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OYO Rooms, also known as OYO Hotels & Homes is the third-largest hospitality chain globally providing a comfortable room stay and ensuring the acceptability of the services by the OYO's customers in more than 80 nations. Incorporated in 2013 by Ritesh Agarwal (one of the youngest Indian entrepreneurs, the founder and CEO of OYO Rooms) it has established itself as the fastest-growing network of hotels offline and online.


Headquartered in Gurgaon, it has expanded its reach worldwide within the span of 8 years and by employing over 17,000 employees globally, of which approximately 8000 are in India and South Asia. However, this is not the only reason why OYO has recorded such a huge success. Its excellent marketing strategy has seen to it that it continues to be a leading hotel chain.


OYO’s valuation dropped by $2 billion from $10 billion in 2019 to $8 billion in August 2020 due to uncertainties in the global market. But OYO’s valuation drop is very small compared to other global giants in the sector like Airbnb that dropped by over 50%. 



While traveling to a lot of places and searching for accommodations and food, Ritesh Aggarwal felt the need for budget living spaces and discovered the idea of OYO rooms.  With the launch of single property in May 2013, the journey of Oyo rooms began and it has now partnered with 6500 hotels across the nation. They made their international debut in 2016 and 2017, in Malaysia and Nepal respectively. OYO offers clean rooms, quality and standardized services like free Wi-Fi connectivity, breakfast, AC, flat-screen TVs, spotless white bed linen of a certain thread count, branded toiletries, 6-inch shower heads, a beverage tray and so on. They provide hotel rooms to customers and keep a percentage of profits with them.

The brand is valued at over 600 crores. The quality checks and standards are audited every few days to deliver the assured quality experience. They provide budgeted hotels which range from Rs. 999 – Rs.4000. With fast listing services, a hotel property can be added to their list within 5-6 days after signing the agreement. The hospitality start-up is backed by the SoftBank Group, Greenoaks Capital, Sequoia Capital, and Lightspeed India.

2.HISTORY



In 2012, Ritesh Agarwal launched Oravel Stays to enable listing and booking of budget accommodations. After undertaking months of research and staying in various bed and breakfast homes, guest houses, and small hotels across India, he pivoted Oravel to OYO in 2013.

OYO partners with hotels to give similar guest experiences across cities. Shortly after launching Oravel Stays, Ritesh Agarwal received a grant of $100,000 as part of the Thiel Fellowship from Peter Thiel. OYO currently has over 17,000 employees globally, of which approximately 8000 are in India and South Asia. OYO Hotels & Homes now identify as a full-fledged hotel chain that leases and franchises assets. The company claims to invest in CAPEX, GMs to oversee operations and customer experience as well as generating around a million job opportunities in India and South Asia alone. OYO has also set up 26 training institutes for hospitality enthusiasts across India.



3. FOUNDER 



Ritesh Aggarwal: Ritesh Aggarwal is founder and CEO of OYO. To pursue his dream of becoming an entrepreneur he Indian School of Business & Finance, Delhi but left his studies mid way to becoming an entrepreneur.

At the age of 17, Ritesh launched Oravel travels which later branched out to become Oyo rooms. He has travelled all over India and discovered the issue of lack of budget hotels in India. Later while working on his first startup he identified that not only there is a lack of hotel but also the prices of hotels are very high that’s why he started Oyo.

Today at the age of 24 he is one the biggest businessman in India. He has won many national and international awards. Below are the few awards that he won:

Forbes “30 under 30” in the consumer tech sector
Top 50 entrepreneurs in 2013 by TATA First Dot powered by NEN awards
TiE-Lumis Entrepreneurial Excellence award in 2014
Business World young entrepreneur award

Ritesh has also written a book named “A complete Encyclopaedia of top 100 engineering colleges” and was the best seller of the year. Ritesh also became the youngest speaker in the panel of Think EDU panel in 2014.


4. BUSINESS MODEL 



The main aim of the hotel aggregator is to simply provide the customers with a listing of hotels on their website and take a commission as revenue. The OYO Rooms operate differently as they focus on co-branding.

OYO decided to associate with travel aggregators like Make My Trip, Clear Trip and GoIbibo.com for listing since the agreement OYO’s market cover has increased. This industry mainly targets small business travellers and budget tourists.

Let us go step by step to understand the business model of Oyo rooms.

Oyo books a part of hotel inventory beforehand.
Oyo organizes the booked rooms under their brand name.
Oyo signs a contract with the hotels to provide standardized services to their customers.
The bookings are made through the website and mobile application.
Then customer books rooms at predetermined prices by Oyo.

Oyo does more than 15 million booking in last year and has an annual growth run rate of approximately 400 billion every year.

From late 2017 Oyo changed its business model from being a hotel aggregator into franchises. The shift was mainly to reduce operational costs and improve serviceability, the company said The company started off its operations by building its business model around the aggregator business model but things have changed since 2018.

The New business model of Oyo Rooms is Fully stack and Franchise Business.

It’s just the company doesn’t lease the hotel rooms anymore, but now it asks the hotel partners to operate them as a franchise.

The founders of OYO decided to shift its business model to a pure franchise business model.

They have partnered with hotels and made them work with them under their name.

5. OYO ACQUISITION 



The expansion of OYO Rooms has been fierce. The company has acquired properties and companies to fuel its expansion drive. As of now, the hotel aggregator-cum-franchise has acquired seven startups/companies to facilitate the experience for its customers.

For instance, OYO acquired Danamica, a pricing tool for vacation rentals. Mumbai-based Weddingz, an online marketplace for weddings and events, Novascotia- a Chennai-based management company for service apartment, IoT venture AblePlus and Boutique Homes were acquired by OYO.
It acquired –

  • Novascotia Boutique Homes on Sep 28, 2017
  • AblePlus Solutions Pvt. Ltd. On July 10, 2018
  • Weddingz on Aug 13, 2018
  • Innov8 Co-working on March 15, 2019
  • Qianyu Islands on March 26, 2019
  • Leisure Group  on May 1, 2019

6. STRATEGY ADOPTED BY OYO

You might have thought about the strategies implemented by OYO that, made it so successful.

Let’s discuss the strategical approach of the brand OYO ROOMS.

To maintain its ranking and perform above all its competitors, OYO focuses mainly upon mass retention and acquisition.

It is using Digital Marketing section very aggressively for customer acquisition and lead generation.

Oyo knows the power of Social media. Hence, it is very strategically using all the platforms available for social media coverage.

They target mass potential customer based on their behaviour, interest and many other factors which are readily available via Digital Marketing.

Social media presence of OYO includes more than 2.7 lakh fans on Facebook, more than 8000 followers on twitter.

The company claims to have over 1.5 million app downloads with a very good number of active users.

The brand actively participates into several social media campaigns such as –

#Aurkyachahiye videos on youtube.
IPL final verbal combat by OYO
Fathers Day celebration campaigns
They also featured Bollywood celebs Manoj Bajpai and Raveena Tandon in a campaign named Jai Hind which was a massive success.

With the rise in prices in the real estate sector providing the best spaces to people for living at an affordable price with all amenities is not an easy task but Ritesh managed well. In today’s digital and connected world, it is important to stay ahead in the competition of online hotel booking which is increasing day-by-day. OYO made use of a 360-degree marketing strategy which included online and traditional media. In the world of digital media, it is necessary to retain and attract customers. The OYO leveraged the power of social media well to retain its ranking and perform well and stay ahead of the competitors.


8. KEY PARTNERS 

The key partners of Oyo are:

  • Hotels, clubs, corporations, banquet halls, etc.
  • Event organizations
  • Booking confirmation, location, navigation details, and cancellation can be managed through communication platform such as WhatsApp.
  • Electronic payment services such as Paytm
  • Taxi service providers such as OLA
  • Dinner Reservation Services such as Dineout
  • GPS services with Google maps
  • In-room entertainment services with Netflix's


 09. GROWTH 


In its first year of operations, OYO clocked a revenue of Rs 32.86 crore and a steep loss of Rs 496.31 crore. By the end of FY 2018, its top line had scaled to Rs 415 crore while losses stood at Rs 360 crore. Year on year, OYO saw its revenues climb 245 percent while losses widened marginally from Rs 355 crore to Rs 360 crore. In its short life, OYO Hotels and Homes have been variously described as a hotel aggregator, an online travel agency (OTA), and even a Ponzi scheme with an unsustainable business model, but never a hotel chain. Today, OYO is India’s largest hotel chain with 173,000 rooms under management. It is also the world’s third-largest, with over half a million rooms over the 18,000 properties that it currently franchises and leases in 500 cities across 10 countries


Financial : 


The fiscal ended in March 2020 was the biggest year for Oyo in terms of collections as the company went all in with its expansion plan in markets such as India, China, Southeast Asia, the Middle East and Europe and its entry into the United States. The number of storefronts or hotels on the Oyo platform ballooned 7.3X from 21,616 as at March 31, 2019 to 158,176 as at March 31, 2020.


Oyo’s revenue from operations grew by 108% to Rs 13,168.2 crore in FY20 from Rs 6,330 crore earned during FY19. Sale of accommodation services accounted for 88% of the revenue, growing by 91.4% to Rs 11,591 crore in FY20.



Revenue Breakdown : 



Commission income grew exponentially as the company ventured into vacation homes business and the listings business during the first quarter of FY20. Such income surged 2,312.3% to Rs 713.3 crore in FY20. Rental income grew by 1,024.2% to Rs 139 crore due to its co-living business and the launch of its coworking vertical after Innov8’s acquisition.


To chase scale, Oyo spent heavily on marketing and sales promotions to run online advertising on search engines and social media apart from the increased brokerage payments to OTAs across different global markets.  As a result, marketing and promotion expenses surged 4.2X to Rs 1,880 crore during FY21.


While the growth of scale was evident, Oyo was burning through a huge pile of cash to acquire the growth. Annual expenses surged by 159% to around Rs 22,800 crore in FY20 from Rs 8,809.4 during FY19. Annual losses ballooned 5.5X from Rs 2,364.5 crore in FY19 to around  Rs 13,122.8 crore in FY20 at an EBITDA margin of -46.5%.



10. KEY LEARNING FROM OYO


No entrepreneur is successful if he did not take risks and big decisions. Here we are talking about the CEO of OYO Rooms, Ritesh Aggarwal, who decided to turn the model of OYO rooms. He has set a perfect example for and a guiding light to build up their dream ventures for the young minds. Here are some learnings that an entrepreneur can learn from the journey of OYO rooms:


Create a Good Working Environment


It is essential to create a good working environment for your employees, as it leads to an increase in the productivity of start-ups. Oyo created a good working environment for the employees. Oyo provided the environment which helped in boosting the environment of the start-up positively.


Invest in Best Resources


Whether it would be working staff or strategies, invest in the best. Investing in the best resources such as skilled people, the latest technology, best strategies will lead to a fruitful result. Ritesh invested


Consistently putting Efforts


The main mantra to be successful is to be productive. Rushing after completing tasks can be dangerous for the company. Believe in building the perfect product or service rather than building it rapidly. Invest in building perfect strategies and processes that matter.


Stay Tough


There will be times when you have to make big decisions that will decide the future of the company. Make a decision based on your inner guts. Stand strong when many hurdles will force you to push you down. Be positive and solve these hurdles happily.


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