CASE STUDY ON OYO ‘On Your Own ’

We all know the success the company has got but very few people know the whole story behind OYO. How was it started? How does it extend its services? What is the business model of OYO?

I bet that you can hardly find anyone who doesn’t know about OYO. This is the hospitality and expansion of this company.

The growth of OYO Hotels & Homes is astounding. Since its launch in April 2013, OYO has come a long way from becoming the world’s third largest and franchised chain of hotels, homes and living spaces[1].

Founder Ritesh Agarwal achieved the feat of becoming the youngest self-made billionaire in the world after Kylie Jenner in February 2020. . This company didn’t just face the success but also various challenges on its way.

 INTRODUCTION

Entrepreneurships are not a destination where one can just reach, but it’s a journey where one keeps learning and improving themselves.

Ritesh started his journey by launching Oravel Stays, his first step towards making OYO and to his dreams.

About OYO’s success:

 OYO grew continuously after 2013.It began its service in India, and now, after eight years of foundation, works in 800 cities in more than 80 countries around the world. The company began its international activities in 2018, starting with Malaysia. It then entered the markets of the United Kingdom, UAE, Dubai, China, Singapore, Indonesia and other countries. In 2018, the company became a franchising hotel network. In 2018, the company recorded 75 million nights worldwide, almost six times as much as in 2017, and earned revenue of $211 million. In 2017, 2016 and 2015, 13 million, 6 million and 4 million nights were registered in a room around the world, respectively. In 2019, OYO earned $951 million, an increase of $740 million, 4.5 times more than in 2018.The Company has so far acquired more than a million rooms in more than 43,000 hotels. Through the business of recreation homes, the company offers travelers and citizen’s access to more than 130,000 homes[2].

MAKEOVERS:

Oyo employs hundreds of staff in this area to assess characteristics in 200 factors, from mattress and linen quality to water temperature. To get the list, most hoteliers need to agree to a makeover, which usually takes about a month, along with a bright red Oyo sign that hangs along the street like a sign of Good Housekeeping approval. After that, Oyo gets 25% of all bookings. Rooms typically operate between $ 25 and $ 85.

“Oyo is committed to building a very large foundation for hotel partners and becoming a sincere brand,” said Mrigank Gutgutia, an analyst at RedSeer Management Consulting.

Agarwal doesn’t offer sales. , He said, the number of transactions has tripled. Last year, 90% came from repeaters and no money was spent on advertising. Currently, there are 10,000 hotels in 160 cities in India with over 125,000 rooms[3].

“Over 150,000 heads rest on our pillows every night,” said Agarwal.

OYO CRISIS:

Dirty sheets: Not everyone is happy with Oyo’s experience. A recent guest, Payal Gupta, was disappointed to stay in a property near Delhi Airport. She said she felt like a house renovated into a hotel in a hurry. The seats were dirty and the bathroom was cramped. “It’s not enough to have an Oyo brand shampoo and moisturizer,” she said.

 It was not just limited to organizing and maintaining it furthermore OYO was also talked about, surrounded by several crises and controversies. The company has been accused of fraud and fraud. In 2019, Bangalore hoteliers claim they have not paid him a membership fee to Ritesh Agarwal and the other six, and cheated. According to the complaint, he claimed that OYO was supposed to pay him 70,000 rupees a month, but they did not. However, OYO rejected such a motion.

Hospitality companies were also suspected of fraud. The hotel owner pointed out that the company charges a 20% franchise fee for room revenue. Ultimately, it costs more money through various sources that are not initially disclosed.

IMPACT DUE TO COVID

As obvious there were no travelling and since it was restricted so not just OYO but all the other hotels had no customers or tourist even companies permitted work from home even after pandemic the lifestyle of WFH continues therefore there were no visits from any customer.

As a result, the company told partner hotels that the payment cycle could be disrupted. For a variety of unforeseen reasons, companies may be forced to postpone payment of minimum guarantees and other membership fees to vendors and hotel partners[4].

OYO FUNDING

OYO is funded by 28 investors. Qatar Insurance Company and Microsoft are the latest investors.

OYO has raised a total of $ 3.1 billion over 22 rounds. Their latest funding was raised from the secondary market round on January 13, 2022. OYO invested in OYO LIFE on October 30, 2018. This investment-Funding Round-OYO LIFE-was worth $ 3 billion.

OYO has acquired seven organizations. Their latest acquisition was Danamika on September 2, 2019. They bought Danamika for $ 10 million[5].

OYO SEGMENTS ACCORDING TO THE CONSUMER

  1. Townhouse – it’s a luxury stay where one can interact with every other person in the room and also have personal time in their own rooms.
  2. OYO Home – usually located for vacation break at exotic places such as beaches.
  3. Silver key- located usually near corporate clusters with all amenities perfect for a business trip.
  4. Collection O – for corporate travelling
  5. OYO homeluxe- offered mix of residence and luxury.
  6. OYO life- it’s based on monthly basis rental stay.

CONCLUSION

 Despite a lot of hard work, this startup Oyo has been successful and the success story of its journey has inspired many small startups in India. Oyo has expanded its horizons beyond the boundaries of India, not just hotels. Today, Oyo is one of the most talented startups in India. Ritesh Agarwal accounts for 30% of Oyo Rooms’ profits.


[1] https://www.apacoutlookmag.com/industry-insights/article/800-qa-how-has-covid-19-impacted-hotel-giant-oyo

[2] https://www.cidm.co.in/oyo-rooms-case-study/

[3] https://www.analyticssteps.com/blogs/success-story-oyo-rooms

[4] https://inc42.com/buzz/oyo-reveals-extent-of-covid-19-impact-on-revenue-ops/

[5]  https://www.crunchbase.com/organization/oyo-rooms/company_financials

Aishwarya Says:

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.

IF YOU ARE INTERESTED IN PARTICIPATING IN THE SAME, DO LET ME KNOW.

Do follow me on FacebookTwitter  Youtube and Instagram.

The copyright of this Article belongs exclusively to Ms. Aishwarya Sandeep. Reproduction of the same, without permission will amount to Copyright Infringement. Appropriate Legal Action under the Indian Laws will be taken.

If you would also like to contribute to my website, then do share your articles or poems at secondinnings.hr@gmail.com

In the year 2021, we wrote about 1000 Inspirational Women In India, in the year 2022, we would be featuring 5000 Start Up Stories.

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