By Keiko Morris 

India's biggest lodging company has acquired the Hooters Casino Hotel Las Vegas, its first U.S. property purchase under a global expansion.

Oyo Hotels & Homes and its partner Highgate, a New York-based hotel investment and management company, paid $135 million, according to people familiar with the matter. The acquisition, near the Las Vegas Strip, is being renamed Oyo Hotel & Casino Las Vegas.

The six-year-old budget hotel company already ranks among the world's largest hotel chains. Oyo has more than 1 million hotel rooms and 23,000 hotels world-wide through franchising and other partnerships. It has raised about $1.5 billion from SoftBank Group Corp. and others.

The 25-year-old founder and chief executive, Ritesh Agarwal, is pursuing a global expansion, and the U.S. market is a crucial part of that effort. In June, Oyo announced it was investing $300 million to boost the number of hotels in the U.S. At the time of the announcement, the company had 50 U.S. hotels. Today, it has 112 hotels and expects to have nearly 150 hotels by the end of this month.

"We've been opening one building per day across the United States," said Mr. Agarwal. "That is just a starting point, and one hotel per day will look like a very small number."

He said the 657-room Las Vegas property is key to the U.S. expansion. The hotel becomes the largest under the Oyo brand and is located in the biggest U.S. hotel market in terms of number of rooms.

Oyo lacks the brand recognition of such budget competitors as Days Inn, Motel 6 and Econo Lodge, and it has less experience in the market. But Mr. Agarwal built the Oyo chain, officially known as Oravel Stays Pvt. Ltd., by wooing independently owned small and midsize hotels with a number of perks and innovations not regularly offered in the industry.

Oyo has created its own listing platform and an online reservation system with an algorithm that analyzes and adjusts prices to help owners maximize revenue.

The company offers its hotel owners money to upgrade their properties in exchange for fees. Oyo has created apps for use by hotel cleaners, sales staff and customers.

"Given their recent history, we expect them to become a very strong brand in the U.S.," said Neil Luthra, principal at Highgate.

Oyo and Highgate, which purchased the Las Vegas hotel from Junius Real Estate Partners and Trinity Hotel Investors LLC, plan to spend about $20 million on renovations, according to a person familiar with the deal. It will be run under the Oyo brand and remain open during the transformation.

Oyo intends to upgrade furnishings, add art and change the interior design to appeal to younger customers and families that have increasingly become part of the Las Vegas tourism market, Mr. Agarwal said.

The renovated properties will "create the image of the brand as new or modern," said Bjorn Hanson, a hotel industry consultant.

The Las Vegas hotel has restaurants and bars, a pool and a 24-hour gym, making it part of a limited but growing collection of Oyo's upscale lodgings.

While Hooters is known for waitresses in tight tank tops, Oyo is sticking with an approach it believes will appeal to its customer base, including families.

"Definitely Hooters appeals to a completely different customer segment," an Oyo spokeswoman said.

Write to Keiko Morris at Keiko.Morris@wsj.com

 

(END) Dow Jones Newswires

August 23, 2019 05:44 ET (09:44 GMT)

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