Oyo Hotels and Homes has made its first property acquisition in the U.S, purchasing the Hooters Casino Hotel Las Vegas, the company announced Friday.
The deal, completed in partnership with hotel investment and management company Highgate, is said to be valued at $135 million, according to a Wall Street Journal report. The 657-room property will also be renamed Oyo Hotel & Casino Las Vegas after renovations are completed later this year.
Oyo CEO Ritesh Agarwal called the move critical to the budget hotel chain’s U.S. expansion strategy. The U.S. is already Oyo’s fastest growing market by property openings, Skift reported last month. Oyo also currently has more available rooms in China than in its home market of India, and the U.S. is expected to follow suit.
In June, the hotelier committed $300 million toward building a footprint in major U.S. cities, such as New York, San Francisco, and Los Angeles. Oyo currently has 112 hotels available to customers in 21 states, up from 50 hotels in 15 states at the beginning of last month.
“With our newest hotel in Las Vegas, we are excited to cater to a completely different audience segment and are certain that this will be the perfect start to Oyo’s journey in Las Vegas,” said Agarwal, in a statement. Oyo’s 35,000 square-foot flagship casino will be one of the chain’s growing upscale lodging options, offering guests two restaurants, four bars, a fitness center, and outdoor pool — a far cry from typical motel accommodations.
While the company has its skeptics about how it will make a low-cost hotel business model work in the U.S., where there is already much competition from the likes of Choice Hotels and Wyndham Hotels and Resorts, Oyo remains confident that it will be the cheapest lodging option for travelers through its dynamic pricing strategy.
Oyo’s rapid expansion in the U.S. to this point has been accomplished through consulting and revenue management agreements, where the startup’s investors, including SoftBank and Sequoia Capital, supply funds for renovations to owners in return for fees paid to Oyo.
Copyright 2019 Skift. All rights reserved. From https://skift.com. By Danni Santana, Skift.