UPDATE 1-India’s Oyo says SoftBank’s Yahoo Japan exits Japan room rental venture

* Oyo has expanded rapidly but faces pushback from hoteliers

* Oyo is backed by SoftBank’s Vision Fund (Adds background on Oyo expansion)

By Sam Nussey

TOKYO, Dec 19 (Reuters) – 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.

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. (Reporting by Sam Nussey; Editing by Muralikumar Anantharaman and Arun Koyyur)