‘We'll Con­tinue to De­liver on Our Prom­ise of Creat­ing Qual­ity Liv­ing Spa­ces’

FICCI Business Digest - - Lead Story -

OYO has been at the fore­front of the small and bud­get ho­tel revo­lu­tion in In­dia, Malaysia, and Nepal, and we will con­tinue to strengthen our foot­print in China by fo­cussing on lo­cally rel­e­vant stan­dard­ised ser­vices at af­ford­able prices. We'll con­tinue to de­liver on our prom­ise of creat­ing qual­ity liv­ing spa­ces and de­light the guests of OYO Jo­dian (trans­lated as ho­tels in Chi­nese) while en­sur­ing high yield for as­set own­ers. We en­tered China with a thought that how will a Chi­nese com­pany run it­self if it wanted to em­u­late OYO and the results are vis­i­ble. Each and ev­ery as­pect of o ur op­er­a­tions in China is highly lo­calised.

Oyo Aims to Pro­vide an Af­ford­able and Trusted Stay Op­tions for Both In­dian and In­ter­na­tional Tourists

Ritesh Agar­wal, Founder & CEO, OYO, speaks to Business Di­gest and shares what keeps ahead and at the fore­front.

OYO is present across 230 cities in In­dia as well as in Malaysia and Nepal. What made you de­cide to ven­ture out­side of the coun­try?

OYO was launched in 2013 with an ob­jec­tive to cre­ate a per­fect equi­lib­rium be­tween lo­ca­tion, com­fort, and pric­ing. In the past five years, we've de­liv­ered pre­dictable, af­ford­able and al­ways-avail­able ho­tel ac­com­mo­da­tion to trav­ellers by us­ing pro­pri­etary tech­nol­ogy and skilled tal­ent pool of hos­pi­tal­ity ex­perts. Our idea be­hind the over­seas ex­pan­sion is to reach out to hos­pi­tal­ity mar­kets across the world that have char­ac­ter­is­tics sim­i­lar to In­dia. Un­branded ho­tel room sup­ply ac­counts for a ma­jor­ity share of ho­tel sup­ply world­wide; our model is suit­able for such mar­kets to trans­form their hos­pi­tal­ity ex­pe­ri­ence. Our en­try and ex­pan­sion in China is aligned with OYO's mis­sion of creat­ing beau­ti­ful liv­ing spa­ces by em­pow­er­ing ho­tel own­ers to be­come bet­ter hos­pi­tal­ity play­ers while en­sur­ing an end-to-end con­trolled ex­pe­ri­ence for the guests. With this ex­pan­sion to global ter­ri­to­ries, we aim to pro­vide an af­ford­able and trusted stay op­tions for both In­dian and in­ter­na­tional tourists, business trav­ellers and lo­cal city-dwellers.

You have plans to ex­pand to China. What made you choose China as the next coun­try to ex­pand to? How dif­fer­ent or sim­i­lar is the Chi­nese mar­ket?

In China, we saw a sim­i­lar mar­ket op­por­tu­nity. The coun­try's tourism in­dus­try is flour­ish­ing, and it of­fers a tremen­dous op­por­tu­nity both in terms of the mar­ket size and trav­ellers while its hos­pi­tal­ity sec­tor is as frag­mented as In­dia's. OYO's launch in the coun­try aims at pro­vid­ing an af­ford­able and trusted stay op­tion for both In­dian and in­ter­na­tional tourists, business trav­ellers and lo­cal city-dwellers.

OYO has been at the fore­front of the small and bud­get ho­tel revo­lu­tion in In­dia, Malaysia, and Nepal, and we will con­tinue to strengthen our foot­print in China by fo­cussing on lo­cally rel­e­vant stan­dard­ised ser­vices at af­ford­able prices. We'll con­tinue to de­liver on our prom­ise of creat­ing qual­ity liv­ing spa­ces and de­light the guests of OYO Jo­dian (trans­lated as ho­tels in Chi­nese) while en­sur­ing high yield for as­set own­ers.

We en­tered China with a thought that how will a Chi­nese com­pany run it­self if it wanted to em­u­late OYO and the results are vis­i­ble. Each and ev­ery as­pect of our op­er­a­tions in China is highly lo­calised. This lo­cal­i­sa­tion has helped us in cus­tomis­ing our of­fer­ing from the point of view of a trav­eller in the coun­try and what was lack­ing from his/her ex­pe­ri­ence ear­lier when OYO was not around. This also gave us an

edge with the lo­cal tal­ent pool. To sum it up, OYO copied what OYO it­self has been ex­e­cut­ing since its in­cep­tion in In­dia to gain this mo­men­tum in China.

What are some of the lessons you learnt from the suc­cess and chal­lenges you faced in the home mar­ket be­fore you ven­tured into the global mar­ket?

The In­dian bud­get hos­pi­tal­ity mar­ket, when we started out, was largely seg­mented with no real sense of con­sis­tency. The prob­lem that we saw was not the lack of bud­get ac­com­mo­da­tion, or even ac­cess­ing these prop­er­ties, but the lack of pre­dictabil­ity and stan­dard­i­s­a­tion in terms of the cus­tomer ex­pe­ri­ence. So we launched OYO with a goal to pro­vide has­sle-free stay ex­pe­ri­ence at af­ford­able prices with­out any com­pro­mise on lo­ca­tion or com­fort.

Our ex­per­tise in man­ag­ing a chain of ho­tels along with OYO's business model cre­ates a unique of­fer­ing for both the cus­tomers and ho­tel part­ners. We have mul­ti­ple tech­based so­lu­tions for our as­set part­ners in­clud­ing the Prop­erty Man­ager app that acts as an end to end one-stop solution tablet-based app for man­ag­ing all daily func­tions of the prop­erty – vis­i­bil­ity book­ings, sales chan­nels, cus­tomer re­quests, house­keep­ing, fi­nances. With the Owner App, the as­set own­ers can have com­plete vis­i­bil­ity of cash flows, business per­for­mance, pric­ing, cus­tomer re­views, and rec­om­men­da­tions. Fur­ther to this, we have a ro­bust on-ground team of OYO Cap­tain that un­der­takes phys­i­cal au­dits of prop­erty at reg­u­lar in­ter­vals to en­sure stan­dards of ser­vice qual­ity are main­tained. All these facets come to­gether to cre­ate an em­pow­er­ing ecosys­tem for our guests and part­ners, and that's what makes OYO ex­cep­tional.

We iden­ti­fied the most crit­i­cal el­e­ments con­tribut­ing to a de­light­ful stay – clean linen, WiFi, break­fast, AC rooms, TV and clean wash­rooms – and have been suc­cess­ful in en­sur­ing a con­sis­tent stan­dard of ser­vice and ameni­ties for our guests. It is grat­i­fy­ing to say that we have been able to bring about a change in the way peo­ple con­sider stay­ing away from home.

In the in­ter­na­tional mar­ket your com­pe­ti­tion is from lo­cal and in­ter­na­tional play­ers? How have you geared to take on the global giants?

Com­pe­ti­tion is good for con­sumers and ho­tel part­ners, and it keeps us on our toes. Five years ago, in 2013, we started OYO with the in­tent to solve the de­mand-sup­ply im­bal­ance that af­flicted In­dia's hos­pi­tal­ity in­dus­try and re­alised the im­por­tance of qual­ity liv­ing spa­ces. In these years, we've built and demon­strated deep ca­pa­bil­i­ties in part­ner­ing with var­i­ous for­mats of real es­tate and rapidly trans­form­ing them into beau­ti­ful liv­ing spa­ces. After dis­rupt­ing the bud­get space and en­abling value-driven ex­pe­ri­ences for both our guests and as­set part­ners, we have made our pres­ence felt in the mid-seg­ment space with OYO Town­house, Sil­verKey, OYO Home and added mul­ti­ple brands to OYO's port­fo­lio with Cap­i­tal O, Edi­tion O and Pal­ette Re­sorts by OYO.

With a unique op­er­at­ing model pow­ered by award-win­ning ser­vice and op­er­a­tional ef­fi­cien­cies, OYO has cre­ated a unique space for it­self both in the In­dian mar­ket and foray into the in­ter­na­tional mar­kets with a strong per­for­mance in China and the UK In a brief span of 10 months, we've ex­panded OYO's chain of ho­tels in China to 171 cities with over 87,000 rooms. We are run­ning four Town­house ho­tels in the UK and this strong per­for­mance is a tes­ta­ment to OYO's ra­zor-sharp fo­cus on creat­ing qual­ity liv­ing spa­ces, glob­ally.

How im­por­tant has been the role of SoftBank as an in­vestor in your global march?

SoftBank has been one of the fore­most in­vestors in OYO, not only in terms of funds but also in the kind of con­fi­dence Masayoshi Son has shown in our mis­sion. SoftBank's as­so­ci­a­tion with us for the past three years has not only re­in­forced in­vestor con­fi­dence in our brand and its unique business model, but with each fresh in­flux of fund­ing, we are able to de­velop and ex­pand our ca­pa­bil­i­ties fur­ther and ex­plore newer av­enues of hos­pi­tal­ity and aes­thetic liv­ing. Son has al­ways been known for his in­ge­nu­ity and dif­fer­en­ti­ated think­ing and has ex­pressed his con­fi­dence in what we are try­ing to build – qual­ity liv­ing spa­ces for mil­lions of trav­ellers at per­fect lo­ca­tions at af­ford­able prices. He's a vi­sion­ary in the truest sense and is com­mit­ted to in­vest­ing in or­der to build ecosys­tems, creat­ing jobs and driv­ing im­pact, and has a

very en­thu­si­as­tic view of the In­dian mar­ket and its vast po­ten­tial. With the kind of sup­port and guid­ance he has of­fered OYO, within five years of our in­cep­tion, we have so­lid­i­fied our po­si­tion as South Asia's largest and world's fastest grow­ing ho­tel chain in terms of net­work pres­ence and in­ven­tory and be­come the go-to hos­pi­tal­ity brand for has­sle-free and af­ford­able ac­com­mo­da­tion.

From 2013 to 2018, within five short years, you have seen phe­nom­e­nal growth. Do you think you have con­sol­i­dated enough be­fore ex­pand­ing?

We are ar­dent be­liev­ers in in­no­va­tion and want to do things dif­fer­ently ev­ery day. The last five years have truly been an ex­tra­or­di­nary jour­ney of growth and grit. OYO In­dia cur­rently has over 125,000 rooms is wit­ness­ing 3x growth in trans­ac­tions year-on-year with net take rates over 20 per cent. In ad­di­tion to at­tain­ing unit-level prof­itabil­ity, the com­pany is ben­e­fit­ing from 90 per cent de­mand com­ing from its di­rect chan­nels, im­prov­ing op­er­at­ing ef­fi­cien­cies and cus­tomer loy­alty, with over ~67 per cent of the top line in In­dia com­ing from re­peat cus­tomers. OYO China, on the other hand, has pres­ence in 171 cities with over 87,000 rooms, in over ten months since its foray into the mar­ket. While we con­tinue to be fo­cused on ex­pan­sion into new mar­kets, our pri­or­ity will re­main high-qual­ity cus­tomer ex­pe­ri­ences and in­creased yields for ho­tel own­ers.

It is also be­ing spec­u­lated that soon you would be ex­pand­ing to Dubai? Is that cor­rect?

As men­tioned above, we are on a con­stant look­out for des­ti­na­tions with sim­i­lar traits as of In­dian bud­get hos­pi­tal­ity mar­ket and fac­ing the chal­lenge of de­mand and sup­ply gap. We'll con­tinue to iden­tify and ex­plore such mar­kets but cur­rently, don't have any com­ments to of­fer on ven­tur­ing into Dubai.

Do you think OYO has solved com­plex prob­lems and is wellplaced to ap­ply their so­lu­tions to in­ter­na­tional mar­kets? What are some of the business model in­no­va­tions you have un­der­taken in re­cent times?

Our ap­proach in China and other in­ter­na­tional des­ti­na­tions has been sim­i­lar to what we have had in In­dia since in­cep­tion. The macro re­mains the same. There are 4 mil­lion rooms in In­dia and 32 mil­lion rooms in China which are un­branded and less than 100 room ho­tels. We un­der­stand how to op­er­ate small ho­tels prof­itably. Our macro abil­ity to op­er­ate small as­sets prof­itably com­prises some of OYO's core at­tributes of fran­chis­ing and leas­ing small as­sets and en­sur­ing high yields while de­liv­er­ing a qual­ity ex­pe­ri­ence for our guests. As we move to newer ter­ri­to­ries there will be tac­ti­cal dif­fer­ences but the ul­ti­mate goal stays the same – work­ing with un­branded ho­tels, stan­dar­d­is­ing them and mak­ing them bet­ter hos­pi­tal­ity play­ers. At the end of the day, the cus­tomer wins be­cause they get a bet­ter-qual­ity prod­uct at a lower price. We are also sup­port­ing our cus­tomer to en­hance their business by im­ple­ment­ing new-age tech­nol­ogy like AI, IoT and ma­chine learn­ing. When the as­set owner and cus­tomer win, then we count it as a win for OYO too.

What marks the suc­cess of a new ven­ture?

In ad­di­tion to rev­enue num­bers and growth statis­tics, which are of course the most quan­tifi­able iden­ti­fiers of how well or poorly any ven­ture is do­ing, it is also im­por­tant to map the out­comes of the said ven­ture, in terms of the kind of im­pact it has had on the given in­dus­trial seg­ment and/or con­sumer be­hav­iour. This of­ten serves as a strong in­di­ca­tor of whether the ven­ture is suc­ceed­ing in achiev­ing its ob­jec­tives or not. For us at OYO, be­yond the growth num­bers, the fact that 90 per cent comes from re­peat and or­ganic cus­tomers, makes us re­ally happy. This is a tes­ta­ment to how much our guests en­joy the OYO hos­pi­tal­ity.

As a mil­len­nial en­tre­pre­neur, what is your mes­sage to as­pir­ing young en­trepreneurs?

A great idea is worth­less if you don't get started. I would sug­gest start­ing early and ask­ing for hon­est feed­back, so you know what to ex­pect when the time comes for Se­ries A, B or even C fund­ing. It is es­sen­tial to see your idea through to fruition be­fore di­ver­si­fy­ing. Build­ing a strong core team of mem­bers early on, who not only of­fer their ex­per­tise but also their coun­sel and trust also goes a long way.

Ritesh Agar­wal

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