Oyo CEO shares plan for making the ‘most-loved’ brand
 
Oyo CEO shares plan for making the ‘most-loved’ brand
23 APRIL 2019 8:16 AM

In merely five years, India’s Oyo Hotels & Homes has grown from one property to more than 515,000 rooms in more than 500 cities.* Its mission? To become “the most-loved hospitality brand in the world,” according to founder and CEO Ritesh Agarwal.

GURUGRAM, India—Oyo Hotels & Homes is one of the most significant hotel industry growth stories of recent years and attracted funding from major players, notably Japanese bank SoftBank Group and Airbnb.

Founded in 2013 by now 25-year-old Ritesh Agarwal, the company is now looking to expand internationally. Agarwal spoke with Hotel News Now about his brand, its expansion and the innovation needed to survive in today’s hospitality world.

Q: Oyo is setting up a rapid pace for growth having attracted a lot of funding. What are its growth prospects, and how will you be able to achieve your targets to justify the investments?

Agarwal: “We started with one fully managed building in Gurgaon, India, back in 2013, with the ambition of becoming a full-scale hospitality company, and today we lease or franchise over 18,000 buildings across 10 countries.

“Globally, the world’s accommodation market stands at 160 million rooms and is a $3.6 trillion opportunity and growing. With us capturing less than one percent of the larger pie, we are just scratching the surface. We foresee an enormous opportunity for us to build a truly world-class brand.

“We are aggressively moving ahead to not only become the largest hospitality brand but also become the most-loved hospitality brand in the world. We are investing heavily on strengthening our capabilities in technology, talent and network, while creating an ecosystem of efficiency through which we are able to deliver higher yields for our asset owners. We have invested (heavily) in CapEx, appointed hundreds of GMs to oversee operations and customer experience, created job opportunities for over 100,000 people in India alone and set up 26 Oyo Skill Institutes for hospitality enthusiasts.

“On an average, over 75% of hotel owners associated with Oyo have seen an increase of 20% to 30% in occupancy, a 2.5-times jump in (revenue per available room) and a significant jump in profit for every asset operating as an Oyo-branded building. In the last five years, we have seen a 4.3-times year-on-year growth with realised value run-rate of $1.8 billion annualised.”

Q: What synergies are you looking at for Oyo following this notable investment from Airbnb? Would you also be using Airbnb’s reach to market Oyo properties?

Agarwal: “As the sixth-largest hotel chain operator in the world, we at Oyo are committed to offering our guests and travelers great quality living spaces. We are happy to have Airbnb as our partner in this vision. Airbnb’s strong global footprint and access to local communities will open up new opportunities for (us) to strengthen and grow while staying true to our core value proposition.

“We’re excited by the possibilities and committed to bringing benefits to the millions of travelers who can now rely on Airbnb and Oyo to find a home away from home.”

Q: What gap in the market did you find, and why was your move successful?

Agarwal: “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. It is our mission to create quality living spaces. We believe hospitality and real estate are broken categories. 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.”

Q: Your model has been successful in India. Do you think the same model will work overseas, or are you tweaking your model for different countries?

Agarwal: “We are currently in 10 countries around the world: India, China, Malaysia, Nepal, United Kingdom, United Arab Emirates, Saudi Arabia, Indonesia, The Philippines and Japan. We understand that each market is unique in its own way, so we localize the product experience and interiors of our buildings and our overall approach.

“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%. Our teams across international geographies have observed local nuances with respect to the hotel industry in each of the countries we are present in. These observations help us in highly localizing and personalizing the experience for our guests.

“For instance, in The Philippines, as the country has a lot of devout Christians, most hotel rooms keep a copy of the Bible in the drawer or on the table in the rooms for guests; in Indonesia, most hotel rooms have the Qibla sign, also known as Arah Kiblat in the local language Bahasa, (signifying) the direction in which daily prayers should be offered; as Malaysia hosts a lot of Indian tourists, hotels provide information on the nearest Indian/South Indian restaurants.

“(Other examples include) hotels not having a room 13 and in China most hotels accept payment by QR code and even pre-booking by QR code scans because of the high level of online payments in the country.

“We are proud that every country we have opened Oyo hotels in, we have increased the occupancy from 25% to 65% in less than three months on average, and as consistently high as 90%. We’ve received overwhelming support for our high-quality and affordable offerings across all our geographies.”

Q: The U.K. is a relatively new market for you. How is that going?

Agarwal: “In the U.K. we have (more than) 30 hotels across London, Birmingham, Manchester, Blackpool and Edinburgh. We are aiming towards launching our 50th hotel in the U.K. by the end of April.

“The Oyo Townhouse Sussex Gardens, our first in the U.K., saw occupancy jump from 60% to over 90% after it became an Oyo Townhouse. This stellar performance has encouraged the asset owner to sign a second property with Oyo.”

Q: What is the next phase of growth? Which markets, what are you looking at for the future?

Agarwal: “Our expansion across India and international territories is backed by our strong operational capabilities and our ability to use technology to improve efficiencies at every touch point. We are looking at the largest 15 to 20 markets of the world that are characterised by fragmented inventory.

“The future looks bright as these are also all-purpose markets like China and the U.K. We can foresee an enormous opportunity for an Indian hotel chain to become the largest hotel chain in the world in the years to come.

“There is no stopping for us. Wherever there is a scope of hospitality industry, there should be Oyo.”

*Correction, 24 April 2019: This article has been updated to correct Oyo Hotels & Homes' company name and the total number of rooms in its portfolio.

3 Comments

  • John Powell April 25, 2019 1:56 AM Reply

    I've stayed with OYO a few times, the last two being Mclaudgunj and Goa.
    While there is an attempt to standardise, there is failure of standards at the moment of truth - the human interface at the properties. The standards of hygiene are questionable. In Goa, the property did not even have running water in tap, when I checked-in. My sister was stuck in a shower for over 30minutes and the so called captain helplessly kept saying water would be available after a couple of hours. The management also tried to pass of dirty linen as though it was clean. The experience manager said he.would call back but did not bother. We checked out of the property and went to another across the road, absolutely no issues there. Oyo is growing fast but if it's people think this growth will continue irrespective of what they dish up, it won't be long before the fall.

  • Hotel April 25, 2019 11:29 AM Reply

    It’s a high time told you about the ranking system that is followed by OYO. The rankings are usually based on performances and feedbacks from the customers and this is what all other platform follow this, whereas OYO give rankings if only you subscribe to the ranking which is not free. OYO doesn’t respect the feedbacks or satisfaction from the customers but only it cares for the paid subscription. This is totally unprofessional and unethical.

    i believe OYO doesnt stand for "Order Your Oscar"

  • Sreekumar Iyer April 26, 2019 8:22 PM Reply

    Dear Sir,

    We, a family of four (3 guest 1 child), have been living in OYO Home Stay from March 17, 2019. From March 17 to April 25 we were living in your Property No.22264 in Kochi. There is only one reason for leaving that property is that behaviour of the Manager namely Ms. Maya. She doesn't know the meaning of what is politeness or basic etiquette. I am very sorry to say that she is an unfit for even sweeper in hospitality industry. Rather than hearing the complaint of the customer she has the habit of resisting with justification. I don't have the hesitation to admit that the property is value for money we paid, but she is horrible. Still we have been continuing there because of youngest daughter loved the ambience there.

    In short, being a journalist worked national and international, I have never experienced such a bad behaviour from a manager of Hospitality Industry.

    In the light of above, I request you to please bring the matter to property owner so that they will get good customers in the days to come.

    With love & regards
    Sreekumar Iyer

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