The rise (and fall?) of OYO … perhaps the world’s fastest growing hospitality brand from India, offering “tasteful spaces, whenever you need them, at unbeatable prices.”

May 15, 2020

OYO Rooms, also known as OYO Hotels & Homes, is the world’s fastest-growing hospitality chain of leased and franchised hotels, homes and living spaces. The Indian brand was founded in 2013 by Ritesh Agarwal.

OYO’s portfolio combines fully operated real estate comprising more than 43,000 hotels with over 1 million rooms. Through its vacation homes business, the company offers travellers and city dwellers access to over 130,000 homes around the world. It  operates in over 800 cities in 80 countries.

“What is OYO’s secret sauce?”, asks its website. “We offer tasteful spaces, whenever you need them, at unbeatable prices.”

On your own 

At the age of 13, Ritesh Agarwal started selling SIM cards on the streets of Titilagarh in India, and moved to Delhi in 2011 to study at college, but soon dropped out.

In 2012, as an 18 year old, he launched Oravel Stays to enable listing and booking of budget accommodations, and was helped by $100k grant from Peter Thiel. A year later, he rebranded as OYO in 2013. OYO is said to mean “on your own”, based on how Agarwal experienced life travelling alone as a young man.

In 2018-19 OYO raised a $2.5 billion in funding, including from Softbank, and $2 billion through Agarwal’s own investments. In 2020 the company is said to be worth around $10 billion, and 26 year old Agarwal worth $1.1 billion, making him the world’s youngest self-made billionaire after Kylie Jenner.

OYO’s portfolio

OYO now partners with hotels to create a branded guest experience across cities, licensing its brand, and providing distribution and credibility in return for a royalty fee, and ensuring of common standards.  The business currently has over 17,000 employees globally, of which approximately 8000 are in India and South Asia, whilst generating around a million job opportunities in the licensed partners. It has also set up 26 training institutes for hospitality enthusiasts across India

OYO Hotels & Homes has a multi-brand approach. These include:

  • OYO Townhouse which is promoted as the neighbourhood hotel is in the midscale segment targeted at millennial travellers.
  • OYO Home, which OYO claims is India’s maiden Home Management System that offers private homes in different locations and are fully managed by OYO. 
  • OYO Vacation Homes which claims to be the world’s 3rd largest vacation home brand with vacation rental management brands Belvilla, Danland, and DanCenter along with Germany-based Traum-Ferienwohnungen.
  • SilverKey launched in April 2018, caters to the needs of the corporate travellers undertaking business trips for a short or long duration.
  • Capital O offers hotel booking services.
  • Palette offers the perfectly curated staycation for those in search of an intuitive experience at competitive prices, an upper-end leisure resorts category.
  • Collection O offers booking and renting services to business travelers.
  • OYO LIFE, targeted at millennials and young professionals in search of fully managed homes on long-term rentals, at affordable prices.

OYO Townhouse

These operate as 25% Hotel, 25% Home, 25% Cafe and 25% Store, and seek to become to the social hotspot of their neighbourhood. Every single element – from the breakfast menu to the booking process – has been re-engineered to deliver higher quality and better value. Also, unlike the lego-brick approach of traditional hotel chains, every OYO Townhouse is designed to complement its neighbourhood. The tastefully done properties are staffed with highly trained managers to deliver world-class and modern hospitality specially designed for millennials.

OYO says there are six features that make those Townhouses different from the other products, and “improves over the old hotel formula”: Smarter Rooms, Smarter Spaces, Smarter Menus, Smarter Buildings, Smarter Service, and Smarter Locations.

Creating the experience

The process of standardisation of the experience starts with what OYO calls a “150 point checklist” that goes from the booking experience to the support centre and the on-ground Cluster Managers, ready to solve any problem it might arise during the experience of guests.

OYO also brought Uber-style booking and “dynamic” pricing to hotels, and saw its operations grow 20-fold in just two years, from roughly 50,000 rooms in December 2017 to over 1 million in October 2019.

Controversy and change

However in early 2020 OYO started to run into some trouble, initially due to a range of complaints about hotel standards, and controversies about the ethics of its business practices. You can listen some of these problems, issues and allegations in the video below. It subsequently announced a significant number of job losses which it said was set to refocus its strategy.

This all happened at the same time as another Softbank investment, WeWork was exposed as having being overhyped and over valued prior to its IPO which was abandoned. Whether these are the “growing pains” of a 7 year old start-up, or a business which is in serious trouble because it has over stretched itself, grown too big and too fast, remains to be seen.

 

 

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