OYO - Elevating Hospitality Standards Worldwide

In the earlier days, the hospitality industry operated on a localized scale, limiting itself to specific areas. People often discovered accommodations only upon reaching their destination or relied on agents for lodging during travel. The unbranded nature of this industry introduced uncertainties, which were subsequently addressed and reshaped during the internet and technological boom.

This transformative period saw the emergence of various players, such as Airbnb and FabHotels, with OYO standing out among them. OYO's rapid success and widespread popularity played a pivotal role in branding and restructuring the entire industry in our country. Notably, OYO has evolved to become the third largest hotel chain globally (as of June 2019).

In this article, we will delve into the successful journey of OYO, its founder, business model, funding, competitors, and more.

OYO - Company Highlights

OYO - About
OYO - Industry
OYO - Founders and Team
OYO - Startup Story
OYO - Mission and Vision
OYO - Name and Logo
OYO - Business Model
OYO - Revenue Model
OYO - Challenges Faced
OYO - Funding and Investors
OYO - Investments
OYO - Acquisitions
OYO - Growth
OYO - Programs and Feature launch
OYO - Partnerships
OYO - Layoff
OYO - Advertisements and Social Media Campaigns
OYO - Awards
OYO - Competitors
OYO - Future Plans

OYO - About

OYO, also referred to as OYO Hotels or OYO Rooms, is an international hospitality platform that offers reasonably priced lodging options all over the world. The business offers consumers the option to choose rooms and living areas that best fit their needs at an affordable price by listing both franchised and leased hotels on its marketplace.

OYO's successful marketing tactics and flexible expansion plans are responsible for its noteworthy growth. Founded in 2012, OYO, with its headquarters in Gurgaon, Haryana, was established by Ritesh Agarwal when he was just 19 years old. The business has considerably grown since its founding, operating in several cities across several nations.

Apart from standard hotel accommodations, OYO provides an extensive array of services, assisting users in locating residences, holidays, long-term and short-term rentals, and meeting different business or corporate travel requirements. OYO is positioned as a flexible participant in the international hospitality market.

OYO - Industry

As to a report analysis by Statista, the hotels industry is anticipated to witness significant expansion, with a projected revenue of US $9.13 billion by 2024. The results point to a strong expansion trajectory and a predicted annual growth rate (CAGR 2024–2028) of 5.41%.

The market volume is predicted to rise further if current trends continue, with an anticipated value of US $11.27 billion by 2028. Based on a thorough research carried out by Statista, these estimates highlight a good picture for the hotels business, demonstrating ongoing expansion and changing consumer patterns.

OYO - Founders and Team

Ritesh Agarwal is the co-founder and Group CEO of OYO.

Ritesh Agarwal

Ritesh Agarwal is the co-founder and Group CEO of the online hospitality chain OYO. He was born in Odisha. His interest in business started early in his teens. Ritesh dropped out of college and was accepted into the Thiel Fellowship program in 2013. His time at Thiel Fellowship and the year before laid the foundation for OYO. He has joined the Shark Tank India Season 3 panel as the youngest shark.

OYO - Startup Story

While residing in California in 2013, Ritesh Agarwal established OYO with the original goal of running an Indian hotel through Oravel Stays. Targeting low-cost tourists online, the hotel in Gurgaon later rebranded as OYO saw a sharp increase in occupancy rates in just its first month, going from 19% to 90%. After coming back to India, Agarwal saw the opportunity to elevate budget accommodations all throughout the world.

OYO's concept arose from Agarwal's desire to please both owners and guests. It is focused on smart updates, optimized services, and dynamic pricing. OYO's strategy, which was centered on the preferences of its guests and little elements like soft white light, enhanced reviews and guaranteed profitability, signifying its transformation from a single property to a worldwide hospitality network.

OYO - Mission and Vision

Mission: The OYO mission in the company website is mentioned as "OYO is a global platform that empowers entrepreneurs and small businesses with hotels and homes by providing full stack technology that increases earnings and eases operations. Bringing affordable and trusted accommodation that guests can book instantly."

Vision: OYO vision is to empower entrepreneurs and small businesses with homes and hotels to increase earnings and simplify their operations.

OYO - Name and Logo

The name OYO stands for 'On Your Own’ rooms. Earlier, the company was named 'Oravel' but later changed to OYO.

OYO - Business Model

OYO's unique business model represents the first hotel chain to be integrated with OTA -like distribution capabilities. In contrast to conventional approaches, OYO tackles practical issues in the actual world, with brand development coming naturally rather than as the main goal.

It functions as a redesigned hybrid, skillfully fusing technology and hospitality to maximize client satisfaction, efficient use of available space, and general corporate success.

The dedication to customer pleasure that is at the heart of OYO's ideals is demonstrated by the company's initial acceptance requirements and its upfront investment in modernizing each hotel before it joins the OYO network.

OYO's core advantage is its ability to consistently prioritize the needs of its customers. The company has shaped its business model to optimize the customer experience, effectively utilizing technology and hospitality to improve space utilization and overall business performance.

OYO - Revenue Model

OYO employs a diverse revenue model to sustain its business, featuring several key streams:

Commissions:

OYO has a commission-based business model, taking a cut of about 22% from its hotel partners for each reservation made via its website. Depending on variables like property kind, location, and other considerations, the proportion might change.

Franchise Charge:

OYO has a franchise model whereby it charges its partners fees for the use of its technology, brand, and operational assistance. One-time or ongoing payments are included in this income stream, which makes up a sizable portion of OYO's earnings.

Room rate margins:

By selling rooms to visitors at a higher price than it originally negotiated with partner properties, OYO makes money by keeping the difference between the selling and reduced rates.

Membership in OYO Wizard:

Wizard Blue, Wizard Silver, and Wizard Gold, OYO's premium memberships, are a profitable revenue stream.

Promotions, Collaborations, and Sponsorships:

Through sponsorships, brand promotions, and advertisements on its website and app, OYO makes money off of its platform. To increase overall revenue, businesses pay OYO fees for the display of their advertisements.

Income from Supplementary Services:

By charging more for upscale offline services and facilities, OYO diversifies its revenue sources. Breakfast, transportation, laundry, and other extras bring in money and give consumers something extra, all while strengthening OYO's bottom line.

OYO - Challenges Faced

OYO faced various difficulties in the past that are typical of many startups. The business struggled with massive layoffs, conflict with hotel partners, and lawsuits related to disagreements in contracts. Although the aggressive pricing strategy was successful in drawing in customers, it also caused worries about profitability and sparked legal attention, especially because of claims of predatory pricing.

Due to complaints of dormant or nonexistent listings, the legitimacy of OYO's platform was also called into question. The COVID-19 pandemic dealt a further blow to these difficulties, forcing OYO to traverse a challenging environment and deal with governance concerns in order to ensure a stable future. These obstacles are similar to those that startups in the cutthroat hotel sector frequently encounter.

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OYO - Funding and Investors

OYO went through 18 funding rounds as of 2022 out of which it has raised $3.3 billion.

Below are some of the recent funding rounds of OYO:

OYO - Investments

OYO has invested in OYO LIFE, signaling a strategic move to diversify its portfolio beyond conventional hospitality services as of October 30, 2018.

OYO - Acquisitions

OYO has acquired 9 companies around the world so far.

The following are the 9 companies that have been brought under the management of OYO:

OYO - Growth

OYO's journey began modestly, evolving from a small platform supporting local customers and businesses into the world's third largest multinational hotel chain as of June 2019. Starting in 2012, OYO debuted with sponsorship support and unveiled its website in its first year of operation. The firm reached 100 cities with 10,000 rooms by 2015, and in 2016, it went outside of India and than later went on to expand into the UK, China, the US, Indonesia, Europe, and other regions

OYO launched a number of services throughout its expansion phase, including OYO Townhouse, OYO Workspaces, OYO Wizard, and OYO Life. Even with sporadic controversies like the one with the'relationship mode' feature the business became well-known. OYO's strategic expansion and ongoing introduction of new features helped to cement the company's reputation throughout the world.

Some of the growth highlights of OYO are:

• OYO Corporate Business Solution has 4,000+ exclusive hotels, as mentioned on their website as of January 2024.
• OYO Corporate Business Solution has a presence in 230+ cities and towns as of January 2024, spanning across 4 countries.
• OYO has over 174,000 hotels and homes around the nation as of January, 2024.
• It is present in over 35 countries as of January, 2024.
• OYO reached the milestone of 100 million downloads in 2021.
• The estimated company valuation is $7 million as of May 2022.

Financials

OYO Expenses

OYO total expenses reduced from Rs 6,985 crore in FY22 to Rs 6,800 crore in FY23.

EBITDA

OYO - Programs and Feature launch

Super OYO program

The Super OYO program was introduced by OYO in December 2022. Through this initiative, customers were able to identify hotels that provided the most reliable and superior customer service.

OYO Accelerator Program

In March 2023, OYO announced the launch of the Accelerator Program, with plans to add more than 200 properties in key Indian cities to its portfolio as part of the accelerator project.

OYO Spotless Stay Program

In July 2023, OYO introduced the Spotless Stay Program, as part of their planned initiatives. The program was designed to implement new cleaning and hygiene requirements, simultaneously enhancing hotel and room decor.

Stay Now, Pay Later Feature

OYO has introduces Stay Now, Pay Later Feature in June, 2023. This feature follows the rise in popularity of buy now, pay later (BNPL) plans for buying consumer electronics from retail stores and e-commerce websites.

OYO New Brand Palette

In cities including Jaipur, Hyderabad, Digha, Mumbai, Chennai, Manesar, and Bengaluru, OYO said it has opened 10 Palette resorts as a pilot program. By Q2 FY24, it plans to increase that number to 40 as per from various news report said in July, 2023.

OYO - Partnerships

Some of the prominent partnerships of OYO are:

Lemon Tree

In March 2023, OYO had established a partnership with Lemon Tree. The collaboration aimed to enhance the occupancy of Lemon Tree Hotels' banquets and event spaces in over 40 locations nationwide, including Delhi NCR, Jaipur, Kolkata, Lucknow, Bhubaneswar, Mumbai, and Pune, among others.

SoftBank

In September 2023, the parent company of OYO, Oravel, had formed a partnership with SoftBank. Through this collaboration, they introduced the premium hotel chain Sunday in India, establishing a relationship with SoftBank Japan.

OYO - Layoff

In December 2022, OYO made 600 layoffs as part of a significant reorganization, which had an impact on the corporate and technology divisions.

OYO - Advertisements and Social Media Campaigns

OYO launched a multi-film brand campaign that featured renowned actors such as Gul Panag, Kalki Koechlin, Chitrangada Singh, and Kunal Kapoor. The campaign aimed to highlight the everyday experiences of tourists by utilizing television, social media, and over-the-top platforms.

In response to the changing tastes of travelers during the pandemic, OYO placed a strong emphasis on customization and flexibility in their brand campaign. The first movie emphasized the advantages of OYO's "Nearby" feature, which allows customers to easily book lodging with a tap on the smartphone and takes advantage of OYO's widespread presence in over 35 countries globally.

OYO - Awards

OYO has won various awards. Some of the prominent ones are:

• In the hospitality sector, the Ministry of Skill Development and Entrepreneurship presented the 2017 National Entrepreneurship Award to OYO.
• OYO won the 2019 ASEAN-India Excellence & Achievement Award.
• OYO won the 2018 ET Startup Awards, the biggest startup competition in India.

OYO - Competitors

The following are some of the top competitors of OYO:

Airbnb

Airbnb is one of the popular and well-known competitors of the company. It was established in 2007 and is considered to be a predecessor and a luminary for OYO. Airbnb serves to be a trusted brand globally due to its affordable prices and availability of excellent accommodations.

Treebo Hotels

Treebo is a growing hotel chain in India that has established its operation in over 113 cities in the country. This company operates in the category of the premium budget segment. Treebo Hotels is based in Bangalore, Karnataka, India.

FabHotels

FabHotels was founded in 2014 by two alumni of "The Wharton School of the University of Pennsylvania." It rents out 3-star rated hotels at a budgeted price under its brand. FabHotels operates in more than 66 cities, with over 900 hotels in India as of November, 2022.

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OYO - Future Plans

OYO had originally planned to go public in 2022, but due to worries about the worldwide market slump and how it may affect the firm's valuation, the company decided to strategically delay its IPO to an unspecified future date. This delay was caused by the worry of a reduced worth.

According to a news report from January 2024, the Indian hotel booking company, supported by SoftBank Group Corp., is allegedly in talks with Khazanah to lead a $400 million fund raising in order to pursue expansion and debt reduction. It's crucial to remember that this information has not yet been verified.

Furthermore, according to a different news report from January 16, 2024, OYO intends to expand its portfolio by 400 new hotels with an emphasis on religious tourism.

FAQs

When was OYO founded?

OYO was established in 2012.

Who is the founder of OYO?

Ritesh Agarwal is the founder of OYO.

What is the valuation of OYO?

OYO valuation was last reported at $7 billion in May, 2022.

What is the operating revenue of OYO?

OYO operating revenue was recorded at Rs 5,464 crore in FY23.

What is OYO famous for?

OYO is famous for budgeted hotel bookings and affordable stays.

Who are the top competitors of OYO?

Some of the top competitors of OYO are:

• Airbnb
• Treebo Hotels
• FabHotels