August 23, 2019 / 11:09 AM / 3 months ago

SoftBank-backed Oyo, known for budget stays, to rebrand Hooters hotel in Vegas

BENGALURU (Reuters) - SoftBank Group Corp-backed Indian hospitality startup Oyo will rebrand Hooters Casino Hotel in Las Vegas in a deal that a source with knowledge of the matter said was worth $135 million.

FILE PHOTO: The logo of OYO, India's largest and fastest-growing hotel chain, installed on a hotel building is pictured in an alley in New Delhi, India, April 3, 2019. REUTERS/Adnan Abidi

Oyo said on Friday it would partner with restaurant operator Highgate, which runs the Hooters hotel in Vegas, to rebrand it Oyo Hotel and Casino. The hotel, with 657 rooms and a 35,000 square-feet casino located near the famed Las Vegas Strip, will continue to be managed by Highgate.

Oyo and Highgate will spend $20 million in total to renovate the hotel, which will remain open during the transformation, the source said.

The deal, Oyo’s first such in the United States, suggests the startup is setting its sights high, but founder Ritesh Agarwal told Reuters in an interview that the company would continue to focus on its mainstay: large numbers of middle class travelers looking for affordable accommodation.

“Our focus on economy and mid-scale hotels will continue to remain, because, all said and done, that’s the largest population of the world,” Agarwal told Reuters on Thursday, ahead of the deal, speaking over the phone from Gurugram, near New Delhi.

As it looks to expand and targets the world’s middle class, Oyo plans to hire up to 4,000 mid-and-senior level employees for domestic operations in the next six months, Agarwal said. Tens of thousands of junior employees, including front office staff, are likely to be hired for the hotels it franchises or leases out, he said.

Oyo, founded by 25-year-old Agarwal in 2013, started as a budget hotel aggregator in India. It expanded rapidly into markets such as China, Europe and the United States, and now manages over 23,000 properties across the world.

Valued at about $10 billion, Oyo now caters to an increasing number of corporate travelers who frequent its hotels because of affordable rents, cushioning the company from seasonal changes associated with the industry.

Agarwal, who recently took out a loan to buy back $2 billion worth of equity in the company, said he intended to spend on building technology and talent, not on discounts.

India and China account for two-thirds of the company’s revenue, while a fifth comes from Europe and the United States, Agarwal said.

Reporting by Derek Francis in Bengaluru; Editing by Sayantani Ghosh and Subhranshu Sahu

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