Innovation is key in the hotel industry. Two examples this week are Indian hotel company Oyo Hotels & Homes and Accor’s Jo&Joe brand, complete with decent beer.
Stand back. Or you will get mown over.
That might be the message—in today’s corporate-speak, unspoken of course—from Indian upstart Oyo Hotels & Homes, which is backed by large checks from SoftBank Group and Airbnb.
It got its first start, though, with a grant in 2013 from the Thiel Fellowship after a three-week selection process in California. Oyo was the only recipient from India in that year.
The blurb on the home page of the Thiel website said it “gives $100,000 to young people who want to build new things instead of sitting in a classroom.”
People in the industry speak of Oyo as being a disruptor, but that is painfully not the case.
Disruption is a non-hotel firm taking rooms and revenue out of the hands of hotel firms. Disruption derives from “hotel” firms that own no part in the traditional hotel business model, selling rooms that are not their own in any way, regardless of what agreements they have with hotel firms.
Oyo leases and franchises its hotels, and it has found a niche in the industry that it has supported with very good technology.
Indians have been very good with technology for the last 30 years, so this is not a surprise. This “disruption” has not appeared overnight.
Unless disruption is used if there is a threat to any established hotel firm of more than 20 years’ duration?
Oyo’s CEO Ritesh Agarwal told Hotel News Now contributor Chitra Balasubramaniam that “globally, the majority of the chains operate properties that have over 100 rooms, while in reality nearly 80% to 90% of the assets in the hospitality industry are small or independent hotels with less than 100 rooms. This was an opportunity that was not realized by large chains and created a unique space for us. … There is a huge disconnect between demand and supply of quality living spaces, forcing travellers and city-dwellers to compromise on location, quality and price. Oyo uses technology and talent to fix this problem.”
That does not sound like disruption to me. Just a market gap. And I repeat that I have heard people use the word “disruptor” immediately before using the word “Oyo” on numerous occasions.
It is not good enough to exhaustedly say this as an excuse not to move your own business model quickly enough.
My main concern for Oyo is how it can maintain quality across a rapidly expanding portfolio. Unless its guests are those happy with basic necessities, in which case Oyo might be disrupting a great deal fewer people and firms.
Agarwal added “the macro environment for Oyo to operate in any country remains that majority of the hotels are unbranded and operate at sub-25% occupancy versus the branded ecosystem at 75%.”
As I say, a market gap, and there should be sufficient additional travelers popping up all over the place to allow Oyo’s clients to be new guests, not existing ones “stolen” by disruptive forces.
By the way, the article also has become the most-read HNN article in our more than 10 years of publication, so the interest evidently is there.
Jo&Joe beers 1 to 10
I visited the Jo&Joe Paris-Gentilly hostel-hotel hybrid last week for its grand opening, the first flagship of this brand created in-house by Accor, and the first such brand it has developed in many, many years.
The opening was on 18 April, but the hotel softly opened on 6 April. I was told it already has had its first night of 100% occupancy, and that is in regards to beds, not rooms.
It contained one offering that I particularly liked, a beer-pump rack of generally good craft brews that guests can pay for with their room keys that can be charged with Euros.
Pop the card on the metal plate at the top of the pump of your choice, pull the lever, and when your plastic pint glass is as full as you want, extract the card. The screen on the pump will show you your new balance.
And with four hammock chairs outside in a sunny garden (18 April was a gorgeous day), one needs never worry about disruption in any form ever again.
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