Yahoo Japan quits apartment venture with Oyo, offloads 34%

India’s Oyo Hotels and Homes said on Thursday Softbank – controlled Yahoo Japan has quit its Japanese room rental venture, in the latest setback for the fast-growing, money losing startup. Oyo, which is also backed by Softbank Group Corp, said it has bought back the shares in Japanese apartment rental company, Oyo Life, held by internet firm Yahoo Japan, now known as Z Holdings, for an undisclosed amount. Yahoo sold its roughly 30 per cent stake in Oyo Technology and Hospitality Japan, operator of the Oyo Life service, to Oyo in November. The service launched in March, leases vacant homes and rooms from their owners to rent out via its website. It reportedly received multiple complaints from owners about contract issues. While yahoo has not disclosed its reason for leaving the venture, Oyo is believed to be looking to improve the service in light of resolving the capital relationship. Oyo is backed by Japan’s Softbank Group, which also has a stake in Yahoo. Oyo operates a joint venture in its mainstay hotel business in Japan with Softbank’s Vision Fund and Softbank Corp. Hiro Katsuse, who led Oyo Technology and Hospitality when it’s launched, has stepped down as CEO.

Yahoo Japan said it exited the venture Oyo Life, in which it had a 33.9 per cent stake, to focus on other initiatives. The internet firm has led a wave of consolidation in Japan this year, buying online fashion retailer Zozo Inc and scooping up messaging app operator Line Corp. Oyo expanded rapidly in India and abroad by promising to drive up hotel occupancy through its online booking system, but has faced pushback from hoteliers who say they have been blindsided by hidden fees. The startup has been forced to relax expansion targets in Japan, where it launched a hotel business this year that faced complaints over its booking system and promises of payment for room renovations. Softbank, however, remains invested in Oyo’s Japan hotel business, which has expanded by offering hotels minimum revenue guarantees, with Vision Fund and wireless unit Softbank Corp retaining stakes. Yahoo Japan’s exit from the apartment rental venture comes amid widening losses in India for Oyo and projections it may not make a profit there and in China until 2022. Helmed by 26-year old founder Ritesh Agarwal, Oyo is just one Softbank – backed startup where the tech conglomerate’s cash injection has fueled rapid growth but that is under pressure to demonstrate a path to profitability.