OYO - Success Story of the Leading Indian Multinational Hospitality Company

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Earlier, the hospitality industry remained localized and was confined to a particular locality. People don't know these stays unless reaching the spot. Or they should rely on the agents for their lodging needs during travel. Such uncertainties caused by this unbranded industry were eliminated and restructured during the internet and technological boom in the country.

Many players, like Airbnb and FabHotels, started showing up during this period and OYO was one among them. The quick success and popularity of this company branded the whole industry in our country. OYO has become the second-largest hotel chain (as of Dec 2019) with over 40,000 hotels listed across the world.

The growth of OYO is incredible and the story of its founder is truly inspiring. Despite numerous controversies, this company has reached greater heights over the years. This article covers the entirety of OYO right from its inception to its current position in the global market, which will answer questions like "who founded OYO?", "when was OYO established?" and more.

OYO - Company Highlights

OYO - About
OYO - Founders and Team
OYO - Startup Story
OYO - Mission and Vision
OYO - Name and Logo
OYO - Business and Revenue Model
OYO - Challenges Faced
OYO - Funding and Investors
OYO - Acquisitions and Investments
OYO - Growth and Revenue
OYO - IPO
OYO - Competitors
OYO - Future Plans

OYO - About

OYO, popularly known as OYO rooms or OYO hotels, is a global hospitality marketplace that helps people find budgeted rooms and hotels around the world. This company lists its leased and franchised hotels on its platform from where people can choose their rooms and living spaces of their choice at an affordable cost. OYO achieved spectacular growth over the years through its aggressive expansion plans and marketing strategies.

Founded in 2012, OYO is headquartered in Gurgaon, Haryana. Its founder Ritesh Agarwal was just 19 years old at the time of establishing OYO. The company has spread its wings of operation in over 800 cities in 80 countries, as per its reports in 2019. OYO not only helps people with locating hotels and rooms but also in finding homes, vacation stays, long/short term rentals, business/corporate travel needs, etc.

OYO - Founders and Team

The following are the key people of OYO:

Ritesh Agarwal

Ritesh Agarwal is the founder of the online hospitality chain OYO. He was born on November 16, 1993, in Odisha. He also serves as the group CEO of the company. 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.

Aditya Ghosh

Aditya Ghosh serves as a board member at OYO since 2019. Earlier, he remained the CEO of the company’s South Asian region. Aditya Ghosh has 24 years of experience in the field of management and also served as the president of Indigo Airlines between 2008 and 2018. He recently did an advanced management program in business administration at Harvard Business School.

Troy Alstead

Troy Alstead is one of the board members at OYO. He served as the COO of Starbucks for 24 years starting in 1992. Alstead also forms part of the director’s boards in several big companies like Harley-Davidson, Levi Strauss, Top Golf and a few more.

Oyo's global chief marketing officer (CMO) Rohit Kapoor has reportedly resigned from the company and is in his notice on July 21, 2022. As per the reports, Kapoor would be joining Swiggy as the CEO of the foodtech major or would assume any other leadership position in the same. Kapoor was the marketing boss of OYO and has completed over 44 months in the firm. Joining as chief executive officer (CEO) of the new real estate business in December 2018, Kapoor was promoted as the CEO of India and South Asia, just after a year. It was then in April 2022 that Kapoor was elevated to the role of the Global CMO.  

Paralympian Deepa Malik has been announced by Ritesh Agarwal as an independent director of the company on July 20, 2022. While on a virtual meeting with the Paralympic India President, Deepa Malik, Founder and OYO Group CEO Ritesh Agarwal, acknowledged Malik's contributions to build a more inclusive and diverse ecosystem for all the stakeholders.    

OYO has last listed a workforce that contained over 5000 employees in 2021.

OYO - Startup Story

OYO was the result of some personal travel experiences of its founder Ritesh Agarwal. He was so keen on starting something on his own right after dropping out of college. He decided to start an online hotel & room booking platform and named it Oravel. Ritesh joined hands with local hotels and started providing budgeted accommodation for people. The startup Oravel was later transformed into OYO in 2013.

OYO - Mission and Vision

OYO’s mission is to ‘bring affordable and trusted accommodation that guests can book instantly’. The company wants to give its customers the best choices for stay and make the entire process simple. OYO also has a vision to ‘empower entrepreneurs and small businesses with homes and hotels to increase earnings and simplify their operations. Not only the customers, but OYO also pays attention to the welfare of its dealers.

OYO - Name and Logo

The name OYO stands for 'On Your Own’ rooms. Earlier, the company was named 'Oravel' but later changed to OYO. The logo of the company carries the three-letter name 'OYO' in bold red.

OYO - Business and Revenue Model

OYO's business operation involves renting out rooms for its customers by leasing them from local hotels and other stays. After these initial leasing activities, OYO started a franchise model of business where it joined hands with local hotels and made them its franchisee. This business model proved successful and hence OYO made aggressive expansion of its brand in and out of India.

90% of OYO's revenue flows through its franchise model of business. The company targets budgeted travelers in need of accommodation and charges a competitive price for rooms.

OYO - Challenges Faced

OYO has faced challenges and controversies from investors, hotel owners and customers. In 2018, the Hotel and Restaurant Association of many states filed lawsuits against OYO for disagreement with the contract. They complained that OYO refrained from paying them the money for their services. The money was deducted on the grounds of penalty, improper services, etc. The association protested that all these conditions were not mentioned or clearly stated in the contract.

OYO charges much less from its customers than its competitors because of competition. This has resulted in low profitability for the company. No investor can tolerate this in the long term. As a result, OYO is facing pressure from its investors, like Softbank, to focus more on profitability along with its expansion. Even this pricing strategy has resulted in a lawsuit filed against OYO in the Competition Commission of India (CCI) for predatory pricing and killing competition.

Some hotels and rooms listed on OYO's platform are inactive or non-existing in real life. There were reports raised on this issue by the customers. Also, the COVID pandemic came as a huge hit to the entire industry. The businesses are still trying to wake up from the fall they faced during this challenging time.

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OYO - Funding and Investors

OYO went through 22 funding rounds as of 2022 out of which it has collected a sum of $3.1 billion. SoftBank is a major investor in OYO, which holds a 45% stake in the company. The other investors include Sequoia Capital, Microsoft and Lightspeed Venture Partners. The primary competitor Airbnb has also invested a sum between $150 million and $200 million in OYO.

Ola's valuation has last been estimated at $12 billion in 2021, which crossed the $10 billion mark in 2019.  

Below are some of the recent finding rounds of OYO:

OYO - Acquisitions and Investments

OYO has acquired 9 companies around the world so far. Its acquisitions outside India explain the company's plan and need for expanding its operations outside the country. OYO has last acquired Bornholmske Feriehuse, a Danish vacation home company in an undisclosed deal. This acquisition of OYO will strengthen the company's place in the region, and will cater to all the users visiting the region. Bornholmske Feriehuse will add 737 more vacation homes to OYO's reserves. This transaction was materialised via OYO's European subsidiary DanCentre. Post the acquisition, Rasmus Lund, Director and Cofounder of Bornholmske Feriehuse, will continue to lead the company.

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

OYO Investments:

OYO has also invested $3 billion in one of its business wings OYO Life.

OYO - Growth and Revenue

As discussed earlier, the growth of OYO was rapid and phenomenal. Started as a small platform to help local customers and businesses, today OYO stands as a multinational hotel chain business that is the second-largest in the world. Within a year of its inception in 2012, OYO commenced its business with the help of a sponsor and also launched its website.

In 2015, this startup reached 100 cities with 10,000 rooms and by 2016, OYO set its foot outside India. Then the phase of expansion took place and went on into the UK, China, US, Indonesia, Europe, etc., The company also induced various services like OYO Life, OYO Wizard, OYO Townhouse, OYO Workspaces, and many more. It launches seasonal campaigns and keeps adding new features to its services that sometimes create controversies (like 'relationship mode' - rooms for unmarried couples) but gains popularity from people. All these growth-focused expansion strategies made OYO a globally recognized brand.

The pandemic surely came and spread a wave of terror across industries and organisations worldwide, bringing great resignation and more such events. The Covid-19 pandemic also led OYO to see the worst of downfalls, however, the business slowly started to recover with the unwinding of the world, and of the businesses that operate in it. Oyo claimed that it has shaken off the major impacts of the Covid-19 pandemic and has grown 5X in May 2022. Besides, it also announced the addition of 1,250+ corporate clients in the period between March and May 2022.

OYO Financials, Revenue, Expenses and More

OYO Revenue

The financial year of 2020 was undoubtedly the biggest year that Oyo has witnessed to date in terms of collections. The startup witnessed an expansion in the number of storefronts/hotels on the platform. Besides, its revenue from operations also grew by 108%, from Rs 6330 crore in FY19 to Rs 13,168.2 crore in FY20. However, this fell down a big time during FY21, at the end of which, OYO registered Rs 3,961.6 crore in operational revenue.

OYO Expenses

OYO expenses also saw a rise during FY20, when it went up to Rs 22,800 crore from 8,809.4 crore in FY19. OYO has reigned in the expenses home again during FY21, at the end of which, the hospitality startup ended at Rs 6,936 crore in expenses.

OYO Losses

The losses of OYO topped in FY20, much like its revenues and expenses, which ballooned to Rs 13,122.8 crore from Rs 2,364.5 crore in losses in FY19. These losses came down again in FY21, becoming Rs 3,943.8 crore.  

OYO - IPO

OYO has earlier mentioned an IPO round where it would raise around $1.2 bn. The Delhi-based hospitality startup has also filed its DRHP in October 2021. However, the company has eventually reduced its IPO size to $800 mn, as per June 2022 reports. The Ritesh Agarwal-led startup has also revealed that it is looking forward to an IPO during the festival of lights, in 2022.    

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 2008 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 Bengaluru, Karnataka.

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 50 cities with over 450 hotels in India.

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OYO - Future Plans

OYO has earlier decided to launch its IPO in 2022. However, the company had then decided to postpone it to an unforeseen future.  The reason was the global market downturn, which the company is afraid, could lower its valuation. Nevertheless, OYO has last announced that it would list during the festive season of Diwali in 2022 itself. The company, however, has slashed its initial IPO valuation from $1.2 bn to $800 mn.  

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 $12 Billion in 2021.

What is the revenue of OYO?

OYO revenue was recorded at Rs 3,961.6 crore ($495.56 million) in 2021.

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