Photo/Dfic

Feb. 15 (NBD) – China's largest ride-hailing platform Didi Chuxing has recently invested 100 million U.S. dollars in India's biggest budget hospitality company OYO Hotels & Homes, bringing the latter's 1-billion U.S. dollars financing round to a close, which valued OYO at 5 billion U.S. dollars, Indian news outlet The Economic Times reported Thursday. OYO's spokesperson only confirmed the closure of the financing round.

News outlet the 21st Century Business Herald contacted Didi and OYO, but the person in charge of the public relation at OYO declared that is not the official news and refused further comment on the report, and Didi did not offer any replies.

The relationship between the two companies dates back to 2017 when OYO made inroads into the Chinese market. At that time, their advertising tagline read "Ride comfortably with Didi, Stay comfortably with OYO". 

Sources familiar with the matter revealed the collaboration will be deepened as the two companies grow globally, according to The Economic Times.

In fact, this is not the first time Didi made its foray into the hotel industry. In July 2018, the car-hailing firm announced a strategic partnership with Booking Holdings, a U.S. online travel agency (OTA), and obtained an investment of 500 million U.S. dollars from the U.S. partner.

The tie-up enabled Didi's passengers to directly reserve accommodations through Booking Holdings' online booking platforms Booking.com and Agoda.

It was then predicted by the industry that Didi's move would bring new challenges to domestic OTA giants including Ctrip.com, Tuniu and Tongcheng-Elong, and it also signified that the tourism industry will see more and more crossover cooperation.

At the same time, Ctrip.com and Meituan-Dianping's advance into the mobility sector will also beget intense pressure to the car-hailing company.

Zhao Huanyan, chief knowledge officer of consulting institute Huamei's hotel division, told the 21st Century Business Herald that industries such as clothes, food, accommodation and mobility actually target the same consumer base. 

OYO, through Didi's investment, can not only obtain funds for further development but also attract more user traffic, Zhao added.

Since 2018, hotel operators have begun shifting focus to the integration and chain operation of independent hotels. Behemoths such as InterContinental Hotels Group and Crip.com already made efforts to team up with independent hotels.

Wilson Li, partner and chief finance officer at OYO, forecasts that the integration of independent hotels will be an inevitable trend in the development course of China's hotel industry.

After rapid growth over the past years, the whole industry is close to the saturation point. Over 80 percent hotels in the massive market are independent ones located in third-tier and smaller cities, which is a new "Blue Ocean", presenting a niche segment worth 1 trillion yuan (14.8 billion U.S. dollars), he claimed.

Email: wenqiao@nbd.com.cn