- Credit lines range from BRL 5,000 to BRL 3 million, with a grace period of up to 6 months for repayment and interest rates from 0.84% per month;
- Mexico and Brazil are the company’s main markets in Latin America;
- About 450 hotels operate under Oyo’s flag in Brazil. A bit more than half of these are open, with occupation resuming, at an average rate of 20%.
The Indian unicorn Oyo made a partnership with the Brazilian fintech Creditas to make it easier for independent hotels to obtain credit amid the severe economic crisis the sector has been passing through, as a consequence of the lack of demand due to Covid-19.
Through Creditas, hoteliers in Oyo’s chain are able to raise funds to maintain cash flow, working capital and other expenses with credit lines ranging from BRL 5,000 to BRL 3 million, with a grace period of up to 6 months for repayment and interest rates from 0.84% per month, besides the possibility for paying the debt in up to 20 years.
As LABS has shown, Oyo’s Brazilian division has been putting efforts on dealing with the challenging scenario and preparing for a reality that may not return to be the one seen before the pandemic, at least until the arrival of a vaccine against the coronavirus.
Eduardo Zucareli, VP of Brazilian operations at Oyo, told LABS that from the company’s perspective, reality has changed and the hotel industry, regardless of the vaccine, will be much more linked to trust that guests may lay on properties and brands.
“We see that the pandemic scenario is a difficult time for the hospitality sector as a whole, and perhaps what we saw as the most challenging factor is the access of hoteliers to credit. For this reason, we looked for Creditas and managed to close this partnership, which I consider tailored for our hoteliers because we got reduced rates”, he says.
The entire loan process can be done online and the hotelier is able to make a simulation of the loan. He also highlighted the grace period up to six months for the hotelier. “We designed two forms of loans always focused on debt repayment, cash flow and some type of renovation. Hoteliers can use, for instance, a car or a property as collateral”, explains Zucareli.
What will the future of hotel chains be like in Brazil?
Even though the company entered a contingency period, laying off a significant part of its staff over the past months, Oyo is feeling optimistic about Brazil. “I believe in a seasonality aspect, so we see a change [in habits] because, at first, we had a lot of people doing social isolation. The schools changed their calendars, there were events canceled, postponed, all of which affected the chain in general. All of this together ends up changing behavior. Now, we do believe in the resumption [of the sector], we are very confident with Brazil”, he says.
A little over a year since arriving in the country, Oyo has just reached its millionth guest. Globally, even in the midst of the pandemic, more than 3,600 new hoteliers have joined Oyo’s chain in recent months. The company, which works with independent hotels and facilitates the search for accommodation on a digital platform, says that, as the startup lends its brand and standardizes environments, 88% of hotels in Brazil that are independent can benefit from it, since they are in need of support, thus, they end up having great potential to become an Oyo partner.
Oyo’s earnings come from a rate charged from hotels, and at the beginning of the pandemic, this fee was slashed by 50%. Now, it has returned to the regular rate. “When we identified the crisis, we took a series of measures, the crisis committee discussed daily developments, interrupted international trips, created plans of action. In the most acute period of the crisis, we were trying to understand the large impact in Brazil, so we promoted a rate change, and now we already operate at our normal level”, he told.
Mexico and Brazil are the company’s main markets in Latin America. About 450 hotels operate under Oyo’s chain in Brazil, and the company says that a bit more than half of their hotels are operating today, in a phase of resumption of occupation, with an average of 20%.
The partnership with Creditas is open to every Oyo partner, regardless of whether they have returned their operations or not. “There are cities that have legal restrictions for the operation, others that can only operate partially, and others that can operate normally, there are several scenarios”, says the executive.