Yahoo Finance Accor’s Franchise Deal in Singapore Underscores Mounting Challenges for Budget Chain Oyo
Oyo Hotels & Homes has a competitor in Accor Hotels, which has just inked a deal to franchise 15 budget hotels in Singapore which are branded Fragrance Hotel.
Even before there was an Oyo, or the other foremost Southeast Asia budget chain RedDoorz, Fragrance was offering “good price, location [note that in many cases this means close to public transport], service, cleanliness and hassle-free booking experience,” says its website.
A room at Fragrance Hotel in Balestier, an area on the fringes of the city, costs $64 for a stay on August 17. Price-wise and building-wise, Fragrance hotels sure sounded like a good target for Oyo Hotels & Homes to convert to its brand.
Except its owner, James Koh, has just signed a franchise with Accor.
Singapore’s hotel market is tight for development, and this new deal shows the Paris-based global hotel group is getting more aggressive and creative in seeking out less high-profile owners and developers, such as Global Premium Hotels, which operates Fragrance Hotel.
Accor says the 15 hotels will undergo asset enhancement initiatives to be in line with its global standards, and will be re-branded. Thirteen will be Ibis Budget and the remaining two Mercure and Ibis Styles. The agreement brings Accor’s total network in Singapore to 30 hotels and 7,625 rooms.
An Oyo spokesperson said in response to Accor’s move: “We are focused on innovating for tomorrow and welcome competition as it keeps us on our toes.”
As Oyo grabs attention — it recently announced itself as the world’s third largest chain overtaking Accor, Wyndham, and InterContinental Hotels Group — it can’t expect the globals not to take more notice of the budget sector.
For its part, Oyo has just appointed a CEO for Southeast Asia and Middle East, two regions that are key to its global expansion as the budget hotel chain heads towards an expected IPO in two to three years.
Mandar Vaidya, CEO Southeast Asia and the Middle East, Oyo. Source: Oyo Hotels and Homes.
Mandar Vaidya was with McKinsey & Co from 2002 to 2017. A qualified medical doctor, his focus at McKinsey was on operations, both hospitals and pharmaceutical companies, and health policy. He also led the Delhi office of McKinsey for four years.
Vaidya’s appointment strengthens Oyo’s push to show it has a strong global management team. Oyo’s first coup with this was when former CEO of IndiGo, India’s biggest carrier, joined the chain last year as it CEO for India and South Asia. Since then, it made new hires including Rohit Kapoor, CEO, New Real Estate Businesses; Sam Shih, COO, Oyo China; Marcus Higgins, head of expansion, Oyo U.S.; Jeremy Sanders, head of OYO U.K.; Tadeus Ari Nugraha, operations head Indonesia; and Erica Perry Briody, vice president of talent acquisitions Oyo U.K.
The chain also has country heads, such as Dushyant Dwibedy in Vietnam and Rishabh Gupta in Indonesia, to drive expansion.
In Southeast Asia and the Middle East, Oyo operates in Indonesia, Malaysia, the Philippines, Vietnam, the UAE and Saudi Arabia.
“Under Mandar’s leadership, we look forward to establishing a strong relationship with asset owners in these regions while staying true to our mission of delivering a chic hospitality experience at hard-to-ignore prices,” Oyo’s founder and CEO Ritesh Agarwal said in a statement.
Oyo aims to add two million rooms in Southeast Asia by 2025, from over 32,600 rooms currently, 21,000 of which are in Indonesia, its figures show.
In the Middle East, it claims to have over 8,000 rooms, with over 5,800 rooms of them in Saudi Arabia. The chain forayed into the UAE in October last year, and Saudi Arabia last February.
The company also has a partnership with the kingdom’s Ministry of Hajj and Umrah to provide the ministry with its technology suite such as Oyo OS and Krypton which will “enable them to deliver an elevated hospitality experience” in the holy cities of Mecca and Medina, said Oyo.
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