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Property

SoftBank-backed Oyo quits rental business in Osaka and Nagoya

Indian hotelier to focus on Tokyo while pursuing hotel operations as planned

Oyo lets users rent rooms online without having to pay broker fees or deposits. (Nikkei Montage) 

TOKYO -- Indian budget hotel operator Oyo Hotels and Homes will withdraw from its struggling real estate rental business in the Japanese cities of Osaka and Nagoya, focusing its resources on greater Tokyo to improve earnings.

Since entering the market in March, the Indian startup had expanded its business by working with SoftBank Group, a major shareholder in the company. Through the Oyo Life service, it leases vacant homes and rooms from owners and rent them out via its website, touting that renters can complete the transaction online without paying broker fees and deposits.

But low occupancy rates have dogged the business, and Oyo had disputes with some property owners over such issues as guaranteed revenue. The company will continue to provide service to existing renters.

The exit from Osaka and Nagoya -- the two largest cities outside greater Tokyo -- is expected to result in a 20% to 30% decrease in the roughly 8,000 available rental properties. 

Oyo Technology and Hospitality Japan, the operator of Oyo Life, used to be a joint venture with Z Holdings, formerly known as Yahoo Japan. Z Holdings, which is under the umbrella of SoftBank, sold off its holdings in November in light of the poor performance of the rental business.

Separate from the rental business, Oyo has hotel operations in Japan through a joint venture with SoftBank and SoftBank's Vision Fund. SoftBank is expected to continue to support Oyo's operations in Japan.

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