OYO - Hospitality and Travel Tech
Founded in 2013, OYO is the world's 3rd largest and fastest growing hospitality chain.
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Founded in 2013, Haryana-headquartered OYO is a global virtual hospitality platform. It provides full-stack technology to entrepreneurs and businesses who own hotels and homes to ease their operations and increase earnings. It provides a standardized and trusted experience to customers by running a managed marketplace of properties under its own brand. The company claims to be the third-largest hospitality chain in the world.
In 2018, OYO entered the unicorn club after raising $1B in a funding round led by Japan’s SoftBank group. Its latest funding was in August 2021, where it received $5M from Microsoft, bringing its total valuation to $9.6B. The startup has filed for an IPO in the $9B range and is all set to explore the public markets.
The company is backed by notable investors like SoftBank Group, Didi Chuxing, Greenoaks Capital, Sequoia India, Lightspeed India, Hero Enterprise, Airbnb, Microsoft and China Lodging Group.
Business Overview & Products
OYO Hotel Rooms: Provides affordable hotel stays at prime locations.
OYO Townhouse: A friendly neighborhood hotel for millennials that operates as a hotel, community hotspot, cafe, and merchandise store.
OYO Home: Private homes that offer high-quality amenities, service and surroundings that are managed by OYO.
OYO Vacation Homes: A leading vacation rental company.
Capital OYO: Premium hotels for business travelers to target more corporate accounts.
OYO Life: Provides fully furnished, managed, long-term accommodations at affordable rates to millennials and young professionals.
OYO Flagship: The company leases whole buildings/apartments to provide a homely atmosphere to clients.
OYO Wizard: A membership model where members can avail exclusive discounts, offers, deals, and cashback advantages
SilverKey: Provides executive furnished accommodation to corporate travelers on business trips for a short or long duration.
Palette: An upper-end leisure resort for customers looking for an intuitive experience at affordable prices.
Collection O: Provides accommodation tailored to the needs of discerning business travelers.
The company operates across 35 countries and 391 cities in India.
How It Works
OYO is an interface for users to search for and book hotels that are part of its network. It does not own any of the lodgings that the users book through its application.
The company renovates hotels listed on its platform according to its checklist of standard services and makes the property part of its ‘standardized budget hotel chain’ with OYO’s branding. The rooms are paid for once they have been booked. Besides the standard rooms, OYO also offers special options such as townhouses under different headers for business trips or other events.
The app, besides showing a list of available rooms in any given area, also serves as a tour guide by showing names of nearby recreation and food joints. Users can also book spots at these places like they do with their OYO rooms. While normally the app is free, users can also avail a subscription model called OYO wizard which comes with exclusive discounts, cashback offers, and deals not available on the free version of the app.
Business Model & Pricing
Initially, OYO had an aggregator business model where it used to partner with property owners to lease a part of their inventory of lodgings at negotiated prices under the company’s branding. The difference between the price negotiated with the hotel owners and the price, at which the rooms were sold to the customer, represented their revenue.
Now OYO has a franchise business model where it does not lease hotel rooms anymore, and instead, it manages the complete hotel property on behalf of the owners. The company now sells the whole inventory of hotels under its own branding which benefits hotels listed on the platform as it gives them more traction and helps them acquire more business.
OYO’s primary source of income is the 22% commission it charges hotel partners. However, it also has other sources of revenue, like the sale of accommodation services, advertising fees, membership fees, sale of tours, packages, and events, cancellation income, and consulting fees. The company also earns rental income from the lease of office space, sale of food and beverages, and subscription income from customers on its platform.
OYO has been growing consistently ever since its launch in 2013. In a short span of time, the company has managed to become the world’s 3rd largest and fastest-growing chain of leased and franchised hotels, homes & living spaces. In 2021, the company reported revenue of $850M which was a significant decrease from 2020’s revenue of $1.8B due to covid-induced lockdown.
However, 2020 was a particularly great year for the company mainly due to its aggressive expansion strategy, where within a year it globally expanded its footprints in markets such as China, Southeast Asia, Europe, the Middle East, and the United States. As a result, OYO’s storefronts and hotels grew 7.3x from 21,616 in 2019 to 158,176 in 2021 and its gross booking value grew 170% as well. The company now claims to be EBITDA positive.
Founder(s) & Team
Ritesh Agarwal: CEO and Co-Founder at Oyo. Ritesh, an Indian billionaire entrepreneur previously served as a Fellow at the Thiel Foundation, a two-year program for young people who want to build new things. He has won numerous awards for his work, including the Business World Young Entrepreneur Award.
History & Evolution
In 2012, Oravel Stays was founded by Ritesh Agarwal to enable the listing and booking of short-stay budget accommodations. The venture was built on the lines of Airbnb, an on-demand vacation rental app.
In 2013, Oravel Stay pivoted to OYO and launched in Gurgaon.
In 2015, the company launched its app and expanded to Malaysia.
In 2017, OYO launched OYO Townhouse, a mid-market brand at handpicked locations for tasteful travelers.
In 2018, the company expanded to the UK, China and Indonesia.
The company launched OYO OS, a hotel management solution; OYO Life for long stay rental service; and OYO Wizard, a customer loyalty program.
That year it also acquired Chennai-based service apartment operator, Novascotia Boutique Homes; and Weddingz.in, a Mumbai-based online marketplace for wedding venues and vendors.
In 2019, the company expanded to the US, Europe, and the Middle East.
It also launched OYO Lite, a lighter version of the consumer app; Yo! Chat, a real-time customer care assistant; and OYO Workplaces, a flexible friendly coworking space.
That year OYO acquired Leisure Group, one of the largest players in the European online market for accommodation rental; Innov8, a co-working space in New Delhi; and Danamica, a European data science company.
It also announced a strategic partnership with AirBnB where OYO would list their properties in the Airbnb platform and a strategic global distribution partnership with Hotelbeds.
That same year the company launched the OPEN program, an initiative for its partner hotels to help them attain their business goals; and also set up 26 training institutes for hospitality enthusiasts across India.
In 2020, it launched Sanitised Stays, a safety protocol for its hotels and homes; and Discover OYO, a low-cost new user acquisition engine.
In 2021, the company launched Ota Powerplay, a revenue-generating product that boosts the property's OTA ranks and increases conversion rate; Vaccinaid, a vaccine visibility initiative that shows the vaccine status of staff of its partner hotels; and OYO360, a self onboarding platform.
It also collaborated with Yatra, Airbnb and EaseMyTrip to form the Confederation of Hospitality, Technology, and Tourism Industry (CHATT) – an industry body for the tourism sector of India.
OYO’s competitive edge is its standardized hospitality services. The company has always focused on user experience rather than the availability of hotel rooms and prices. This is why OYO renovates all hotels listed on its platform so that they meet their standard services checklist and customers all around the globe have the same quality experience.
The global hospitality industry is supposed to be worth $1.1Tr in 2022
India’s hospitality industry is estimated to account for 53 million jobs in the country by 2029, with earnings to reach around $50.9B in visitor exports.
In 2021, the hospitality industry accounted for 7.5% of the GDP in India.
Next Suggested Reads
The great promise and dangers of being OYO (Divya Guha, Fortune India, October 13, 2021)
A Budget Hotel Chain That You've Never Heard Of Is Exploding In The United States (Suzanne Rowan Kelleher, Forbes, October 24, 2019)
How OYO Rooms redefines living spaces with technology (Ritesh Gupta, Phocus Wire, July 2, 2018)