OYO, an online hotel aggregation platform, acquired Novascotia Boutique Homes, a Chennai-based service apartment business. This is the first major acquisition of OYO which will help establish its presence in the segment that includes service apartments and corporate executive hotel stays.
Negotiations for this deal began in October last year. The final deal was struck last month. Though OYO has declined to comment on the actual financial figure, it is speculated that the deal might’ve cost around $1 million.
This acquisition is the first cash deal made by OYO, marking its venture into the brick-and-mortar space. Headquartered in Gurgaon, the company is looking for more opportunities in India and overseas through its rapid expansion plans.
Novascotia was founded by G Madhu Manohar and Girija Madhu and currently has 64 employees that will be accommodated in roles in OYO. The company manages 350 rooms across Kochi, Trivandrum, Hyderabad, Coimbatore and Chennai.
Since 2016, OYO, backed by the SoftBank Group, has made 6 acqui-hires though they were not announced publicly. These deals were primarily made up of stocks rather than cash components. The deals focused more on acquiring teams of these ventures.
OYO was also in talks with a smaller rival company ZO but negotiations fell through in October 2017 as OYO was unable to identify any potential value in business.
Currently, OYO has around 70,000 rooms operating under the brand. In south India, OYO operates across Kerala, Telangana, Tamil Nadu, Andhra Pradesh and Karnataka with a total of around 16,000 rooms. The fast-growing hotel aggregator is targeting 1,80,000 rooms by the end of 2018 under its wing in India. The new acquisition will add to its core business and help the company reach its annual target.
OYO had raised $250 million from global investors. OYO’s CEO Ritesh Agarwal had stated earlier that a significant portion of the funds will be used to finance acquisitions.