$5bil hotel startup was built in five years by a 24-year-old

Clean, affordable hotels in India can seem impossible to find in India. 

Websites can be misleading, and what looked lovely online turns into a roach-infested room in a crumbling building without running water.

Bloomberg reports that Ritesh Agarwal’s solution comes in the form of a booking app. The app promises truth in advertising, and branded hotels that don’t deliver unpleasant surprises. 

Oyo Hotels, a chain he started in 2013, has become the largest in India, The publication cites New Delhi-based researcher Hotelivate.

Agarwal is now heading overseas with his franchise model, which offers a reservation site, paired with a full stack of services for small hoteliers to upgrade their offerings.

The company is currently raising $1 billion from SoftBank Vision Fund, Sequoia Capital and other investors to fund expansion, reports Bloomberg. In November Oyo opened in China.

It started with a single listing in Shenzen. At present, there are over 1,000 Oyo-branded hotels and 87,000 rooms in over 170 Chinese cities.

 Last week it launched in the U.K.,its first developed market.

“By 2023, we will be the world’s largest hotel chain,” said Agarwal, quoted by Bloomberg. “We want to convert broken, unbranded assets around the globe into better-quality living spaces.”

Oyo evaluates properties on 200 factors, such as the quality of mattresses and linens, and water temperature. Hoteliers are required to submit to a makeover, which garners them a red Oyo sign to hang street-side, like a seal of approval. 

Oyo gets 25% of every booking for their hotels. Rooms usually run between $25 and $85.

Agarwal says the number of transactions tripled in the last year, with 90% coming from repeat travelers. No money has been spent on advertising. Currently, 10,000 hotels in 160 Indian cities are listed on the site, he said. 

“Over 150,000 heads rest on our pillows every night,” said Agarwal.

Indian startups have seen a boom recently, over a dozen are now worth more than $1 billion, reports the publication, citing researcher CB Insights. Walmart paid $16 billion for a majority stake in Flipkart, an online retailer founded in 2007.

Funding announced by Oyo values the business at $5 billion, reports Bloomberg, citing a person familiar with the deal who declined to be named. This makes Oyo India’s second most-valuable startup, after One97 Communications, owner of Paytm, a digital payments company with financial backing from Warren Buffett’s Berkshire Hathaway Inc.

A college dropout, Agarwal got the idea for Oyo while traveling India on a shoestring budget. To learn the hotel business from the ground up, he spent a year cleaning rooms at one of them.

But despite all the success he’s seen, Agarwal says his mother keeps nagging him to take a break from the business and go back to college. 

“But why let university interfere with my education?” he said with a laugh.