Strengthening Business in Indonesia, OYO Prepares Investment Fund of 4,2 Trillion Rupiah

OYO announced a new commitment in their investment in Indonesia to US$300 million or equivalent to 4,2 trillion Rupiah. This new commitment was announced after the company's success in penetrating 5 million subscribers throughout 2019.

The founder and CEO of OYO Ritesh Agarwal directly conveyed a number of achievements that they had obtained while operating in Indonesia. Ritesh said, currently OYO has partnered with 1.000 hotels and 27.000 rooms in Indonesia 100 cities in Indonesia. He said the figure was achieved faster than their target of one year.

"We once said that we would invest US$100 million last year. Now we will renew that investment to US$300 million in light of our success here," said Ritesh.

OYO Indonesia Country Head Rishabh Gupta explained that the additional investment of US$200 million was budgeted for the next one year. According to him, the funds will be used primarily for the revitalization of hotel buildings and training of scattered staff

OYO Indonesia Country Head of Business Development Agus Hartono Wijaya also added that the disbursement of the investment was decided because they realized that there were quite a number of hotels in a number of cities whose quality was below standard. Renovation is their priority step to attract customers.

"Let's say their occupancy is below 50 percent for example. Exactly that value OYO to increase their occupancy to above 50 percent. How do you do it by renovating it first," Agus added.

Differences in access and infrastructure of an area also affect the quality of various hotels. This disparity in hotel quality is what OYO is trying to resolve through their additional investment.

Focus on the east

One of the focuses of OYO's expansion in Indonesia is in the eastern region. The huge tourism potential and the growing hospitality industry are the reasons why OYO is aiming there.

However, the expansion effort will not be easy because the passion for the hospitality business there is sluggish.

Chairman of the Indonesian Hotel and Restaurant Association (PHRI) Haryadi Sukamdani said that hotel occupancy rates in the eastern region down 30 percent. Similar to PHRI data, the Central Statistics Agency also recorded a decrease in the occupancy rate of star hotels in March 2019 by 4,21 points to 52,89 percent compared to the same period last year. Haryadi said the increase in flight ticket prices was the main reason for this to happen.

However, Rishabh believes that the increase in air ticket prices will not have much effect on the hotel industry. In addition to the Indonesian government's efforts to continue to improve tourism infrastructure, it also continues to invest in improving the quality of hotel services in collaboration with OYO.

"Moreover, Indonesians do not only travel by plane, many also use land infrastructure, such as when going to Bandung or Yogyakarta. For OYO, hotel occupancy is not affected by the increase in air tickets," said Rishabh.

OPEN program for asset owners

At the same time, OYO also launched OPEN which is aimed at partner owners of assets. Simply put, this program is a place for asset owners to exchange ideas, information, and others that can support business.

In this program, OYO is committed to sharing revenue on time, providing access to affordable financing, helping hotel marketing, and providing technology as a solution for hotel owners.