net profit after tax (PAT) of Rs 230 crore in FY24, driven by a 16% reduction in overall expenditure.