The company plans to take this brand to international markets as well.
Priyanka SahayMoneycontrol News
Ahead of a mega funding round, SoftBank-backed hospitality firm Oyo is finally letting go of its budget accommodation provider’s tag with the launch of a luxury resort range under the brand name Palette, according to two sources privy to the development.
The first property, in Pondicherry, will cost Rs 8,000 per night, which is almost triple of what an average room costs at Oyo currently.
“This will mark Oyo’s entry into the upscale segment, after successfully etching its presence in the budget and mid segment focusing on leisure oriented resorts segment,” Maninder Gulati, Chief Strategy Officer, told Moneycontrol.
Oyo is in talks with more such resorts that will be offering private villas and beaches, gourmet dining and spa, among other things.
The company plans to take this brand to international markets as well after feedback on the first property.
India has a huge bank of unbranded independent resorts and branded assets such as heritage, beach properties and inland. According to Oyo, there are around around 4,000 such properties with over 65 percent of these concentrated in leisure travel locations like Kerala, Goa, Karnataka, Rajasthan and Uttarakhand.
Oyo which was broadly recognized for offering rooms in the three digit price range till about a few years ago has been consistently launching new properties under different price ranges.
It launched a segment called Townhouse to cater to millennial travelers in 2017 with an average price tag of Rs 2,500-3,000.
Now the launch of luxury properties on its platform completes its overall offering across budget, mid-market, premium and luxury properties.
This brings Oyo in direct competition with the likes of Mumbai-headquartered The Indian Hotels Company Ltd (IHCL) which offers multiple brands including luxury brands such as The Taj Hotels and US-based Marriott International, among others.
Oyo which so far used its brand name on its properties is now also creating new structures which will have standalone branding.
In June, Moneycontrol had reported that Oyo launched two brands – Capital O and Edition O to cater to corporate travelers.
Similarly, Palette also is a standalone brand under which different resorts would be available. However unlike Capital O and Edition O which have their own brand names on the properties, Palette properties will have different sub-brand names of their own. The Pondicherry resort for instance is called Le Pondy.
“The new category will operate under the Palette brand name as a part of the Oyo chain of hotels, featuring a stellar range of resorts. We are working towards creating a brand architecture and nomenclature that encapsulates Oyo’s various offerings,” Gulati added.
Started in 2013 by 23-year old Ritesh Agarwal, Oyo used to aggregate select rooms across hotels and offer them on its website.
However, the company received a lot of flak on social media for poor customer service, and poor quality of inventory in some parts of India.
The Gurugram-based company now has a franchisee model, under which it offers customers rooms from exclusive properties that have either been leased by Oyo or are run on a revenue-share basis.
Palette will also be run under a leased model where Oyo will have a full control over the inventory.
Present across three countries China, Malaysia and Nepal besides India, Oyo currently claims to be having 7,000 hotels under its umbrella.
IHCL on the other hand currently runs 145 hotels across 11 countries and Marriott International has a portfolio of 6,500 properties in 30 leading hotel brands across 127 countries.
The development happens at a time when Oyo is in talks to raise around USD 700 million in a fresh round of funding. This round is expected to inflate the valuation of the firm to USD 4 billion, according to reports.
Oyo last raised around USD 250 million in a round led by SoftBank Vision Fund, and another USD 10 million from Nasdaq-listed Chinese hotel operator China Lodging Group, in September.Although the company did not disclose its valuation then, sources said it was around USD 850 million.