India's Oyo Rolls Dice With Purchase of Las Vegas Hooters Hotel
23 August 2019 - 7:59PM
Dow Jones News
By Keiko Morris
India's biggest lodging company has acquired the Hooters Casino
Hotel Las Vegas, its first U.S. property purchase under a global
expansion.
Oyo Hotels & Homes and its partner Highgate, a New
York-based hotel investment and management company, paid $135
million, according to people familiar with the matter. The
acquisition, near the Las Vegas Strip, is being renamed Oyo Hotel
& Casino Las Vegas.
The six-year-old budget hotel company already ranks among the
world's largest hotel chains. Oyo has more than 1 million hotel
rooms and 23,000 hotels world-wide through franchising and other
partnerships. It has raised about $1.5 billion from SoftBank Group
Corp. and others.
The 25-year-old founder and chief executive, Ritesh Agarwal, is
pursuing a global expansion, and the U.S. market is a crucial part
of that effort. In June, Oyo announced it was investing $300
million to boost the number of hotels in the U.S. At the time of
the announcement, the company had 50 U.S. hotels. Today, it has 112
hotels and expects to have nearly 150 hotels by the end of this
month.
"We've been opening one building per day across the United
States," said Mr. Agarwal. "That is just a starting point, and one
hotel per day will look like a very small number."
He said the 657-room Las Vegas property is key to the U.S.
expansion. The hotel becomes the largest under the Oyo brand and is
located in the biggest U.S. hotel market in terms of number of
rooms.
Oyo lacks the brand recognition of such budget competitors as
Days Inn, Motel 6 and Econo Lodge, and it has less experience in
the market. But Mr. Agarwal built the Oyo chain, officially known
as Oravel Stays Pvt. Ltd., by wooing independently owned small and
midsize hotels with a number of perks and innovations not regularly
offered in the industry.
Oyo has created its own listing platform and an online
reservation system with an algorithm that analyzes and adjusts
prices to help owners maximize revenue.
The company offers its hotel owners money to upgrade their
properties in exchange for fees. Oyo has created apps for use by
hotel cleaners, sales staff and customers.
"Given their recent history, we expect them to become a very
strong brand in the U.S.," said Neil Luthra, principal at
Highgate.
Oyo and Highgate, which purchased the Las Vegas hotel from
Junius Real Estate Partners and Trinity Hotel Investors LLC, plan
to spend about $20 million on renovations, according to a person
familiar with the deal. It will be run under the Oyo brand and
remain open during the transformation.
Oyo intends to upgrade furnishings, add art and change the
interior design to appeal to younger customers and families that
have increasingly become part of the Las Vegas tourism market, Mr.
Agarwal said.
The renovated properties will "create the image of the brand as
new or modern," said Bjorn Hanson, a hotel industry consultant.
The Las Vegas hotel has restaurants and bars, a pool and a
24-hour gym, making it part of a limited but growing collection of
Oyo's upscale lodgings.
While Hooters is known for waitresses in tight tank tops, Oyo is
sticking with an approach it believes will appeal to its customer
base, including families.
"Definitely Hooters appeals to a completely different customer
segment," an Oyo spokeswoman said.
Write to Keiko Morris at Keiko.Morris@wsj.com
(END) Dow Jones Newswires
August 23, 2019 05:44 ET (09:44 GMT)
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