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OYO Rooms

Submitted by Group 5

Zaid alawadhi

: 1602021153

Parth Agrawal

: 16020241112

Jitin Nair

: 160202411098

Angad Khunger

: 16020241144

Bhavnesh Diwan

: 16020241086

Satish Kumar

: 16020241123

OYO Rooms is Indias fastest growing branded network of budget hotels

founded by young entrepreneur Mr. Ritesh Agarwal on 2013. Within a short span
of time, OYO Rooms currently operating in more than 100 Indian cities including
Delhi, Gurgaon, Mumbai, Bangalore, Hyderabad, Goa, Chennai, Kolkata are few
to name. Similarly, OYO has been trying to be present in major Metros, Regional
hubs, leisure destinations and pilgrimage towns. Hotel owners who partner with
OYO Rooms are connected via worlds first tablet based property management
App and become part of the OYO brand.

Vision:
To change the way people stay away from home.
Technology Driven
OYO uses technology to link all its functions and provide the customer a seamless
awesome experience.

Business Model of OYO Rooms

Oyo Rooms Business Model, though a lot similar to the usual aggregator
business model (Uber for x business model), is different from it. Oyo Rooms
Books a part of Hotels inventory beforehand,
Organize those hotel rooms under their brand name Oyo Rooms

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These partner hotels provide standardized service to customers of those rooms as

decided in a contract with Oyo.
Bookings are made through the Oyo Rooms website and mobile
application.

How Oyo Rooms Work

Oyo rooms is the largest branded network of hotels currently operating in
India and Malaysia. Oyo is a hotel aggregator with a business model similar to that
of Uber (Aggregator business model).
This Aggregator business model has certain characteristics. The firm organises
the unorganised businesses operating under the same domain, make them work as
their partners by signing of a contract, and sell their products under its own brand.
The main focus, in these type of business models, is on quality of the service
provided. Hence, to maintain the name, they make the partners provide services at
predetermined standards while they make them more visible to their user-base.
Oyo Rooms Business Model is a hotel aggregator model. The services are
bought by the users under the name of Oyo rooms and not any individual
partner (like in Make My Trip business model). Just like uber, Oyo provides
rooms with standardized quality and price.
Business Model of Oyo Rooms is different from AirBnBs business model as
Oyo doesnt focus just on discoverability of the partners among
the users but also on the standardized quality of the services
provided.
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Aggregator Business Model, What is it and how does

it operate?
Aggregator Business Model is a network model where the firm collects the
information about particular good/service providers, make the providers their
partners, and sell their services under its own brand. Since aggregator is a brand,
they have to provide services which has a uniform quality and price. This is done
through signing up a contract with the partners.
The good/service providers never become aggregators employees and
continue to be the owners of the good/service provided. Aggregator just help them
in marketing in a unique and a win-win way.

Who Are the Customers?

The Users.
Unlike usual Aggregator Business Model where a commission is charged from the
partners for providing them with customers. Oyo earns through a take up rate.
That is, they hire a part of hotels inventory for a month or a specified time period, at
a specified price and offer those rooms to the visitors of its website/application at
different set prices.

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Characteristics of Aggregators Customers

The ultimate users of the good/service are not the customers of the aggregator. The
providers of the good/service are.

1. Industry
All the service providers are from the same industry. Aggregators collect the
good/service providers of a single industry and organize them under his own
brand. Like Uber in taxis, FoodPanda in food delivery, Oyo in hotels, etc

2. Partnership Model

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The good/service providers are not the employees of the aggregator. They act as
partners to the business. Partners always have the freedom to accept or to reject
the offer provided by the aggregator (these terms are clarified in the contract).

3. Brand
Aggregators spend most of their revenue in building up a brand. This brand have
certain notable features like quality, price band, on demand delivery, etc. All the
goods/services are provided under a single brand but by different providers.
Branding is done at every customer touch point to have a recall value.

4. Quality
The aggregator strives to provide a standardized quality to every user. They make
sure that the partners provide you the standardized quality product/service. These
aggregators have teams that make sure quality is maintained.

5. Contract
A contract is signed between the aggregator and the goods/service provider where
all the terms are cleared. The terms provide a win-win situation for both the parties
where the partners focus on providing quality product/service to the customers and
the aggregator focus on marketing and creating more leads for the partners.

Aggregator Revenue Model

As already stated above, the good/service providers are the real customers of the
aggregators.

Aggregators provide them with the customers and in return charge some

commission. (Uber Business Model), or

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The partners quote the minimum price at which theyll operate and the

aggregators, after adding up the take up rate, quote the final price to the consumer.
(Oyo Business Model)
This method isnt always in operation. The revenue generation is different for
different business stage, cycle, and season. There is a big role of discounts and
surge pricing in determining the total revenue generation by the aggregators.

Pricing
Aggregators are different from a marketplace (like Amazon, Alibaba, Flipkart, etc.).
They provide different services for different but definite prices (or price bands).
For E.g. UberX has a definite price per kilometer.

Competition
Competition in aggregator business model is tough to handle as same partners
might work for competitors.

How Does Aggregator Business Model Work?

Aggregator visits the Good/service providers.

Aggregator shows them the model (more customers).
Service providers are now the partners.
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Aggregator builds up his own brand.

Brand attracts the customers.
Brand also provide offers.
This results in customers to the partners
Promises fulfilled.
Aggregator gets the commission.

Revenue Model of Oyo Rooms

Oyo Rooms books a part of the hotels inventory (expense).
These rooms are put to match the standardized quality like free WiFi, clean toilets, etc. (Expense)
These Rooms are offered to the customers at Oyo Rooms
Website/Application
Users buy these from Oyo Rooms at a predetermined price.
(Revenue)

Oyo is currently in its introduction stage in many cities (and in growth stage in
others) and it has to provide (and has being providing) heavy
discounts to the customers.

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These discounts often result in prices which are even less than
the cost price of these hotel rooms and hence result in
losses to Oyo rooms.
The expenses also include the heavy expenses on promotional activities to increase
the brand equity among the users as well as the remuneration of the employees.

OYO Rooms Expenses

Employees 2,200
Salaries @ 25,000 per employee per month - 3 crore per month
Hotels 6,500
Rooms (considering an average of 5 per hotel, half of OYOs claim) 88,500
Inventory Cost 67.5 Crore per month
Total Expense 70.5 Crore per month (excluding advertising, marketing and
other OPEX)
How is OYO Rooms able to use its own branding at these
hotels if they dont own any property?

You have to understand how these 0 to 2 star hotel owners operate. In most
cases, they have other primary businesses and the hotels are simply used as a tool to
show losses. Many of them dont bother to see regularly if their hotel is doing any
business at all, lets forget about profitability. So, they are not interested in any
marketing or customer service themselves as much as it is generally required from a
hospitality business.
But, they wouldnt mind if some free money is going to come from somewhere if
they dont have to move a muscle to get that, would they?

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Growth of OYO Rooms

OYO Rooms started with one city and one hotel (OYO Rooms Huda City
Centre) in Gurgaon in May 2013 and has seen a tremendous growth. With whopping
budget hotels under its branded network across the India, OYO Roomsgrowth has
been nothing short of phenomenal, and the rapid expansion has meant that the
funded start-up now owns Indias largest branded network of hotels. The company as
of August 2015 has more than 2000 hotels with more than 20000 room capacity
spread over 100 cities of India. Moreover, the company has planned to add more
than 50 cities by the end of 2015. Now, OYO Rooms has been named India's largest
budget hotel chain.
Continuing with its rapid expansion drive, OYO Rooms today crossed an
important milestone as it became Indias largest budget hotel chain. Backed by the
funding from various sources and strong consumer partners, OYO Rooms also has
set itself a revised target to expand its network. Ritesh Agarwal, Founder and CEO
of OYO Rooms are quite hopeful that Indias budget hospitality market is ripe for
disruption and as the market leader; OYO is best poised to lead this change. Strong
customers feedback and loyalty encourages the company to redouble its growth
efforts to bring the OYO experience to as many Indian travelers in as many different
cities as possible and at the earliest.

As a leader, OYO Rooms has created a new paradigm in the hospitality sector
through an asset-light managed marketplace model. This innovation coupled with
sound execution has been recognized by several national and international accolades
including TIE Lumis Business Excellence Awards, India International Travel Mart
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Award and Lufthansa ET Now Runway to Success Award. Now the company has
more than 1000 employees including 10-20 people from IIMs, more than 200 people
from IITs, HBS and Ivy.

Detail of OYO Rooms Properties

Year

Number of Property (Hotels)

2013 January

1 Property

2013 June

3 Properties
13 Properties

2014 July
2015 August

2000+ Properties

2016

4500+ Properties

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Redefining OYO Rooms through Technology

In a highly customer facing hospitality industry, for OYO Rooms the first
focus was on creating a highly efficient hotel booking app for the customers. In the
beginning of May this year, the company came up with an app that allowed hotel
bookings to be done within 2 steps. When you open the app put in your search query,
the app gives you all the required information about the hotels near you. All your
profile information is already stored inside the app. All you need to do is to click on
the book button to make your bookings. The company has thus reduced the hotel
booking activity to a 2 step process when you put in your search query. Through the
app the company has tried to provide a seamless way to access and manage your
bookings !
Behind the scenes of creating a 2 steps booking app is a lot of effort put into
hotel standardization. To make the user comfortable to book a hotel without having
to worry about hotel reviews requires a lot of trust to be created about the hotel
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aggregator. OYO Rooms has an intensive standardization process setup in which the
their sales forces visits every hotel to collect data and pictures and to filter out only
those hotels that OYO Rooms trusts to provide good services to their customers.
In order to make sure that the process of hotel standardization is handled in the
same way in 90+ hotels and has over 1500+ rooms that the company works with,
OYO Rooms has also come up with an app for the standardization process. Sales
reps across cities are given tablets which have an app that provides parameters on
which the hotel can be evaluated. The sales reps when at the hotel make sure that all
the checklist is checked for as a part of hotel standardization process, pictures and
customer reviews are recorded as a part of this process. Customer reviews have a lot
of weight assigned when evaluating a particular hotel. Coming up with such an app
has immensely helped the company to set up stricter quality checks across all the
cities that they exist in today.
India is surely going digital slowly and steadily but there are still certain hotels
who do not maintain a digital inventory. This was hampering the efficiency of results
that OYO Rooms could provide their customers and the company therefore has
come up with a tablet app for hotel owners that allows them to maintain room status,
room service requests etc through the tablet. The tablets are installed by OYO
Rooms at hotel locations. This not only gives the hotel owners a better idea of their
own inventory but also gives OYO Rooms better visibility and data about the hotel.
The basis for creating these apps has come from the experience that the
company has managed to gather over the years and personal experience that the
founder and the management team have had staying at various hotels.To put himself
in the shoes of his customers, Ritesh Agarwal, Founder & CEO-OYO Rooms, stays
in a OYO Rooms Hotels very frequently. One of the main problem that Ritesh came
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across was the customer experience that was being provided by the budget hotels.
Simple things such as the number for calling rooms service was not available in the
hotel rooms. The company has now therefore come up with a solution to put up a
tablet in each room in some of the OYO Rooms Hotels.
Customers can now order room service directly via the app. Other
information such as directory of various numbers inside the hotel as well as list of
restaurants and places to visit around the hotel are also provided in the app. This is
the first time in India that such services are being provided in budget hotels.

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