Do you intend to use the raspberry as media player, or only for Hyperion alone? If the latter, I'd recommend using Hyperion standalone on a stretch lite image rather than OSMC.
Unable to connect to host points to Hyperion not even running properly, or not configured right.
Either way, the Arduino should play a color sequence on power up without any influence from the raspberry already, so if that fails, your sketch or sketch settings for the arduino are wrong in the first place, or the wiring of the arduino is.
Without some additional logs, config files and what sketch you used, all we can do is guess.