Last Friday (4), news broke that the Japanese investor and Oyo Rooms launched a joint company: Oyo Latam. This new venture will oversee Oyo’s ops in over 1,000 hotels, mainly from Brazil and Mexico. Moreover, both partners shall be equally represented on the company’s board of directors.
SoftBank drew money from its US$5 billion Latin America Fund to finance this new project. However the exact amount it pitched is unknown.
I know, I know, Oyo Rooms isn’t from Latin America. But this shift in events gives reason to believe there’s more to the industry and the pandemic shouldn’t cloud our judgement on the matter.
Case in point is the fact that other investors and accelerators alike are pitching into travel-related startups from the region, so don’t count them out just yet.
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SoftBank and Oyo’s ups and downs
SoftBank is one of the biggest backers of Indian unicorn, Oyo Rooms. The hospitality startup had been making headlines for layoffs in China, India as well as for furloughing employees in Europe and the United States.
In Latin America, around 500 employees were laid off from its office in Brazil.
To top it all off, it’s also facing lawsuits from unhappy hotel partners for bills that have gone unpaid.
And much like fellow portfolio company, Rappi, it too has spent a greater share of 2020 seeking the path to profitability. Which means stalling aggressive growth plans.
With Oyo Latam, it would appear that its operations in the region will be a big piece in that vision for the future.
Tourism: Down, but not out in Latin America
Oyo and SoftBank are not alone in venturing further into the hospitality industry of Latin America.
And even throughout the pandemic a couple of companies have managed to raise equity funding.
For example, Colombian Awake Travel closed US$500,000 to push for more eco-friendly tourism experiences. Likewise, Mexican Rotamundos has managed to raise US$1.4 million to scale its booking platform.
So while the industry isn’t experiencing its best moment, things will get better, give or take two or three years.
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