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Oyo Business Model(Case Study) How Oyo Works & Earns?

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September 8, 2019

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Oyo Rooms is the largest branded network of hotels. Currently, OYO rooms are operating with more than 450,000 listings in almost 5,000 cities across India, Malaysia, UAE, Nepal, China, and Indonesia. The man behind the great startup which is popular as OYO Rooms of Oyo rooms is Ritesh Agrawal. He was born in Bisham in Cuttack, Orissa in the year 1993 on 16th November. Oravel Stays Pvt.Ltd was Ritesh Agarwal’s first startup. Some Problem Faced by OYO were High Cash Burn, Standardization, Competition, Malpractices. It acquired Novascotia Boutique Homes on Sep 28, 2017, AblePlus Solutions Pvt. Ltd. On July 10, 2018, Weddingz on Aug 13, 2018, Innov8 Co-working on March 15, 2019, Qianyu Islands on March 26, 2019, Leisure Group  on May 1, 2019OYO has got 12 funding rounds until now.In which it has raised for about $ 1.7B. Full Detail in Blog.

DO YOU KNOW? Out of total rooms booked via OYO rooms,   28 per cent of people book Oyo rooms after they get into a new city. 36 per cent of people are business travellers. Another 36 per cent is made up of couples. Oyo Rooms is the largest branded network of hotels. Currently, OYO rooms are operating with more than 450,000 listings in almost 5,000 cities across India, Malaysia, UAE, Nepal, China, and Indonesia.

WHATS IN IT FOR YOU?

FOUNDER – OYO ROOMS

The man behind the great startup which is popular as OYO Rooms of Oyo rooms is Ritesh Agrawal. Ritesh Agarwal was born and brought up an in a middle-class Marwari family. He was born in Bisham in Cuttack, Orissa in the year 1993 on 16th November. Ritesh started his entrepreneurial journey at the age of 17. He dropped out of his college, in the year 2012, in the same year he launched Oravel Stays Pvt.Ltd. Oravel Stays Pvt.Ltd was Ritesh Agarwal’s first startup. He designed this company for customers to enjoy the platform for enabling listing and booking of budget accommodation. Being a passionate traveller, he soon realized that the budget accommodation sector lacked many things. Therefore, in 2013 he transformed Oravel to OYO Rooms with the key vision of offering affordable and standardized accommodations. Undoubtedly, he achieved so much in such a short span of time. He is a great inspiration for the people who believe success is earned only after one has years and years of experience. Hence, his achievements are worth knowing. Achievements of  Ritesh Agarwal Ritesh Aggarwal, at the age of 24 was India’s biggest entrepreneur. He has won many national as well as international awards. I have mentioned a few awards that he has won :

• TiE-Lumis Entrepreneurial Excellence award in 2014
• Business World young entrepreneur award
• Forbes “30 under 30” in the consumer tech sector
• Top 50 entrepreneurs in 2013 by TATA First Dot powered by NEN awards

OYO BUSINESS MODEL (OLD)

Earlier, OYO used aggregator business model same as of  U ber  and Ola Oyo’s earlier strategy was to book some of the rooms of the hotel’s inventory. Then, they used to apply uniform standards and develop user’s friendly environment in the hotels to maintain it as per the quality standards exclusively for Oyo customers. OYO gets a heavy discount from the hotel owners as they book rooms in advance for the whole year. Then they allow customers to book the rooms from an online platform under the name of OYO rooms. The benefit to hotel owners was that they got bulk bookings in advance. The benefit to customers was that they got high discounts. Let me explain to you by an example:- Suppose, If the cost of 1 room/night = Rs. 3000   Oyo rooms get a discount on the bulk reservation, let’s say 50% Cost to OYO rooms = 3000*50/100= Rs. 1500

Oyo resells it at Rs. 1800 to customer

Profit to customer= Rs. 1200

Profit to OYO is Rs. 200/room.

PROBLEM FACED BY OYO

There were many challenges faced by OYO rooms based on their hotel aggregator business model. Let us discuss some of the major challenges faced –

• High  Cash burn rate Hotel Aggregator business model involves a very high cash burn rate. Advance booking of the hotel rooms for the whole year needs a lot of cash burn. Also, since the company is in their expansion mode they are offering heavy discounts in order to acquire the customers.
• Standardization One of the major issues was of standardization which was faced by OYO. Since the company was dealing with non-branded hotels, the level of professionalism was low. It soon became a challenge for OYO to delight their customers at every point of contact.
•  Competition OYO is the market leader and it is true that leaders define the path. Oyo has opened paths for many other competitors.
• Malpractices The partners who are the hotel owners used to book their own hotel rooms when they used to see lower prices on the Oyo’s platform and this became malpractice benefiting the hotel owners. To stop this, and to expand the business, Oyo Rooms has started leasing of hotels and places where it has full control over the day-to-day operations of these hotels.

PRESENT DAY BUSINESS MODEL (NEW) The company started off its operations by building its business model around the aggregator business model but things have changed since 2018. The New business model of Oyo Rooms is Fully stack and Franchise Business. It’s just the company doesn’t lease the hotel rooms anymore, but now it asks the hotel partners to operate them as a franchise. The founders of OYO decided to shift its business model to a pure franchise business model. They have partnered with hotels and made them work with them under their name.

FINANCIAL FACTS AND FIGURES

    458,000 ROOMS GLOBALLY AND REALISED VALUE RUN RATE OF $1.8B     WITH A Y-O-Y GROWTH OF 4.3X AS AT                                                 DECEMBER 2018

Categories –  Hospitality, Hotel, Leisure, Reservations, Travel

Founded Date   –  May 21, 2013

Founders –  Ritesh Agarwal

Last Funding Type –  Series E

Number of Employees –  1001-5000

Legal Name – Oravel Stays Private Limited

Till now OYO has 6 acquisition . It acquired –

• Novascotia Boutique Homes on Sep 28, 2017
• AblePlus Solutions Pvt. Ltd. On July 10, 2018
• Weddingz on Aug 13, 2018
• Innov8 Co-working on March 15, 2019
• Qianyu Islands on March 26, 2019
• Leisure Group  on May 1, 2019

FUNDING ROUND AND AMOUNT

OYO has got 12 funding rounds until now. In which it has raised for about $ 1.7B. They got their latest funding on Apr 1, 2019, from a Series E round. Airbnb Invested for about $ 75 Million in OYO. Website and its monthly traffic OYO is ranked 9,303 among websites globally. And it has more than 6,129,043 monthly web visitors .

MANAGEMENT AND THE CORE TEAM

CEO  – Ritesh Agarwal CFO –  Abhishek Gupta GROUP CHIEF TECHNOLOGY AND PRODUCT OFFICER – Anil Goel CHIEF OPERATING OFFICER – Abhinav Sinha CHIEF HUMAN RESOURCES OFFICER –  Dinesh Ramamurthi CHIEF STRATEGY OFFICER – Maninder Gulati PRESIDENT- CORPORATE AFFAIRS – Siddhartha Dasgupta CBDO  –   Anuj Tejpal

The strategy adopted by Oyo

You might have thought about the strategies implemented by OYO that, made it so successful. Let’s discuss the strategical approach of the brand OYO ROOMS. To maintain its ranking and perform above all its competitors, OYO focuses mainly upon mass retention and acquisition. It is using Digital Marketing section very aggressively for customer acquisition and lead generation. Oyo knows the power of Social media. Hence, it is very strategically using all the platforms available for social media coverage. They target mass potential customer based on their behaviour, interest and many other factors which are readily available via Digital Marketing. Social media presence of OYO includes more than 2.7 lakh fans on Facebook, more than 8000 followers on twitter. The company claims to have over 1.5 million app downloads with a very good number of active users. The brand actively participates into several social media campaigns such as –

• #Aurkyachahiye videos on youtube.
• IPL final verbal combat by OYO
• Fathers Day celebration campaigns
• They also featured Bollywood celebs Manoj Bajpai and Raveena Tandon in a campaign named Jai Hind which was a massive success.

SWOT ANALYSIS

Growing Protectionism

SERVICES PROVIDED BY OYO

Oyo Townhouse To stand out of the competition and retains  its value proposition in terms of standardized hospitality and quality, The Brand has recently launched the Oyo Townhouse. Each OYO Townhouse is designed to complement its neighbourhood. OYO has undertaken complete operations of these Townhouse units along with interior and exterior re-engineering. The concept of Oyo Townhouse is based on the needs of the millennial traveller. The company is claiming that this townhouse network is its fastest-moving network and will include more than 400 Townhouse properties by the end of 2019.

Yes, OYO allows unmarried couples into the hotel based on some ID proofs.

Every room in the OYO is legal and is safe for the couples as they need an ID proof to get in the hotel and they can live without any issue.

It was started on May 21, 2013, by Ritesh Agarwal and the business has been running from 2013 by connecting more and more hotels.

OYO (ON YOUR OWN) was started by Ritesh Agarwal on May 21, 2013 and the headquarter is located at Gurugram.

The full form of OYO is ON YOUR OWN which defines that you can choose your own room and live.

It’s just the company doesn’t lease the hotel rooms anymore, but now it asks the hotel partners to operate them as a franchise.

The New business model of Oyo Rooms is Fully stack and Franchise Business.

• SoftBank Group Corp. is dispatching two executives to help Oyo Hotels, one of the largest startups in its portfolio, right its virus-stricken business in Japan, according to people familiar with the matter.
• NoBroker ties-up with OYO LIFE, to scale up its co-living service.
• Delhi HC directs Oyo to furnish an affidavit of unencumbered assets for Anam Datsec
• OYO Indonesia in hot water after refund and payment complaints go viral.
• Agarwal will work with Dr Apoorv Sharma, founder of VCats to promote entrepreneurship across the country’s tier 1, 2 and 3 cities and help India become ‘Atma nirbhar’ (self-reliant).
• Indian hotel group OYO in talks with UAE, Saudi partners to review agreements.
• OYO, FICCI develops online certification course for the hospitality industry.

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Sir Oyo ke New business model par video banao please am your Big fan sir???????????

hello sir, plz make one video on crowd funding w uebsite , can i use it for personal purpose and how these sites make money

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OYO - Elevating Hospitality Standards Worldwide

Bharath , Manisha Mishra

In the earlier days, the hospitality industry operated on a localized scale, limiting itself to specific areas. People often discovered accommodations only upon reaching their destination or relied on agents for lodging during travel. The unbranded nature of this industry introduced uncertainties, which were subsequently addressed and reshaped during the internet and technological boom.

This transformative period saw the emergence of various players, such as Airbnb and FabHotels, with OYO standing out among them. OYO's rapid success and widespread popularity played a pivotal role in branding and restructuring the entire industry in our country. Notably, OYO has evolved to become the third largest hotel chain globally (as of June 2019).

In this article, we will delve into the successful journey of OYO, its founder, business model, funding, competitors, and more.

OYO - Company Highlights

OYO - About OYO - Industry OYO - Founders and Team OYO - Startup Story OYO - Mission and Vision OYO - Name and Logo OYO - Business Model OYO - Revenue Model OYO - Challenges Faced OYO - Funding and Investors OYO - Investments OYO - Acquisitions OYO - Growth OYO - Programs and Feature launch OYO - Partnerships OYO - Layoff OYO - Advertisements and Social Media Campaigns OYO - Awards OYO - Competitors OYO - Future Plans

OYO - About

OYO, also referred to as OYO Hotels or OYO Rooms, is an international hospitality platform that offers reasonably priced lodging options all over the world . The business offers consumers the option to choose rooms and living areas that best fit their needs at an affordable price by listing both franchised and leased hotels on its marketplace.

OYO's successful marketing tactics and flexible expansion plans are responsible for its noteworthy growth. Founded in 2012, OYO, with its headquarters in Gurgaon, Haryana, was established by Ritesh Agarwal when he was just 19 years old. The business has considerably grown since its founding, operating in several cities across several nations.

Apart from standard hotel accommodations, OYO provides an extensive array of services, assisting users in locating residences , holidays , long-term and short-term rentals , and meeting different business or corporate travel requirements . OYO is positioned as a flexible participant in the international hospitality market.

OYO - Industry

As to a report analysis by Statista, the hotels industry is anticipated to witness significant expansion, with a projected revenue of US $9.13 billion by 2024. The results point to a strong expansion trajectory and a predicted annual growth rate (CAGR 2024–2028) of 5.41% .

The market volume is predicted to rise further if current trends continue, with an anticipated value of US $11.27 billion by 2028. Based on a thorough research carried out by Statista, these estimates highlight a good picture for the hotels business, demonstrating ongoing expansion and changing consumer patterns.

OYO - Founders and Team

Ritesh Agarwal is the co-founder and Group CEO of OYO.

Ritesh Agarwal

Ritesh Agarwal is the co-founder and Group CEO of the online hospitality chain OYO . He was born in Odisha. His interest in business started early in his teens. Ritesh dropped out of college and was accepted into the Thiel Fellowship program in 2013. His time at Thiel Fellowship and the year before laid the foundation for OYO. He has joined the Shark Tank India Season 3 panel as the youngest shark.

OYO - Startup Story

While residing in California in 2013, Ritesh Agarwal established OYO with the original goal of running an Indian hotel through Oravel Stays. Targeting low-cost tourists online, the hotel in Gurgaon later rebranded as OYO saw a sharp increase in occupancy rates in just its first month, going from 19% to 90%. After coming back to India, Agarwal saw the opportunity to elevate budget accommodations all throughout the world.

OYO's concept arose from Agarwal's desire to please both owners and guests. It is focused on smart updates, optimized services, and dynamic pricing. OYO's strategy, which was centered on the preferences of its guests and little elements like soft white light, enhanced reviews and guaranteed profitability, signifying its transformation from a single property to a worldwide hospitality network.

OYO - Mission and Vision

Mission: The OYO mission in the company website is mentioned as "OYO is a global platform that empowers entrepreneurs and small businesses with hotels and homes by providing full stack technology that increases earnings and eases operations. Bringing affordable and trusted accommodation that guests can book instantly."

Vision: OYO vision is to empower entrepreneurs and small businesses with homes and hotels to increase earnings and simplify their operations .

OYO - Name and Logo

The name OYO stands for 'On Your Own’ rooms. Earlier, the company was named 'Oravel' but later changed to OYO.

OYO - Business Model

OYO's unique business model represents the first hotel chain to be integrated with OTA -like distribution capabilities . In contrast to conventional approaches, OYO tackles practical issues in the actual world, with brand development coming naturally rather than as the main goal.

It functions as a redesigned hybrid, skillfully fusing technology and hospitality to maximize client satisfaction, efficient use of available space, and general corporate success.

The dedication to customer pleasure that is at the heart of OYO's ideals is demonstrated by the company's initial acceptance requirements and its upfront investment in modernizing each hotel before it joins the OYO network.

OYO's core advantage is its ability to consistently prioritize the needs of its customers. The company has shaped its business model to optimize the customer experience, effectively utilizing technology and hospitality to improve space utilization and overall business performance.

OYO - Revenue Model

OYO employs a diverse revenue model to sustain its business, featuring several key streams:

Commissions:

OYO has a commission-based business model, taking a cut of about 22% from its hotel partners for each reservation made via its website. Depending on variables like property kind, location, and other considerations, the proportion might change.

Franchise Charge:

OYO has a franchise model whereby it charges its partners fees for the use of its technology, brand, and operational assistance. One-time or ongoing payments are included in this income stream, which makes up a sizable portion of OYO's earnings.

Room rate margins:

By selling rooms to visitors at a higher price than it originally negotiated with partner properties, OYO makes money by keeping the difference between the selling and reduced rates.

Membership in OYO Wizard:

Wizard Blue, Wizard Silver, and Wizard Gold, OYO's premium memberships, are a profitable revenue stream.

Promotions, Collaborations, and Sponsorships:

Through sponsorships, brand promotions, and advertisements on its website and app, OYO makes money off of its platform. To increase overall revenue, businesses pay OYO fees for the display of their advertisements.

Income from Supplementary Services:

By charging more for upscale offline services and facilities, OYO diversifies its revenue sources. Breakfast, transportation, laundry, and other extras bring in money and give consumers something extra, all while strengthening OYO's bottom line.

OYO - Challenges Faced

OYO faced various difficulties in the past that are typical of many startups. The business struggled with massive layoffs, conflict with hotel partners, and lawsuits related to disagreements in contracts. Although the aggressive pricing strategy was successful in drawing in customers, it also caused worries about profitability and sparked legal attention, especially because of claims of predatory pricing.

Due to complaints of dormant or nonexistent listings, the legitimacy of OYO's platform was also called into question. The COVID-19 pandemic dealt a further blow to these difficulties, forcing OYO to traverse a challenging environment and deal with governance concerns in order to ensure a stable future. These obstacles are similar to those that startups in the cutthroat hotel sector frequently encounter.

OYO - Funding and Investors

OYO went through 18 funding rounds as of 2022 out of which it has raised $3.3 billion.

Below are some of the recent funding rounds of OYO:

OYO - Investments

OYO has invested in OYO LIFE , signaling a strategic move to diversify its portfolio beyond conventional hospitality services as of October 30, 2018.

OYO - Acquisitions

OYO has acquired 9 companies around the world so far.

The following are the 9 companies that have been brought under the management of OYO:

OYO - Growth

OYO's journey began modestly, evolving from a small platform supporting local customers and businesses into the world's third largest multinational hotel chain  as of June 2019. Starting in 2012, OYO debuted with sponsorship support and unveiled its website in its first year of operation. The firm reached 100 cities with 10,000 rooms by 2015, and in 2016, it went outside of India and than later went on to expand into the UK, China, the US, Indonesia, Europe, and other regions

OYO launched a number of services throughout its expansion phase, including OYO Townhouse , OYO Workspaces , OYO Wizard , and OYO Life . Even with sporadic controversies like the one with the'relationship mode' feature the business became well-known. OYO's strategic expansion and ongoing introduction of new features helped to cement the company's reputation throughout the world.

Some of the growth highlights of OYO are:

• OYO Corporate Business Solution has 4,000+ exclusive hotels , as mentioned on their website as of January 2024.
• OYO Corporate Business Solution has a presence in 230+ cities and towns as of January 2024, spanning across 4 countries .
• OYO has over 174,000 hotels and homes around the nation as of January, 2024.
• It is present in over 35 countries as of January, 2024.
• OYO reached the milestone of 100 million downloads in 2021.
• The estimated company valuation is $7 million as of May 2022.

OYO Expenses

OYO total expenses reduced from Rs 6,985 crore in FY22 to Rs 6,800 crore in FY23.

OYO - Programs and Feature launch

Super oyo program.

The Super OYO program was introduced by OYO in December 2022. Through this initiative, customers were able to identify hotels that provided the most reliable and superior customer service.

OYO Accelerator Program

In March 2023, OYO announced the launch of the Accelerator Program, with plans to add more than 200 properties in key Indian cities to its portfolio as part of the accelerator project.

OYO Spotless Stay Program

In July 2023, OYO introduced the Spotless Stay Program, as part of their planned initiatives. The program was designed to implement new cleaning and hygiene requirements, simultaneously enhancing hotel and room decor.

Stay Now, Pay Later Feature

OYO has introduces Stay Now, Pay Later Feature in June, 2023. This feature follows the rise in popularity of buy now, pay later (BNPL) plans for buying consumer electronics from retail stores and e-commerce websites.

OYO New Brand Palette

In cities including Jaipur, Hyderabad, Digha, Mumbai, Chennai, Manesar, and Bengaluru, OYO said it has opened 10 Palette resorts as a pilot program. By Q2 FY24, it plans to increase that number to 40 as per from various news report said in July, 2023.

OYO - Partnerships

Some of the prominent partnerships of OYO are:

In March 2023, OYO had established a partnership with Lemon Tree. The collaboration aimed to enhance the occupancy of Lemon Tree Hotels' banquets and event spaces in over 40 locations nationwide, including Delhi NCR, Jaipur, Kolkata, Lucknow, Bhubaneswar, Mumbai, and Pune, among others.

In September 2023, the parent company of OYO, Oravel, had formed a partnership with SoftBank. Through this collaboration, they introduced the premium hotel chain Sunday in India, establishing a relationship with SoftBank Japan.

OYO - Layoff

In December 2022, OYO made 600 layoffs as part of a significant reorganization, which had an impact on the corporate and technology divisions.

OYO - Advertisements and Social Media Campaigns

OYO Campaign

OYO launched a multi-film brand campaign that featured renowned actors such as Gul Panag, Kalki Koechlin, Chitrangada Singh, and Kunal Kapoor. The campaign aimed to highlight the everyday experiences of tourists by utilizing television, social media, and over-the-top platforms .

In response to the changing tastes of travelers during the pandemic, OYO placed a strong emphasis on customization and flexibility in their brand campaign. The first movie emphasized the advantages of OYO's "Nearby" feature , which allows customers to easily book lodging with a tap on the smartphone and takes advantage of OYO's widespread presence in over 35 countries globally.

OYO - Awards

OYO has won various awards. Some of the prominent ones are:

• In the hospitality sector, the Ministry of Skill Development and Entrepreneurship presented the 2017 National Entrepreneurship Award to OYO.
• OYO won the 2019 ASEAN-India Excellence & Achievement Award .
• OYO won the 2018 ET Startup Awards , the biggest startup competition in India.

OYO - Competitors

The following are some of the top competitors of OYO:

Airbnb is one of the popular and well-known competitors of the company. It was established in 2007 and is considered to be a predecessor and a luminary for OYO. Airbnb serves to be a trusted brand globally due to its affordable prices and availability of excellent accommodations.

• Treebo Hotels

Treebo is a growing hotel chain in India that has established its operation in over 113 cities in the country. This company operates in the category of the premium budget segment. Treebo Hotels is based in Bangalore , Karnataka, India.

FabHotels was founded in 2014 by two alumni of "The Wharton School of the University of Pennsylvania." It rents out 3-star rated hotels at a budgeted price under its brand. FabHotels operates in more than 66 cities , with over 900 hotels in India as of November, 2022.

OYO - Future Plans

OYO had originally planned to go public in 2022, but due to worries about the worldwide market slump and how it may affect the firm's valuation, the company decided to strategically delay its IPO to an unspecified future date. This delay was caused by the worry of a reduced worth.

According to a news report from January 2024, the Indian hotel booking company, supported by SoftBank Group Corp., is allegedly in talks with Khazanah to lead a $400 million fund raising in order to pursue expansion and debt reduction. It's crucial to remember that this information has not yet been verified.

Furthermore, according to a different news report from January 16, 2024, OYO intends to expand its portfolio by 400 new hotels with an emphasis on religious tourism.

When was OYO founded?

OYO was established in 2012.

Who is the founder of OYO?

Ritesh Agarwal is the founder of OYO.

What is the valuation of OYO?

OYO valuation was last reported at $7 billion in May, 2022.

What is the operating revenue of OYO?

OYO operating revenue was recorded at Rs 5,464 crore in FY23.

What is OYO famous for?

OYO is famous for budgeted hotel bookings and affordable stays.

Who are the top competitors of OYO?

Some of the top competitors of OYO are:

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OYO Case Study: History, Valuation, Product, Services & Growth

Oyo Rooms (stylized as OYO), also known as Oyo Hotels & Homes, is an Indian hotel chain. It is one of the largest and fastest-growing hospitality chains of leased and franchised hotels, homes, and living spaces. Founded in 2013 by Ritesh Agarwal, OYO initially consisted mainly of budget hotels. The startup expanded globally with thousands of hotels, vacation homes, and millions of rooms in hundreds of cities in India.

HISTORY In 2012, Ritesh Agarwal launched Oravel Stays to enable listing and booking of budget accommodations. After undertaking months of research and staying in various bed and breakfast homes, guest houses, and small hotels across India, he pivoted Oravel to OYO in 2013.

OYO partners with hotels to give similar guest experiences across cities. Shortly after launching Oravel Stays, Ritesh Agarwal received a grant of $100,000 as part of the Thiel Fellowship from Peter Thiel. OYO currently has over 17,000 employees globally, of which approximately 8000 are in India and South Asia. OYO Hotels & Homes now identify as a full-fledged hotel chain that leases and franchises assets. The company claims to invest in CAPEX, GMs to oversee operations and customer experience as well as generating around a million job opportunities in India and South Asia alone. OYO has also set up 26 training institutes for hospitality enthusiasts across India.

VALUATION – The company is currently valued at $10 billion as per the last round of funding. – September 2018 – raised $1 billion, of which the RoC filing for the amount of $100 million raised from Star Virtue Investment Ltd. was made on 13 February 2019. – October 2019 – Series F funding of $1.5 billion led by SoftBank Group, Lightspeed Venture Partners, and Sequoia India. – Founder & CEO, Ritesh Agarwal, through RA Hospitality Holdings (Cayman) in 2019 signed a $2 billion primary and secondary management investment round, supported by global institutional banks and his financial partners, subject to regulatory and shareholder approvals. Lightspeed Venture Partners, and Sequoia India, OYO’s early supporters, are selling part of their holdings in order to help the founder increase his stake and thereby commitment while remaining invested significantly in the company’s long-term mission.

PRODUCT & SERVICES Oyo Rooms have a wide product portfolio that is updated from time to time to cater to the needs and demands of the various types of customers leading to product line stretch. It has also co-branded with various other service providers like Airtel for Wifi support, Ola for transport support, Biotique for in-room toiletries, Air Pegasus, PayPal, and Mobikwik for payments to increase its service base and for the comfort of the customers. It has multiple product lines with varying depths: – Hotel Budget Rooms Oyo Rooms partners with hotels with the aim of providing standardized services including free wi-fi and breakfast, flat-screen TVs, spotless white bed linen of a certain thread count, branded toiletries, 6-inch shower heads, a beverage tray, etc. These services are available in around 180+ cities in India and in Malaysia. Budget rooms according to their price range are divided into Standard, Premium, Elite rooms leading to the product depth of 3. – OYO Townhouse which is promoted as the neighborhood hotel is in the midscale segment targeted at millennial travelers. – OYO Home, which OYO claims is India’s maiden Home Management System that offers private homes in different locations and is fully managed by OYO. – OYO Vacation Homes identifies itself as the world’s 3rd largest vacation home brand with vacation rental management brands Belvilla, Danland, and DanCenter along with Germany-based Traum-Ferienwohnungen. – SilverKey launched in April 2018, caters to the needs of the corporate travelers undertaking business trips for a short or long duration. – Capital O offers hotel booking services. – Palette offers a perfectly curated staycation for those in search of an intuitive experience at competitive prices, an upper-end leisure resorts category. – Collection O offers to book and renting services to business travelers. – OYO LIFE, targeted at millennials and young professionals in search of fully managed homes on long-term rentals, at affordable prices.

GROWTH In its first year of operations, OYO clocked a revenue of Rs 32.86 crore and a steep loss of Rs 496.31 crore. By the end of FY 2018, its top line had scaled to Rs 415 crore while losses stood at Rs 360 crore. Year on year, OYO saw its revenues climb 245 percent while losses widened marginally from Rs 355 crore to Rs 360 crore. In its short life, OYO Hotels and Homes have been variously described as a hotel aggregator, an online travel agency (OTA), and even a Ponzi scheme with an unsustainable business model, but never a hotel chain. Today, OYO is India’s largest hotel chain with 173,000 rooms under management. It is also the world’s third-largest, with over half a million rooms over the 18,000 properties that it currently franchises and leases in 500 cities across 10 countries.

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{Case Study} OYO Business Model: Revolutionizing Hospitality Industry

Explore the Oyo business model and discover how Oyo makes money. Delve into the history of Oyo, its business model canvas, and a compelling case study.

Understand Oyo’s competitors and analyze its SWOT analysis. Dive into this comprehensive article to gain valuable insights into Oyo’s success.

Disrupting the Hospitality Landscape

In today’s fast-paced world, the hospitality industry is constantly evolving to meet the needs of modern travelers. One company that has made a significant impact in this space is Oyo, a hospitality unicorn that has revolutionized the way people book and experience hotels. In this article, we will delve deep into the Oyo business model, exploring how Oyo makes money, examining its fascinating history, dissecting its business model canvas, conducting a compelling case study, analyzing its competitors, and finally, understanding its strengths, weaknesses, opportunities, and threats through a detailed SWOT analysis.

Oyo Business Model: Paving the Way for Success

Oyo’s business model is built on the foundation of providing affordable and standardized accommodations to travelers across the globe. Let’s explore how Oyo generates revenue and sustains its impressive growth.

How Does Oyo Make Money?

Oyo employs a multi-faceted approach to generate revenue. Here are some key ways in which Oyo makes money:

• Franchise Fees : Oyo partners with property owners, offering them a brand affiliation and access to Oyo’s technology and operational expertise. In return, Oyo charges franchise fees, which are a percentage of the property’s revenue.
• Commissions : Oyo acts as an online travel agency, listing partner properties on its platform and earning commissions for each booking made through its website or app.
• Oyo Homes & Hotels : In addition to hotels, Oyo also operates in the vacation rental space. Through its Oyo Homes & Hotels segment, it offers fully managed homes and apartments, charging guests a fee for their stays.
• Upselling Services : Oyo enhances the guest experience by offering additional services such as food and beverage, spa treatments, and airport transfers. These upselling services contribute to Oyo’s revenue stream.
• Technology Licensing : Oyo has developed an advanced technology infrastructure to manage its operations efficiently. Oyo licenses its proprietary technology to other hotel chains, earning revenue through technology licensing agreements.

A Brief History of Oyo: From Humble Beginnings to Global Dominance

Oyo was founded in 2013 by Ritesh Agarwal, a young entrepreneur from India. The company started as a budget hotel aggregator, aiming to provide quality accommodation options at affordable prices. Oyo quickly gained traction and expanded its presence across India, catering to the growing demand for standardized budget accommodations.

In 2015, Oyo received a significant boost when it secured funding from SoftBank, a prominent Japanese conglomerate. This investment propelled Oyo’s growth and allowed the company to expand its operations globally. Today, Oyo has a presence in over 80 countries and operates thousands of properties worldwide.

Oyo Business Model Canvas: Analyzing the Building Blocks

The Oyo business model can be visualized and analyzed using the Business Model Canvas framework. Let’s break down the key elements of Oyo’s business model canvas:

Customer Segments

• Budget-conscious travelers seeking affordable yet comfortable accommodations.
• Property owners looking to leverage Oyo’s brand, technology, and operational expertise.

Value Propositions

• Affordable and standardized accommodations for guests.
• Increased occupancy and revenue potential for property owners through Oyo’s brand affiliation and operational support.
• Oyo’s website and mobile app serve as primary booking channels for guests.
• Direct sales and partnerships with property owners.

Customer Relationships

• Oyo aims to build long-term relationships with guests by providing a consistent and quality experience.
• Collaborative partnerships with property owners, offering support and value-added services.

Revenue Streams

• Franchise fees from property owners.
• Commissions from bookings made through the Oyo platform.
• Fees from Oyo Homes & Hotels segment.
• Revenue generated from upselling services.
• Licensing fees from technology partnerships.

Key Resources

• Oyo’s technology infrastructure for managing operations.
• Brand reputation and customer trust.
• Operational expertise and support.

Key Activities

• Property onboarding and standardization.
• Technology development and maintenance.
• Sales and marketing efforts.
• Guest support and service delivery.

Key Partnerships

• Property owners and managers.
• Technology partners.
• Online travel agencies for distribution.

Cost Structure

• Technology development and maintenance costs.
• Marketing and advertising expenses.
• Employee salaries and benefits.
• Property onboarding and operational costs.

Oyo Case Study: The Journey to Success

One notable case study in Oyo’s success story is its expansion into China, a highly competitive and complex market. In 2017, Oyo entered China, facing numerous challenges such as cultural differences, intense competition, and a vast geography. However, through strategic partnerships, localization efforts, and a relentless focus on customer satisfaction, Oyo managed to establish a strong foothold in the Chinese market.

By tailoring its offerings to meet the unique preferences of Chinese travelers and leveraging technology to streamline operations, Oyo achieved rapid growth, becoming one of the largest hotel chains in China within a short span of time. This case study exemplifies Oyo’s ability to adapt and succeed in diverse market conditions.

Oyo’s Competitors: Navigating a Crowded Space

While Oyo has experienced tremendous success, it operates in a highly competitive industry. Let’s take a look at some of Oyo’s key competitors:

• Airbnb : A global vacation rental platform that offers a wide range of accommodations, from private homes to unique stays.
• Booking.com : A leading online travel agency that provides a comprehensive selection of hotels, apartments, and other travel accommodations.
• Marriott International : One of the world’s largest hotel chains, offering a diverse portfolio of luxury and budget properties.
• Expedia Group : A travel technology company that operates multiple online travel agencies, including Expedia, Hotels.com, and Vrbo.
• MakeMyTrip : A popular Indian travel booking platform that offers a wide range of domestic and international accommodations.

Oyo’s SWOT Analysis:

To gain a deeper understanding of Oyo’s position in the market, let’s conduct a SWOT analysis:

• Strong brand recognition and global presence.
• Extensive network of properties and partnerships.
• Advanced technology infrastructure for seamless operations.
• Focus on delivering value and quality to guests.
• Operational challenges in maintaining consistent quality across a diverse property portfolio.
• Reliance on external funding for expansion.
• Vulnerability to market fluctuations and economic downturns.

Opportunities

• Untapped markets with growing demand for budget accommodations.
• Expansion into adjacent segments, such as corporate travel and long-term rentals.
• Leveraging technology for personalized guest experiences and operational efficiencies.
• Intense competition from established hotel chains and online travel agencies.
• Regulatory hurdles and compliance issues in various markets.
• Shifting consumer preferences and emergence of new disruptive models.

s: Unlocking Key Insights about Oyo**

Q1: How does Oyo ensure the quality and consistency of its accommodations? Oyo has a robust quality assurance program in place, which includes regular audits, standardized operating procedures, and guest feedback mechanisms. This ensures that properties meet Oyo’s quality standards and provides a consistent experience for guests.

Q2: What sets Oyo apart from traditional hotel chains? Oyo’s key differentiators include its focus on affordability, standardized quality, and technology-driven operations. By leveraging technology and operational expertise, Oyo offers a unique value proposition to both guests and property owners.

Q3: How does Oyo select properties to partner with? Oyo follows a rigorous selection process, evaluating factors such as location, potential for revenue growth, property infrastructure, and willingness to adhere to Oyo’s quality standards. This ensures that Oyo’s portfolio consists of properties that meet guest expectations.

Q4: Does Oyo own any properties or are all properties operated by partners? Oyo primarily operates through partnerships with property owners, acting as a franchise or management company. However, Oyo has also started acquiring properties in select markets to enhance its offering and increase control over the guest experience.

Q5: What is Oyo’s approach to sustainability and responsible tourism? Oyo is committed to sustainability and responsible tourism practices. The company focuses on energy efficiency, waste reduction, and community engagement initiatives to minimize its environmental impact and contribute to local communities.

Q6: Can property owners customize their offerings within the Oyo framework? Yes, property owners have the flexibility to customize certain aspects of their offerings, such as food and beverage options or additional services. Oyo provides guidelines and support to ensure that the core guest experience remains consistent.

Conclusion: Oyo’s Path to Success

Oyo’s disruptive business model has transformed the hospitality industry, making quality accommodations more accessible to travelers worldwide. By leveraging technology, forging strategic partnerships, and prioritizing customer satisfaction, Oyo has achieved remarkable growth and emerged as a global leader.

Through its franchise fees, commissions, additional services, and technology licensing, Oyo has created a diverse revenue stream. The company’s history, business model canvas, case studies, analysis of competitors, and SWOT analysis provide valuable insights into its journey and future prospects.

As the hospitality landscape continues to evolve, Oyo’s ability to adapt and innovate will be crucial to maintaining its competitive edge. With a customer-centric approach and a commitment to quality, Oyo is well-positioned to shape the future of the industry.

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OYO Business Model | How Does Oyo Make Money?

Last updated: September 30, 2021

Company: Oyo Rooms CEO:  Ritesh Agarwal Year founded: 2013 Headquarter:  Gurgaon, Haryana, India. Number of Employees (2019):  25,000+ Type: Private Valuation (Aug 2020): $8 Billion Annual Revenue (FY 2019): $951 Million Profit |Net income (FY 2019): -$335 Million

Products & Services:  Online room-booking services (Oyo Rooms) | Oyo Flagship | Oyo Townhouse | Oyo Home | Oyo Capital O | Oyo Collection O | Oyo B Direct | Oyo SliverKey Competitors: Treebo Hotels | FabHotels | YourOwnRoom | VistaRooms | Keys Hotels | NestAway | NoBroker | SquarePlums | Airbnb

What started from a single hotel service in India, Oyo has now turned out as one of the world’s largest hotel network brands .

It has stretched out its roots to 230 cities with over 44,000 hotels with over 1.2 million rooms. Through its app-based booking facility, Oyo allows customers to book rooms within a few seconds. Oyo delivers similar awesome experience across all of its rooms with its excellent room services and amenities. In 2020, Oyo has expanded its operations to over 800 cities in 80 countries and offers over 130,000 homes around the world through the OYO vacation homes business. [ 1 ]

OYO’s valuation dropped by $2 billion from $10 billion in 2019 to $8 billion in August 2020 due to uncertainties in the global market. But OYO’s valuation drop is very small compared to other global giants in the sector like Airbnb that dropped by over 50%. [ 2 ]

Table of Contents

Business Model Canvas of Oyo

Oyo started as a hotel aggregator and used to lease some rooms and sell them under its brand name. However, it changed its business model from the aggregator to the franchise model. It involved partnering with hotels, asking them to operate as a franchise, and selling their rooms to customers at competitive prices .

So, what does the franchise model mean in the hotel industry?

What it means – Oyo does not own hotel properties that are listed on their website. Oyo renovates the hotels according to its checklist of standard services, and make the hotel property a part of its “ standardized budget hotel chain ” with Oyo’s branding.   

What makes Oyo’s business model unique and different from other hospitality companies is its standardized hospitality services . It focuses more on user experience rather than only hotel’s room availability and prices.

The company has embarked on an aggressive global campaign in 2020 by offering free accommodation to frontline healthcare workers and foreigners stranded overseas due to the recent health crisis. CEO Ritesh Agarwal selected several facilities from its list of international hotels in India, the US, and other countries to house professionals working on the frontlines. [ 3 ]

To become Oyo’s partners, every hotel has to meet a set of guidelines for services, pricing, staff quality, features of rooms, security, etc.

1. Customer Segments of Oyo

Oyo has served over 180 million customers in 2019 from 120+ nationalities and catered to 750,000 guests every night on average throughout December 2019 . [ 4 ]

The customer segments of Oyo include:

• Adventure Travelers – All those travelers who want to explore different destination independently (in the low budget) or in a small group. Also known as backpack travelers .
• Leisure travelers – Travelers who want to take a vacation from everyday busy life.
• Family travelers – Those who travel in large groups and look for a spacious and comfortable stay, where they can also arrange parties, family events, weddings etc.
• Business travelers – Oyo also has commercial places on its platform where customers can book office spaces and conference rooms for their business purposes.

Here’s a snapshot on our expansion across global markets. We continue to delight millions of guests in thousands of OYO properties across hundreds of cities! More details on our FY'19 Annual Report here: https://t.co/o2ZqV5ODJF pic.twitter.com/8Y6clRPygR — OYO (@oyorooms) February 18, 2020

2. Value Propositions of Oyo

The value propositions of Oyo are its standardization of services to enrich the guest experience. 

Customer experience : Unlike Airbnb that only connects travelers with local hosts, Oyo takes full responsibility of services of the hotels listed on its platform.

Other value propositions are:

• Well-designed app
• simple and easy-to-use app for booking: Oyo has rolled out its Contactless Check-in feature that allows a quicker and safer check-in experience from anywhere at any time. [ 5 ]
• speed and reliability in finding hotels, bars, theatres
• personalized room features
• Holiday packages & discounts
• Discount membership program
• community and entertainment services

To refine its value propositions, it has launched separate banners of unique services.

Oyo Townhouse: Through Oyo Townhouse, millennial travelers can get smart services for their smart needs. ‘ Smart rooms ’ with specially-designed beds, formulated toiletries, power sockets, and TVs with Netflix installed are offered with 24/7 kitchen services. ‘ Smart menus ’ can be ordered by a mobile application. 

Oyo Studio Stays : Through Studio Stays, people can book rooms for their internships, jobs, or corporate stays. They can rent rooms for either single occupancy or twin sharing.

Oyo B Direct: It is primarily for business stays, which provide simplified reimbursement by GST ready invoices. 

Oyo Homes are fully designed private homes for people who are on their holidays.

Oyo Flagship : Oyo leases whole buildings/apartments for its Oyo Flagship brand. These buildings give a homely atmosphere as well as the comfort of the hotel. Friendly staff, vibrant decorations, theme-based rooms, and building walls with lovely quotations are some of its unique features.

Oyo Silver Key : it’s another exclusive service that provides executives and corporate clients executive apartments with private, spacious, and multi-utility services.

Weddingz.in : Oyo has also partnered with several banquet halls’ vendors to allow people to book their wedding venues through its easy booking services and within best prices. 

Oyo Wizard : Oyo has introduced a subscription model where wizard members can avail exclusive discounts, offers, deals, and cash back advantages. Oyo offers popular packages and hot selling deals for travelers.

An #OYOWizard gives you super OYO powers: 5% off on your current booking & up to 10% off on your future bookings. What’s more? Become an #OYOWizard now at an early bird price of ₹99 only. Tag your friends below to extend your powers. Know more here:  https://t.co/6mOrSfcSl6 pic.twitter.com/gxkAtrIEBd — OYO (@oyorooms) September 2, 2018

3. Customer Relationships of Oyo

Self-Serve Platform – Oyo has self-serve website and app, which is a primary tool for customers to access Oyo services. It has over 10 million+ app downloads so far.  

Hotel accommodation Staff – the hotel staff interacts with customers at the time of check-in and provides hotel services.

Customer Service Support – It maintains 24/7 active customer support to respond to customer queries. Moreover, to ensure customer loyalty and increase their trust, Oyo tracks their Net Promoter Score metric thoroughly. And that’s its why customer repeat rate of Oyo is highest in the industry.

Social Media – It does brilliant digital marketing and social media networking to reach customers.

4. Channels of Oyo

The channels of Oyo are:

• Website and mobile application
• Social media networks like Twitter , Facebook , and Instagram
• Neighborhood hotels
• Student organizations

5. Key Resources of Oyo

The key resources of Oyo include:

• Hi-tech app architecture: OYO expanded its app with two new features in 2020. Smart Pricing Manager was introduced within the OYO OS owner app to allow its partners to adjust their room prices instantly based on the prevailing situation on the ground. This feature enables hotel owners to capitalize on the sudden spike in demand or improve occupancy by reducing the price. It exploits local knowledge to enhance efficiency. OYO also introduced the Cancellation Prediction Engine feature, which predicts whether each customer who has booked a room will check-in. It helps hotel owners to optimize occupancy and avoid overbooking. [ 6 ]
• 44,000+  fully leased and franchised hotel properties with over 1.2 million+ rooms. The company acquired 17,000 homes under TUI Holiday Homes in early 2020, which has increased its portfolio of 140,000+ homes spread across 70 countries. The acquisition has expanded OYO’s market share in Europe to become a top 3 player in four key vacation markets. [ 7 ]
• Customer Database – Oyo has a large database of loyal repeat customers
• Employees with technical knowledge like programming, development, and maintenance, and other staff for business management.
• Venture Funding – Oyo has secured funding from many venture capital firms such as Sequoia Capital, SoftBank’s Vision Fund, etc.

We're making our mark in the Big Apple! Our Founder & Group CEO, @riteshagar recently took a tour of the @NYSE . Here's a glimpse of his interview where he delved deep into OYO's legacy so far as well as future plans to deepen our roots in the US. #NYSEFloorTalk https://t.co/tIKVhaDEFb — OYO (@oyorooms) February 22, 2020

6. Key Activities of Oyo

The key activities of Oyo are:

Platform – Creating, developing and maintaining Oyo’s website and app

Partnership – Partnering with hotels, vendors, event planners, etc

Customer experience – Ensuring the hotel services and maintaining quality

Sales & Marketing – Performing advertising and marketing activities. Active social media activities including updating pages of Facebook, Instagram. 

Recruitment – Hiring and retaining talented employees

Business growth – Developing a friendly and promising community to invite friends and attract people to sign up

Communication – Sustain effective communication with hotel partners, vendors, service providers, clients, and customers.

Health and Safety – Oyo launched the ‘ Scrubbed Clean ’ program in 2020 to ensure all its hotels in the US comply with the CDC health and safety guidelines. [ 8 ]

7. Key Partners of Oyo

The key partners of Oyo are:

• Hotels, clubs, corporations, banquet halls, etc.
• Event organizations
• Booking confirmation, location, navigation details, and cancellation can be managed through communication platform such as WhatsApp .
• Electronic payment services such as Paytm
• Taxi service providers such as OLA
• Dinner Reservation Services such as Dineout
• GPS services with Google maps
• In-room entertainment services with Netflix

8. Cost Structure of Oyo

The cost structure of Oyo includes:

• Platform (website and app) development and maintenance costs
• Renovation and branding cost
• IT infrastructure cost
• Marketing and advertising costs
• Employees salary costs
• Hotel Partners’ commissions
• Other operational and administrative cost

9. Revenue Stream of Oyo

As of fiscal year 2019, Oyo has annual revenue of $951 Million . Now let’s discuss how Oyo makes money?

How does Oyo make money?

• Commissions

Oyo charges around 22% of commissions every month from hotels owners. Commissions may vary as per the services and features offered.

• Room Reservation Fee

Customers pay a room reservation fee according to their services chosen. The room fee is charged with a few percentage margins of the hotels’ prices. For example, if a room is priced at Rs. 1,000 per night, Oyo makes only 10-20% commission from it, and that is their actual revenue.

• Membership fees

Users who subscribe to Oyo Wizard memberships are charged with premium fees ranging from Rs 500 to Rs 3000 . 

• Advertising

Oyo also charges different companies to place their ads on Oyo’s app and website. It also generates sizable revenue for Oyo.

• Sponsors and Partnerships

Oyo also charges some amount from its sponsors and key partners by promoting their brand name through advertising on their app. 

• Consulting Services

Oyo charges for its business consulting and data analysis services, it provides to its clients, including hotel, clubs, organizations, etc. It provides these services as it owns an extensive database of locations, hotels, event organizations, users, and their preferences.

Oyo has truly revolutionized the hotel industry with its efficient use of technology. It has redefined living spaces and taken the user experiences to the next level. With its quick booking facility, hassle-free rental experience, and convenient pricing, it has transformed the way people stay away from homes.

Its growth is unstoppable with its continual expansions to newer markets  while it has strongly built its brand name as the most prominent hotel network with both high quality and affordability.

 References & more information

• The Genius (2020, May 15). The rise of OYO, the world’s fastest-growing hospitality brand from India . The Genius Works
• Dash, S. (2020, Aug 4). OYO valuation drops to $8 billion ⁠— but it’s the smallest drop compared to other major hotel chains . Business Insider
• Gilchrist, K. (2020, April 8). India’s Oyo budget hotel chain pledges to house coronavirus frontline staff and those stranded . CNBC
• Gupta, A. (2020, Feb 17). ANNUAL REPORT CARD FY 2019 . Oyo Blog
• Business Editor (2020, Nov 1). OYO launches the ‘Contactless Check-in’ campaign . Hotelier India
• Press Release (2020, September 21). OYO Introduces New Revenue Management Technology . Hospitality Net
• Press Release (2020, Oct 28). OYO Vacation Homes acquires the TUI vacation rental business . Hospitality Net
• Karantzavelou, V. (2020, June 4). OYO launches the ‘Scrubbed Clean’ program in line with the CDC and AHLA Safe Stay guidelines . Travel Daily News

 Tell us what you think? Did you find this article interesting? Share your thoughts and experiences in the comments section below.

Brianna Parker

She is a creative writer, corporate storyteller and global brand consultant, who has a unique combination of a business and creative mindset.

19 comments

Cancel reply.

Aishwarya, Thanks for the kind words, I am glad you liked it.

Crisp and informative content!! Liked the way it is organized… Thank you team:)

I am glad you liked it Subramanian !

Fantastic content. Thank you!

Thank You Wai for your feedback, glad you liked it !

Thank you somuch very useful information

It’s really useful. Thanks for sharing!

Really quality content. thanks!!!!

Thanks Eashan !!!

OYO is an Indian accommodations model overlaid in the US which will never work. The idea of cheap rooms is good but they go into rundown motels and slap their logo on the motel, give the rooms a refresh all the while the motel is still in the worst areas and locations. 95% of their “affordable rooms” are in very questionable areas . Take a look on their website.

Thanks Phil for the feedback. You have raised some very good points here.

OYO business model is fairly consistent either in the USA or India.

OYO has positioned itself as a budget hotel/motel chain. They give visibility to low budget hotels that don’t have access/resources (websites, capital to upgrade their rooms/services) to attract their target audience. As a result, low budget hotels have lower occupancy compared to other hotel chains.

By default, these low budget hotels tend to be closer to airports or in the lower-income communities, but I think even budget hotels would appreciate a little upgrade or refresh 😉

Will it work in the US market?

It’s still very early to tell if it’s going to work for the USA market or not, so far stats suggest that they are growing aggressively in the USA.

Oyo had started with one property in Dallas, Texas in 2018-2019.

Within one year or so, – They have expanded to over 70 hotels in Texas alone. – Overall in the US, they have expanded to over 300 hotels and have served over 1 million customers so far.

Really great job and effort.

OYO dupes hotels that’s where its maximum revenue comes from as it’s a net profit over and above the minimum 35% commission it gets from hotels. Ask any oyo property owner for testimony. Once they loot a hotel they go ahead and find other hotels/victims and do the same again.

I am trying to contact with oyo through email and phone so I can start business with them. I am not getting any response. Please let me know what I should in this case. If starting is like that how I can trust on them in future.

Yes, i would to contact with oyo for further discussion too. Not successful yet.

My experience as a ‘franchisee’ partner of OYO is quite pathetic. In a short period of 4 months, close to Rs.125000/- of mine was stuck with OYO. There is no effort to resolve partner issues – making money vat the cost of partners will not last long.

It was very insightful! Loved it.

Thank you 🙂

Great advice

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How OYO Works: OYO Business Model In A Nutshell

OYO business model is a mixture of platform and brand , where the company started primarily as an aggregator of homes across India, and it quickly moved to other verticals, from leisure to co-working and corporate travel. In a sort of octopus business strategy of expansion to cover the whole spectrum of short-term real estate.

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Octopus strategy: OYO multi-brand and multi-product strategy in action

OYO, thanks also to its $2.4 billion in fundings , managed to keep expanding its business strategy to comprise more products (to cover several markets, from traditional rental to vacation and co-working) and brands.

This sort of octopus strategy has seen the company quickly expanding over the years, by splitting its arms in several directions, to cover all the possible facets of the short-term real estate market.

OYO Townhouse : 25% Hotel, 25% Home, 25% Cafe and 25% Store

Announced on February 2017 :

It gives us great pleasure to introduce you to OYO Townhouse. Operating as 25% Hotel, 25% Home, 25% Cafe and 25% Store, these hotels are slated to become to the social hotspot of their neighbourhood. Every single element – from the breakfast menu to the booking process – has been re-engineered to deliver higher quality and better value . Also, unlike the lego-brick approach of traditional hotel chains, every OYO Townhouse is designed to complement its neighbourhood. The tastefully done properties are staffed with highly trained managers to deliver world-class and modern hospitality specially designed for millennials.

Thought for the higher end of the market OYO Townhouse, is steered toward a boutique hotel format. The company purchases real estate and tranforms it into boutique hotels, branded OYO Townhouse, which the company likes to call “‘the friendly neighborhood hotel’ or “ a unique combination of a hotel, home, merchandise store and café and is targeted at millennial travellers aspiring premium economy accommodations. “

As the company pointed out this is the part of the business targeting higher- income millennials, with six features that make those Townhouses different from the other products (OYO emphasizes them as “6 leayrs of innovation :”

• Smarter Rooms,
• Smarter Spaces,
• Smarter Menus,
• Smarter Buildings,
• Smarter Service,
• Smarter Locations

That is how the formula, that OYO claims, improves over the old hotel formula, was used as part of the initial playbook to expand all over India.

OYO Home : fully managed by OYO

The company announced OYO Home in 2017:

I am excited to introduce OYO Home, our newest initiative in continuing to provide high quality living spaces at diverse locations at a range of prices. OYO is partnering with hundreds of owners across India to unlock, maintain and manage all forms of homes. Everything from villas, apartments, bungalows to farmhouses. Everywhere from Goa, Manali, Shimla, Nainital to Pondicherry.

As the company highlighted back then, there were two main pain pointes t o be solves:

• Guests : “concerns regarding infrastructure quality and the check-in/check-out experience.”
• Hosts/home-owners : “The lack of a trusted partner who will take over the responsibility of maintaining the home.”

Thus, the OYO Rooms addressed those two primary pain points to create a platform to renew, expand, and reinvent the existing travel market.

OYO Vacation Homes  

As highlighted by OYO :

At OYO Vacation Homes, we are utilizing the power of data to understand our customers better. Carefully analyzing customer behaviour has given us insights that are significant for business growth . With the help of data analytics, we are able to solve some of the biggest hurdles faced by homeowners, for example, seasonality or low bookings during certain times of the year. It’s data that has helped us understand the impact of a swimming pool or sauna on the occupancy of a particular home. It is also data that highlights that pet-friendly homes witness higher occupancy!

This segment of the business primarily comprises brands dealing with vacation renal management services, and here OYO expanded also in Europe.

SilverKey : for corporate travelers

Back in April 2019, OYO highlighted “At OYO, our mission is to provide the perfect space in every place. Corporate travel segment is a key engine of our growth for the year and we are stepping up engagement in this segment.”

OYO Workspaces: co-working segment

After the acquisition of Innov8, OYO entered also the co-working industry with three main products :

• Innov8  – “Premium Workspace Designed To Help You Create and Innovate “
• Powerstation –  “ Vibrant yet professional Coworking Solutions ” (fully managed by OYO
• Workflo – “budget-friendly, functional co-working solutions”

Capital O Collection

This brand targets “ new age corporate travelers who are in search for quality and affordable accommodations while meeting their professional and personal requirements. “

Other products in leisure, corporate travel, and student housing

Other products comprise:

• Palette  primarily covering the leisure segment.
• Collection O  as the product focusing on the higher-end of the corporate travel space.
• OYO LIFE , targeting millennials and student housing.

OYO end-to-end experience

A lot goes into delivering what we promise and we never shy away from going the extra mile to give the guests an unforgettable experience. The OYO Team

The process of standardization of the experience starts with what OYO claims to be a 150 point checklist that goes from the booking experience to the support center and the on-ground Cluster Managers, ready to solve any problem it might arise during the experience of guests.

Up to other initiatives like the “Captain.”

OYO and the era of Hyper Agile

Ajay Shrivastava , former head of technology at OYO, back in 2016coined the term “Solver Team” as a sort of Hyper Agile approach based on his experience at OTO.

As he highlighted:

Early last year at OYO, we experimented a new model of collaboration in software development called the “Solver Teams”. Over the year we shipped dozens of products and hundreds of features using this methodology. It’s an impactful execution mechanism, that churns out multiple features every week at a very high speed, while having a positive synergy and camaraderie in environment across business, product, design and technology teams.

As he highlighted in the old model , the starting point of a product development would start from the business going down product, design , engineering and testing/release.

The issue with this sort of approach is well explained in the graphic below by

In a Solver Team approach (or hyper agile) self-sufficient teams come together, so that different functions are comprised in the same team:

Solver Team (ST) = Business + Product + Design + Tech members.  Self-sufficient group of experts from different functions who work together on a specific problem end-to-end.

Some of the key advantages of this approach are:

• Deep understanding of end-to-end flows
• Very high speed of execution
• Strong sense of ownership

Going “Glocal”: from top-down, to bottom-up

As highlighted by OYO engineering team back in 2018, they launched an important update related to the Hotel Rating:

When a user visits the OYO Mobile App, Mobile or Desktop Website, hotel ratings are displayed alongside all the properties with essential details on the hotel listing page and hotel details page. If the total count of rating is less than 10, then a ‘New’ tag appears on the hotel. Upon clicking on a hotel rating, it expands to show a more detailed review and displays a happiness index (out of 100) on amenities and core promises. Hotel ratings are collected post check-out via mobile app, customer care and emails.

For aggregator websites like OYO, mechanisms like Hotel Ratings are crucial as they flipped the market upside down. Where conventional rating mechanisms, in the previous era (where digital business models didn’t take over yet) were primarily top-down.

Large scale algorithms and platforms made consumers the raters, thus enabling a bottom-up approach, with a social-media mechanism, and user-generated content, repackaged in the form of synthetic ratings (what OYO calls the happiness index) that enable the platform to show hotel ratings at scale.

OYO in numbers

OYO has been using over the years an aggressive playbook in terms of expansion. First, in India, then globally. This aggressive expansion calls for substantial growth in revenues, but also a growth in net losses (as we’ll see). And as the pandemic hit, while the company still had over a billion in cash at the bank as of 2019, it will have to cut more and more on expansion plans to fit the current market scenario.

OYO growth channels

Among the key channels the company uses to growth , and to make its business stable over time we have repeat customers, organic and paid.

OYO revenue generation

In 2019, revenues increase 4.5x over 2018, reaching over $951 million:

Consolidated net losses increased from 25% in 2018 to 35%  in 2019. The increase in net loss was primarily due to OYO global expansion plans.

As the company moved from a growth playbook focused on India, to expand globally. The expansion in new markets also resulted and will result further in overhead costs that will be amortized over the years.

This expansion strategy , which worked exceptionally well in times of market expansion, and available cash for growth , it’s now backfiring as the pandemic hits, especially business models built on short-term real estate rents.

That is why, as of March 2020, OYO started to cut its expansion strategy drastically, especially in China .

Quick OYO Business Model Snapshot

Value Proposition:

OYO offers budget-friendly accommodation options for travelers, making travel more accessible to a broader audience. Its value proposition lies in providing comfortable and standardized hotel rooms at economical prices, catering to the needs of budget-conscious travelers. OYO maintains strict quality standards across its network of hotels, ensuring that each property meets predefined criteria for cleanliness, safety, and comfort. By guaranteeing a consistent level of quality, OYO aims to instill confidence and trust among travelers, enhancing their overall experience. Additionally, OYO provides a user-friendly platform and mobile app that enables travelers to discover, book, and manage their accommodations seamlessly. With a wide range of properties available in various locations, OYO offers convenience and accessibility for travelers seeking hassle-free accommodation solutions. Leveraging technology, OYO streamlines operations and enhances the guest experience with features such as online booking, digital check-in, and in-app communication, reflecting its commitment to innovation and customer convenience.

• Affordable Accommodation
• Quality Assurance
• Convenience and Accessibility
• Technology Integration

Revenue Model:

OYO generates revenue through franchise fees charged from independent hotel owners who join its network. These fees cover branding, marketing , and access to OYO’s technology platform. The company also earns a commission on each booking made through its platform, typically a percentage of the booking value . Additionally, OYO offers ancillary services to hotel partners, such as property management and housekeeping, generating additional revenue. Revenue from OYO Rooms, the company’s branded properties, complements its franchise and commission-based income streams.

• Franchise Fees
• Commission on Bookings
• Additional Services

Marketing Strategy:

OYO invests heavily in digital marketing channels, including online advertising, SEO, and social media marketing , to promote its brand and attract customers. Strategic partnerships with travel agencies, airlines, and OTAs expand its reach and access new distribution channels . Customer loyalty programs and referral incentives encourage repeat bookings and word-of-mouth referrals. OYO adopts a localized marketing approach to tailor its messaging to specific geographic regions and target markets.

• Digital Marketing
• Partnership Marketing
• Customer Loyalty Programs
• Localized Marketing

Distribution Channels:

OYO operates its own online platform and mobile app for travelers to browse and book accommodations directly. It partners with leading OTAs such as Booking.com and Expedia to expand its distribution reach. Collaboration with travel agents and tour operators offers accommodations as part of packaged travel itineraries. Direct sales efforts target corporate clients and event organizers, promoting accommodations for corporate travel and group bookings.

• OYO Website and App
• Online Travel Agencies (OTAs)
• Travel Agents and Tour Operators
• Direct Sales and Corporate Partnerships

Key takeaways

• OYO business model is a mixture of platform and brand with an aggressive expansions strategy that looks like a sort of continuous blitzscaling .
• The company expanded in several verticals in the short-term rental real estate and it managed to build several products and to acquire several brands.
• This stot of business strategy while working extremely well to dominate the market, might also get very risk when the market contracts, thus requiring drastic cuts to keep up with the lack of expected growth .

Key Highlights

• Aggregator and Multi-Product Approach : OYO started as an aggregator of homes in India and expanded into various verticals such as leisure, co-working, corporate travel, and more. It follows an “octopus strategy ” of expanding to cover various facets of the short-term real estate market.
• Product Sales : Generating revenue by selling various types of accommodations, including hotels, homes, and co-working spaces.
• Platform Fees : Earning fees from property owners for listing their accommodations on the OYO platform.
• Value-Added Services : Offering additional services like food, beverage, and event spaces.
• Confectionery Lovers : Targeting confectionery enthusiasts, families, and those seeking gift items.
• Millennials : Offering boutique hotels and accommodations designed for millennial travelers.
• Business Travelers : Providing corporate accommodations for business travelers.
• Leisure Travelers : Catering to leisure travelers looking for varied accommodations.
• Students : Offering housing solutions for students.
• Manufacturing : Engaging in the production of a diverse range of confectionery products.
• Research and Development : Focusing on innovation to create new and exciting confectionery offerings.
• Platform Management : Operating a platform that connects property owners and guests, facilitating bookings and transactions.
• Property Management : Managing properties listed on the platform to ensure quality and customer satisfaction.
• Platform : Operating an online platform that connects property owners and guests.
• Brands and Intellectual Property : Leveraging the OYO brand and various sub-brands to appeal to different customer segments.
• Manufacturing Facilities : Utilizing manufacturing facilities to produce confectionery products.
• Distribution Network : Operating a distribution network for delivering confectionery products.
• Technological Expertise : Utilizing technology for platform management and customer experience.
• Suppliers and Property Owners : Collaborating with partners to source accommodations and services.
• Retailers and Distributors : Partnering with retailers and distributors to ensure product availability.
• Property Acquisition and Maintenance : Incurring expenses related to acquiring and maintaining accommodations.
• Technology Development : Investing in technology for platform management and enhancement.
• Marketing and Advertising : Allocating resources to promote the brand and attract customers.

Other resources:

• What Is Business Model Innovation
• Growth Strategies To Expand, Extend, Or Reinvent Your Business Model
• What Is a Business Model
• Business Strategy Examples
• What is Blitzscaling
• What Is Market Segmentation
• What Is a Marketing Strategy
• What is Growth Hacking
• Speed-Reversibility Matrix
• Ansoff Matrix
• Innovation Matrix
• Digital Growth Matrix

More Resources

About The Author

Gennaro Cuofano

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OYO Rooms: Another Unicorn in the Making?

By: Saju B, Harikrishnan K, Joseph Jeya Anand S

OYO Rooms had been growing exponentially since its inception in 2013. By January 2016, it had registered 1 million check-ins and was set to become India's largest budget hotel chain. The venture's…

• Length: 15 page(s)
• Publication Date: Sep 20, 2016
• Discipline: General Management
• Product #: W16574-PDF-ENG

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OYO Rooms had been growing exponentially since its inception in 2013. By January 2016, it had registered 1 million check-ins and was set to become India's largest budget hotel chain. The venture's unique business model helped it to offer effective solutions for the difficulties that were faced by customers seeking budget hotel accommodation in India. OYO Rooms' potential for rapid growth made it a candidate for even greater expansion in the global arena. However, OYO Rooms needed to prove its ability to sustain growth in the Indian budget accommodations market. The company's success and the opening of a huge untapped market had led to a flurry of competition. Would the entrepreneurial founder be able to sustain his company's early momentum in the wake of increased competition? What would be the best strategy to achieve growth and monetize the company's operations? Should OYO Rooms diversify into allied services or apply a more focused strategy? The founder needed to answer these questions to retain the company's dominant position in the market.

Saju B. is affiliated with VIT University. Hari Krishnan K is affiliated with VIT University. Joseph Jeya Anand S. is affiliated with VIT University.

Learning Objectives

This case is recommended for use in MBA and executive MBA courses on entrepreneurship, strategic management, and competitive strategy. After discussion of the case, students will be able to: Discuss the role of a business model and subsequent business model innovation in the context of lean start-ups. Identify the concept of "hypercompetition" and the formulation of survival strategies. Recognize the threats to competitive advantage and analyze those threats using the tetra threat framework. Make strategic decisions regarding growth and profitability in late-stage start-ups.

Sep 20, 2016

Discipline:

General Management

Geographies:

Industries:

Accommodations

Ivey Publishing

W16574-PDF-ENG

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OYO IPO Case Study – Business Model & Financial Performance Explained

by Trade Brains | Oct 27, 2021 | IPO | 0 comments

OYO IPO Case Study: OYO has been no less than a revolution in the hospitality space in India. The company came as a boon to the middle-class population which struggled to get quality accommodation at a reasonable price across India. OYO brought in standardized, affordable and quality accommodation at a cheap price.

With its IPO in the pipelines the company also has created a lot of buss in the market. In this OYO IPO case study, we take a closer look at the company before the IPO. Keep reading to find out!

Table of Contents

About the Company

The brand exudes the charm and warmth of being a go-getter. The company was the first to identify the need for branding the domestic hospitality segment and offer hotel rooms within the price range of Rupee 999- Rupees 3,000. 

Before the advent of OYO, the low and mid-budget hotel segment wasn’t online and barely managed while always falling short of customers’ expectations and expected parameters. This hotel unicorn brought uniformity in a vague landscape.

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The traditional hospitality sector in India is highly divisive and fragmented. It is managed personally and often is a huge contrast from what it is sold out to be. If you pay the money you get excellent service, features and experience. If you don’t you get nothing.

OYO’s technology and a vision to bring budget hotels on board washed this segment with a plethora of changes, including being demographically fit with its user segment. At present OYO is currently valued at almost $9.6 Billion as per its latest funding rounds. This makes OYO the third largest startup in India after Byju’s & Paytm .

OYO Relationships: Rooms for Unmarried Couples

Even though live-in relationships and unmarried couples are considered to be taboo in India, it doesn’t absolve the need for couples to be intimate and spend some time together. This is why OYO walked the talk and rolled out hotels exclusively for unmarried couples at affordable rates. This concept worked well for the company and garnered a lot of appreciation & sales 

OYO IPO Case Study – A Closer Look at the Working of OYO

Ritesh Agarwal started OYO in 2013 after dropping out of college. OYO started its operation in India. OYO operates over 1,57,000 storefronts (hotels and homes) across 35 countries.

India, Malaysia, Indonesia & Europe account for more than 90% of the hotels listed on the OYO platform. OYO claims to have the second-largest loyalty program in India with 9.2 million subscribers.

The company has an employee strength of 5,130 people with more than 70% of them in India. Out of the 5,130 employees, around 4,100 employees hold stock options as per internal sources.

The OYO app has been downloaded more than 100 million times which makes it on par with AIRBNB and booking.com. This shows the popularity of the company. A few major competitors of OYO are MakeMyTrip, EaseMyTrip, bookyourown.net , etc.

OYO Business Model

OYO has changed its business model from minimum guarantee contracts/fixed payouts to a revenue-sharing model during the covid pandemic.

OYO at present charges 20-35% of the gross booking value as commission from its Hotel Partners. The company at present does not hold any of the hotels and operates in an asset-light business model.

Oyo talks about its growth philosophy which is centred in three phases.

In the first stage, the focus is on scale and presence which is followed by creating a strong brand resonance and ensuring improved gross margin. In the final stage, which is where Indian operations are, the focus is to maintain strong brand preference while ensuring a clear path to profitability, enabled by accretive growth, operational excellence, and strong gross margin.

OYO IPO Case Study – Financial Performance of OYO

The company has reported losses in every year of its operations since its inception. Between 2014 and 2019, OYO has posted a consolidated net loss of Rs 3,564.4 crore. The company has posted its highest losses during covid in the year 2020.

A large part of these losses can be attributed to the fast expansion in newer geographies and newer businesses, deep discounting, building technology and renovating the hotels. OYO has also been on an acquisition spree completing 8 acquisitions in a period of 2 years. Its reported acquisition bill for just five companies  Innov8, Danamica, @Leisure Group, Hooters, Novascotia Boutique Homes stood at USD 591 million.

OYO up to date has raised $4.1 Bn from 26 investors across 19 rounds. While OYO has not raised any larger equity round for a long time, the company has recently picked up $660 million in debt from global investors. It has also previously raised $204 million in debt from SoftBank for its Singapore subsidiary OYO Hotels (Singapore) Pte. Ltd.

As per Ritesh Agarwal, Oyo still has cash of around $800 million in the bank. The monthly burn is in the range of $4-5 million across businesses in OYO. Currently, 43% of its revenue comes from India and Southeast Asia, while 28% comes from Europe and the rest from other global markets.

The company has cut down on its operations in markets such as the US and China. Even in India, it had to trim its workforce significantly to curtail spending in light of the pandemic’s impact on the books of the company.

The company has not mentioned any timeline as to when it plans to become profitable, 

Key OYO IPO Information

OYO IPO issue size combines a fresh issue of Rs 7000 crores and an offer of sale of Rs 1,430 crores. The founder Ritesh Agarwal and his company RA Hospitality holdings have a combined stake of 33.16% stake in the company.

SoftBank Group, which is the angel investor and has been backing OYO since the nascent stage has been the largest shareholder in OYO. SoftBank has also been classified as a promoter entity as per the DHRP prospectus has a 46.62% shareholding.

Further, Dinesh Ramamurthi, trustee of Oravel Employee Welfare Trust holds a 5.40% stake in the company. The shares are actually owned by the employees of the company. Sequoia Capital India, the private equity venture also has a 3.24% stake in OYO. Airbnb, the accommodation booking website, also owns a little over 1% of OYO.

Microsoft in September 2021  has also confirmed its investment of $5 million for a minute stake in OYO. Although the stake is very small, it is a strategic deal between the two companies.

OYO might shift to Microsoft’s cloud service platform Azure after this deal. Hence the significance of this deal.

Further Ritesh Agarwal doesn’t plan to offload any of his stake in the IPO. SoftBank plans to sell a stake worth Rs 1,328.53 crore during the IPO. In 2019, Ritesh Agarwal invested $2 billion at a valuation of around $10 billion through borrowed capital, to triple his stake in the startup and take his ownership to nearly a third of the company.

The other prominent investors which include Sequoia Capital, Airbnb and others are not selling any of their respective stakes. Employees of OYO through ESOPS and stock options own up around 7% of the post issue outstanding shares.

Investment Bankers for the IPO

Kotak Investment Banking, JP Morgan Chase & co and Citigroup are the main book-runners and investment bankers for the company. The other bookrunners are ICICI Securities , Nomura Holdings, JM Financials.

The last fundraising round in OYO was done at a valuation of $9.6 billion.

OYO IPO Case Study – Purpose of the IPO

The company plans to use 29% of the IPO proceeds for repayment of the borrowings. The repayment or prepayment of debt would amount to INR 2,441 Cr. The total debts in OYO’s books are at 2848.79 cr as of FY 2020-21.

The company also plans to mobilize another INR 2900 cr towards organic & inorganic growth initiatives. The rest amount will be put to general corporate uses.

Reasons to go for the IPO

The company considers three markets as core growth- India ($26 billion), South East Asia ($56 billion) and Europe ($400 billion).

OYO’s core growth markets are highly fragmented – Organised share in these markets is less than 12%. Most hotels/homes are run by individuals (no brands), making perfect hunting grounds for aggregator platforms that can consolidate supply. Online penetration has been a major growth boost, expanding to ~30% in India (~60% globally). Online short-stay accommodation continues to gain share growing at CAGRs of 34.3% &17.9% for India and South East Asia between 2015 and 2019.

OYO has demonstrated a strong business model – 70% of traffic from direct/unpaid channels. Repeat & new organic customers generate 78% of demand. Exclusive storefronts of 157K+ (70x of the closest competitor) across hotels/homes.

Strong tech DNA with 15% of the employee base in tech roles. 40+ integrated tech solutions for end customers/hotels/homes. Additionally, Strong ROI for hotel/homeowners helps them increase revenue by 1.5x-1.9x compared to revenue at independent hotels.

Upcoming IPOs in 2021: 8 Indian Startup IPOs You Should Watch Out For!

OYO IPO Case Study – Negatives for OYO

• Hotel owners across India have reported several cases pertaining to Oyo’s arbitrary cancellation and breach of contracts.Several police complaints have been filed against OYO founder Ritesh Agarwal & OYO. 
• The Federation of Hotel & Restaurant Association of India (FHRAI) has recently filed a complaint against OYO in the competition commission of India (CCI). 

OYO has mentioned the summary of the outstanding litigations against the companies and their subsidiaries in its DHRP.

As of now, OYO has around 14 criminal complaints going on against its directors

• OYO has been accused of collaborating with make my trip and gaining unfair advantage against its competition. 
• Zostel has written to SEBI to cancel the IPO of OYO in regards to its misrepresentation in its prospectus.

Zostel alleged that OYO has misrepresented the facts in its DRHP and that the upcoming IPO doesn’t include the disclosure of a 7 per cent stake of Zostel’s shareholders in OYO’s parent entity.

The issue pertains to a 2015 proposed deal of ZoRoom’s acquisition of OYO, resulting in a transfer of a 7 per cent stake of Ritesh Agarwal-led firm to ZoRooms. The deal was not implemented after a minority investor in OYO objected to the buyout.

While we can’t put OYO Rooms in the same league as traditional hotel chains, since it is an aggregator and a startup, it still needs to overcome the perception of being only for the price-sensitive customer group. It is a technology-oriented marketplace and doesn’t have to encounter the usual challenges faced by a hotel.

However, the urge to become a market power, increase valuation and stay ahead of the curve is as-is. Besides, there are several e-commerce marketplaces such as Yatra and Trivago in the hospitality segment operating on similar lines of networking. Even the traditional hotels and hospitality giants are now online, and you can book your rooms within a few clicks too. You see, technology is hardly a disruptor anymore. Services and perceptions are.

OYO’s market value and share are threatened by the likes of Airbnb, Treebo, Zo Rooms and MakeMyTrip (MMT). However, OYO has outshined the homegrown MMT on social media, whereas Airbnb still stands tall owing to the perception of being a global and veteran player in this segment. Besides, the MMT and ClearTrip model is commission-based, while OYO works as a reseller.

OYO spent over $3 billion in the last four years onboarding and retaining more hotels to its website. Technology remains the core component of this unicorn startup along with its human assets.

Hope OYO IPO Case Study has provided you with all the information you require. Comment down below and let us know if you will be applying for it.

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Business Model of Oyo Rooms – How Oyo Rooms Work

Oyo Rooms is the largest branded network of hotels currently operating 450,000 listings in 5,000 cities in India, Malaysia, UAE, Nepal, China and Indonesia. The company started off its operations by building its business model around the aggregator business model but things have changed since 2018.

Earlier, the company used to organize the partner with hotels, lease some rooms, and sell them under its own brand. Even though the process is still the same, Oyo’s business model has changed its route to a new structure.

The main focus, however, still is the quality of the service provided. Hence, to maintain the brand image, they make the partners provide services at predetermined standards while they make them more visible to their user-base.

Oyo Rooms – An Aggregator or A Franchisor?

The customers used to buy the services from the brand Oyo rooms and didn’t care who the partner was. Just like Uber, Oyo provided rooms with standardized quality and price.

This model was a mix of aggregator business model and franchise business model .

But as time passed, the company built its brand equity and the founders decided to pivot its business model to a pure franchise business model. The company now gets 90% of its revenue from hotels under the franchise model .

Business Model of Oyo Rooms

Oyo Rooms business model was similar to the usual aggregator business model ( Uber for x business model ) but had the essence of the franchise business model as well. The company used to –

• Lease a part of Hotel’s inventory beforehand,
• Organize those hotel rooms under their brand name – Oyo Rooms
• These partner hotels provided standardized service to customers of those rooms as it was decided in a contract with Oyo
• Bookings were made through the Oyo Rooms website and mobile application.

The current operating model of Oyo Rooms is similar to what it was before. It’s just the company doesn’t lease the hotel rooms anymore, but ask the hotel partners to operate them as franchise. They have good brand equity and boasts a 100% increase in revenue to their partner hotels.

Partnership Model

Oyo Rooms provide visitors with quality hotel room stays at different places around India. They have partnered with hotels and made them work with them under their name.

Services Provided By Oyo Rooms

Oyo Rooms, started and famous as branded hotel rooms aggregator, provides many more services than just hotel rooms to visitors.

The services included in the Oyo Rooms business model are –

Hotel Rooms

Oyo’s earlier strategy was to book a part of the hotels’ inventory, to maintain it as per the quality standards, and to hold it captive exclusively for Oyo customers. That is, they used to lease some rooms every month and provide them to their own customers at profits.

The only thing that has changed is that the rooms are now not leased but operated as Oyo Rooms franchise. Since the hotels and place owners act as the franchisee, they are bound to operate as per the pre-determined standards. The company even offers plans where it runs the place instead of the hotel staff or owner.

Oyo Flagship

The partners used to book their own hotels when they used to see less prices on the Oyo’s platform and this became malpractice benefiting the partners while burning holes in Oyo’s pockets. To curb this, and to expand the business, Oyo Rooms has started leasing of hotels and places where it has full control over the day-to-day operations of these establishments.

Oyo Townhouse

The company has recently launched the Oyo Townhouse to hone its value proposition and stand out of the competition when it comes to standardised hospitality. Oyo Townhouse is based on the needs of the millennial traveller . These hotels are planned and built based on the needs and wants of the millennials. They have –

Smarter Rooms – with specially designed beds, showers, sockets, and internet infrastructure. Even TVs have Netflix installed.

Smarter Spaces – common spaces designed to have meetings. Free printer, business services, magazines, coffee and tea in the common area.

Smarter Menus – 24 x 7 Kitchen which lets you order from the mobile application.

.. and many more smart services.

Studio Stays

Apart from providing hotel rooms, Oyo Rooms also provides fully furnished rooms and flats for long stays like internships, corporate stays, etc. The rooms/flats can be rented on single occupancy as well as on twin sharing basis as well (other provisions are also applicable). Rents are paid monthly. Commission (take-up rate) is charged from the owners if the customer comes through Oyo rooms.

Events & Other Long Stays

Just like studio stays. There are many family functions(weddings, parties) as well as corporate functions (seminars, meetings, parties) which involve hotel rooms for their guests to stay for long. This service is also provided by Oyo.

Commercial Places

Oyo has expanded its branches in the domain of the commercial places as well. Now the customers can even book office spaces on Oyo as well.

The company has also launched a subscription model where the subscribers get exclusive discounts, deals, and cashback offers .

Revenue Model of Oyo Rooms

Earlier the brand used to lease hotels at a predetermined price and offered them to the users at a take-up rate . This has been changed to a commission-based revenue model .

Oyo rooms charges a commission of 22% from its hotel partners. However, this commission does vary according to the services provided by the brand.

Future of Oyo Rooms

[Opinionated Content]

Oyo is growing. Though this growth is at a cost, it will be worth it afterwards. According to a source , Oyo Rooms has delivered a 15x annual growth with 2.3 million booked room-night transactions in the first quarter of the calendar year 2016 while its GMV continues to grow substantially every month. This shows the increasing brand equity and demand of Oyo.

Oyo has set its name as the high-quality budget hotel network, which might change in the near future as the prices might increase. But since Oyo has come up with a new franchise model, there are chances that the prices might be kept as they are now.

Go On, Tell Us What You Think!

Did we miss something?  Come on! Tell us what you think of this article on B usiness Model of Oyo Rooms in the comment section.

A startup consultant, digital marketer, traveller, and philomath. Aashish has worked with over 20 startups and successfully helped them ideate, raise money, and succeed. When not working, he can be found hiking, camping, and stargazing.

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Case Study Of OYO Business Model

Oyo Rooms is currently the largest branded network of properties in India, Malaysia, UAE, Nepal, China and Indonesia operating at a peak of 450,000 hotels in approximately 5,000 cities.

The company began its activities with its business based on the aggregator model and climbed on the ladders of success and fame.  

The business used to manage the hotel partner, lease those rooms and sell them under its name. Although the mechanism remains the same, the business model of Oyo has shifted its direction to a new franchising based structure.

However, the main emphasis remains on the quality of the service offered. Thus they allow the partners to provide services at certain default levels in order to preserve the brand identity, while making it more accessible to their customers.

Introduction

OYO is India’s largest hospitality company offering standardized rooms in different locations across India consisting mainly of budget hotels. It was founded by Ritesh Agarwal in 2013 and has expanded to over 4,50,000 hotels in 500 towns in India, Malaysia, the African Republic, Nepal, China and Indonesia since then.

Oravel Stays as it was previously known used to be a website designed for the listing and booking of budget accommodation, was launched by Ritesh Agarwal. To offer similar and non compromising experience to guests across cities, OYO partners with hotels. OYO Home, an Airbnb platform for short-term, controlled rental firms, was launched by the end of 2017.

OYO raised $1 billion in September 2018. Softbank’s Dream Fund, with the participation of Light speed, Sequoia and Green oaks Capital, contributed to the vast majority of funding — $800 million, to be real.

Ritesh Agarwal

Ritesh Agarwal was born in Bissam Cuttack, in Odisha state, India and brought up in Titilagarh. At the age of 13, he started selling SIM cards. Agarwal graduated from St. Johns Senior Secondary School and moved to Delhi in 2011 for college. He dropped out of college, and was selected for the Peter Thiel Fellowship in 2013. Agarwal started a budget accommodation portal, Oravel Stays, for booking budget hotels. It was accepted into the accelerator program by Venture Nursery in September 2012, and later was one of the winners of the 2013 Thiel Fellowship program, receiving a grant of $100,000. The company was launched as OYO Rooms in May 2013.

By September 2018, the company raised $1 billion. In July 2019 it was reported that Agarwal purchased $2 billion in shares in the company, tripling his stake. His net worth in 2020 was estimated to be approximately $1.1 billion (INR 7253 crore) according to Hurun Rich List 2020. He is also the youngest self-made billionaire after Kylie Jenner, in the world.

Oyo Rooms – A franchiser or an A ggregator?

The business model of OYO rooms used to be of a hotel aggregator. However, it was different from Airbnb ’s business model as Oyo didn’t focus just on the discoverability of the partners among the users but also on the standardized quality of the services provided.

The customers used to buy brand Oyo room services and did not care about their partner. Like Uber , Oyo has provided standardized quality and price accommodations. This model was a mix of a business model aggregator and a business model for franchises. The company, however, developed its brand stock over time and the founders decided to shift their business model towards a profit centric franchise model as the sequel. Under the franchise model the company now earns 90 percent of its revenues.

Business Model of OYO Rooms

The business model of Oyo Rooms was similar to the usual aggregator ( for example, the UBER business model), but essentially it turned tides and  worked as a franchise model.  The company used to –

1. lease a part of the hotel inventory in advance.

2. Arrange those hotel rooms under its brand name – Oyo rooms

3. These partner hotels would provide standardized customer service, as decided by a contract with Oyo Bookings, using the website and mobile applications in Oyo rooms.

OYO Rooms is the hotel add-on and not a place on the market, as customers buy brand OYO Rooms services and don’t bother who they are.

Change in business Model

OYO Rooms  based on the support of  Soft Bank, changed its business model from aggregation to franchising or as we can say from managing hotel operations to come out as the brand OYO in May, 2017. The hotels in the group business model  became franchises. This transition was undertaken by OYO Rooms to improve serviceability and reduce operating costs. This change aimed at rationalizing the costs of the resources of partner hotels. The operating cost grew as OYO kept an OYO captain in hotels with about 5 to 15 rooms. However, OYO has increased its serviceability after this change in the business model as they use the same number of resources now but in fully-functioning hotels.

Services Provided by OYO Rooms

• Hotel Rooms

The previous approach of Oyo was to book a portion of the hotel inventory, to keep it in compliance with quality standards and reserve it exclusively for Oyo clients. In other words, every month they rent rooms and make profits for their own customers.

The only change is that now the rooms are not rented but are now operated as a franchise of Oyo Rooms. As hotels and property owners act as franchisers, they are bound to operate according to the prescribed standards. Instead of the hotel workers or owners, the company offers plans to run the place.

• OYO Flagship

The partners like to book their own hotels when they see fewer prices on the Oyo’s platform and this became beneficiary for the partners. To reduce this OYO Rooms has started leasing hotels and places where OYO has full control over all the day-to-day operations.

• OYO Townhouse

Recently, the company launched the Oyo Townhouse in order to boost the value offering of structured accommodation and to stand out from the competition. Oyo Townhouse is focused on the thousand year old traveler’s needs. These hotels are planned and constructed to meet millennial requirements. They have smarter rooms, smarter office spaces and smarter menus to meet the standards of the modern day millennial.

• Studio Stays

Oyo Rooms provides fully furnished rooms and apartments for long stays such as internships, corporate stays, etc., as well as hotel accommodation. Rooms / apartments can be leased both for single and twin occupancy (other restrictions apply). Rents are paid monthly and the Commission of the rooms is charged from the owners of the customer who comes through OYO rooms.

• Events and other long stays

There are many family functions (weddings, parties) as well as corporate functions (seminars, meetings, parties) which involve hotel rooms for their guests to stay for long. This service is also provided by Oyo.

The company has also launched a subscription model where the subscribers get exclusive discounts, deals, and cashback offers.

Cost structure and Expenses of OYO

• Platform (website and app) development and maintenance costs
• Renovation and branding cost
• IT infrastructure cost
• Marketing and advertising costs
• Employees salary costs
• Hotel Partners’ commissions
• Other operational and administrative cost

Operating expenses have jumped more than 390% to Rs 6,131.66 crore, while employee benefit expenses rose nearly six-fold to Rs 1538.85 crore in the recent financial year.

Revenue Stream of OYO

The Oyo top line grew by more than 350 percent for financial year 2018-19 to Rs 6,642,85 crores, with transaction revenues increasing over the 12-month period by Rs 6,456,91 crore.

• Commissions

Oyo charges around 22% of commissions every month from hotels owners. Commissions may vary as per the services and features offered.

• Room Reservation Fee

Customers pay a room reservation fee according to their services chosen. The room fee is charged with a few percentage margins of the hotels’ prices. For example, if a room is priced at Rs. 1,000 per night, Oyo makes only 10-20% commission from it, and that is their actual revenue.

• Membership fees

Users who subscribe to Oyo Wizard memberships are charged with premium fees ranging from Rs 500 to Rs 3000.

• Advertising

Oyo also charges different companies to place their ads on Oyo’s app and website generating sizable revenue for Oyo.

• Sponsors and Partnerships

Oyo also charges some amount from its sponsors and key partners by promoting their brand name through advertising on their app.

• Consulting Services

Oyo charges for its business consulting and data analysis services, it provides to its clients, including hotel, clubs, organizations, etc. It provides these services as it owns an extensive database of locations, hotels, event organizations, users, and their preferences.

Future Scope of OYO

OYO is growing rapidly and is often regarded as the budget hotel network of highest order and quality. OYO could be able to raise its prices, but since the new products have just been launched, it is likely that prices will stay as they now are. OYO is a business model that is technologically oriented. It is now inaugurated at Hyderabad and Telangana with the first technology development center in Gurgaon and plans to build many more. OYO has already created OYO Total Holidays and expects OYO Total Holidays to generate 10 percent of its overall sales. OYO Rooms is also piloting OYO Café, a website that aggregates food to be sold under the brand name OYO Cafe in its hotels. OYO Cafe can use an surplus stock of hotels and can also use a Zomato or Swiggy for food supplies. It also offers pilot housekeeping services on request for cleaning services.

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Oyo success story | case study | business model | facts & more.

OYO is a hotel chain and hospitality company based in India. It was founded in 2013 and has since grown to become one of the largest hotel chains in the world, with properties in various countries around the globe. OYO offers budget-friendly accommodation options, including hotels, resorts, and vacation homes. The company is known for its technology-driven approach to hospitality, which includes a mobile app that allows customers to book and manage their stays.

Challenges faced by OYO Rooms

Despite these challenges, OYO has continued to expand and grow, and remains a major player in the hospitality industry.

How Does Oyo Scaled It’s Business

OYO has scaled its business through a combination of aggressive expansion and the use of technology. The company has pursued a strategy of rapid expansion, opening new properties and entering new markets at a rapid pace. This has allowed OYO to build a large and diverse portfolio of properties and establish a strong presence in many different countries.

In addition to its expansion efforts, OYO has also relied heavily on technology to drive its growth. The company has developed a proprietary technology platform that powers its operations and enables it to efficiently manage its properties. This platform includes a mobile app that allows customers to book and manage their stays, as well as tools for property owners to manage their properties and for OYO to manage its inventory and pricing.

The Man Behind OYO

OYO was founded by Ritesh Agarwal, who is currently the CEO of the company. Agarwal is an Indian entrepreneur who founded OYO in 2013 when he was just 19 years old. Prior to starting OYO, Agarwal had already made a name for himself as a successful entrepreneur, having founded several other companies including a web design firm and a business consulting firm.

Agarwal came up with the idea for OYO while traveling in India and experiencing firsthand the challenges of finding reliable, affordable accommodation. He saw an opportunity to use technology to improve the hospitality industry, and set out to create a company that could provide budget-friendly accommodation options to travelers.

Under Agarwal’s leadership, OYO has grown to become one of the largest hotel chains in the world, with properties in numerous countries around the globe. Agarwal has been recognized for his entrepreneurial achievements and was named to the Forbes 30 Under 30 list in 2015.

The Story Behind OYO

OYO is a hotel chain and hospitality company that was founded in 2013 by Ritesh Agarwal, a young Indian entrepreneur. The company was created with the goal of using technology to improve the hospitality industry and provide budget-friendly accommodation options to travelers.

Agarwal came up with the idea for OYO while traveling in India and experiencing firsthand the difficulties of finding reliable, affordable accommodation. He saw an opportunity to use technology to streamline the process of booking and managing hotel stays, and set out to create a company that could offer this service to travelers.

Since its founding, OYO has experienced rapid growth and has become one of the largest hotel chains in the world, with properties in various countries around the globe. The company is known for its technology-driven approach to hospitality, which includes a mobile app that allows customers to book and manage their stays, as well as tools for property owners to manage their properties and for OYO to manage its inventory and pricing.

Business and Revenue Model

OYO’s business model is based on providing budget-friendly accommodation options to travelers. The company operates a network of hotels, resorts, and vacation homes, and works with property owners to manage these properties on behalf of OYO.

OYO makes money by charging customers for their stays at its properties. The company uses a technology platform to manage its inventory and pricing, and adjusts its rates based on demand and other factors. OYO also generates revenue through partnerships with companies such as airlines, travel agents, and online travel agencies, which provide it with a commission for bookings made through these channels.

In addition to revenue from accommodation bookings, OYO also generates income from other sources such as food and beverage sales at its properties, and through the sale of ancillary products and services such as airport transfers and tour packages.

Funding and Investors

Acquisitions and investments, growth and revenue.

OYO has experienced rapid growth since its founding in 2013. The company has grown to become one of the largest hotel chains in the world, with properties in various countries around the globe. OYO has achieved this growth through a combination of aggressive expansion and the use of technology to streamline its operations and improve its efficiency.

As a private company, OYO does not disclose its financial performance in detail. However, the company has faced financial challenges in the past, including high levels of debt and a need to raise additional capital. It has also struggled to turn a profit, with some reports suggesting that the company has had losses in recent years. Despite these challenges, OYO has continued to expand and grow, and remains a major player in the hospitality industry.

OYO Competitors

• Marriott International: Marriott is a global hotel chain with a large portfolio of properties in various countries around the world.
• Hilton: Hilton is a global hotel chain with a wide range of properties including luxury hotels, resorts, and extended stay brands.
• InterContinental Hotels Group (IHG): IHG is a global hotel company with a portfolio of brands that includes Holiday Inn, Crowne Plaza, and others.
• Accor: Accor is a French hotel company with a global presence, known for its luxury and budget brands including Sofitel, Novotel, and Ibis.
• AirBnB: AirBnB is a vacation rental platform that allows people to rent out their homes or other properties to travelers. While not a traditional hotel chain, AirBnB is a major player in the hospitality industry and competes with companies like OYO.

These are just a few examples of the many companies that compete with OYO in the hospitality industry.

Interesting Facts About OYO

• OYO was founded by Ritesh Agarwal, a young Indian entrepreneur, in 2013 when he was just 19 years old.
• The company was created with the goal of using technology to improve the hospitality industry and provide budget-friendly accommodation options to travelers.
• OYO has experienced rapid growth since its founding and is now one of the largest hotel chains in the world, with properties in various countries around the globe.
• The company is known for its technology-driven approach to hospitality, which includes a mobile app that allows customers to book and manage their stays, as well as tools for property owners to manage their properties and for OYO to manage its inventory and pricing.
• OYO has made several acquisitions and investments over the years as part of its expansion strategy, including the acquisition of Leisure Pass Group, @Leisure Group, and Hooters Casino Hotel.
• Despite its success, OYO has faced a number of challenges in its history, including competition, quality control issues, legal issues, and management challenges.

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Startup Success Story of OYO Rooms (Case Study)

What is OYO Rooms?

OYO Rooms is a hospitality chain of franchised hotels, rooms and living spaces across the globe. OYO Rooms was founded in the year 2013. When OYO was initially started it was consisted mostly of budget hotels.

Later, this startup scaled internationally with thousands of hotels, vacation spaces and millions of rooms all over the world in countries like India, China, Brazil, Japan, United States and 80+ more.

Who Founded OYO Rooms? - The Story

Ritesh Agarwal is an Indian entrepreneur, he is the founder and CEO of OYO Rooms. He used to travel across India from the age of 17. Ritesh stayed in more than 100 hotels at that age and realized that there is a scarcity of quality hotels in the budget range of common people.

He is known as the world's second youngest billionaire after Kylie Jenner. However, Forbes or Business Insider never listed him as a Billionaire yet.

How was the Early Life of Ritesh Agarwal? - The Struggle

Ritesh Agarwal was born in Bissam Cuttack town in the Rayagada district, within the state of Odisha, India. But he was raised in Titilagarh town in the same state.

Ritesh Agarwal's family used to own a small shop in Southern Odisha. At the age of 13, he used to sell SIM cards. He graduated from St. Johns Senior Secondary School and moved to Delhi in the year 2011 for his college studies. He dropped out of his college and in 2013, he was selected for Thiel Fellowship

Journey of Ritesh Agarwal from Selling SIM cards to becoming an Entrepreneur

Ritesh Agarwal in his late-teens, launched Oravel Stays, an online portal for vacation rentals. Later, he realized the world was competitive and he was not the only one who could make a reservation site. 

“I didn't think that I knew something that nobody else knew as to how to make a reservations website” – Agarwal told in an interview

Even if the platform collapsed, Agarwal maintained the good relationship he had formed with the hotel owners.

Luckily, his early efforts did not go to waste and landed him a Thiel Fellowship , a two-year program from PayPal co-founder Peter Thiel .

This Fellowship grants only 20 teenage entrepreneurs $100,000 and the mentorship of trailblazers like Mark Zuckerberg of Facebook and Elon Musk of SpaceX and Tesla motors .

The condition for this grant was that recipients could not be students at a traditional college. 

“This is great; you get paid not to go to university,” – Agarwal recalled in an interview

At the age of 19, he moved to California and spent more than one year learning from Peter Thiel and other experts, He learned two important lessons from there to apply in the business world: Think big and don’t be afraid to innovate.

How did Ritesh Agarwal started OYO Rooms?

In 2013, when Ritesh Agarwal was in California, he founded a company. This company is to help manage a hotel owned by an person in India, he had worked through Oravel Stays. 

This hotel is located in New Delhi, later renamed as OYO. Improved the rooms and reached out to budget-minded travelers, who were searching for hotel reservations online. This boosted the hotel’s occupancy rates from 19% to 90% in its first month itself.

Startup Story of OYO Rooms

After returning to India, Ritesh Agarwal was excited to put his new knowledge and experience into action. He started reaching to small hotel owners he had worked with through Oravel Stays. He noticed that there were so many small-scale hotels all over the world with fewer than 150 rooms.

He didn’t see many entrepreneurs looking to turn these small properties into “quality experiences for common people.” He realized that OYO could grow from single property to handful of hotels. The concept for the brand was simple and straightforward. 

“An equilibrium of quality, location and price is what required for building the right kind of hotel chain” – Ritesh Agarwal

He figured out, that by smartly updating the interiors, optimizing services and setting the dynamic pricing, the hotel could make both the guest and the owner happy. 

Agarwal put his own experiences visiting hotels into work, focusing on what details guests cared about most at each price point. For example, asset owners might invest significant funds in getting a chandelier, but at the expense of a quality breakfast. 

“Way too many hotels would not have the warm white light, which is what consumers like. There are few many hotels that do serve right, which is something that consumers really appreciate," he observed. By focusing on these elements, online reviews improved and the hotels proved profitable.

How did OYO got Succeed?

Agarwal’s knowledge in technology helped him market his brand to a larger audience.

“We used great interior design, which inspired people to come into the hotels, updated the rooms in a way that consumer ratings were the most important factors that we cared about.” – Agarwal in an interview

Ritesh Agarwal also had improved the pricing model of OYO for budget friendly customers. OYO team used to adjust rates for 1 million guestrooms more than 50 million times each day, by his estimates.

In the back end, OYO has connected all asset’s staff. E g.- the brand has a dedicated app that lets staff of the hotel know which room needs to be serviced. They tracked how much time the housekeeper spent cleaning the rooms and how clean the guest has reviewed the room to be to the management.

“If they clean it quickly and got a five-star feedback, they could get paid up to 25% more...  And  if he or she gets paid more, we can hire less. We don't need to hire as many people because ... they are incentivized to be more efficient because they get paid more.” – said the CEO

What is the Business Model of OYO?

Oyo initially started as a hotel aggregator and used to lease hotel rooms and rent them under its brand name. Later, it changed its business model from the aggregator model to the franchise model. It includes partnering with hotels and asking them to work as a franchise, and rent their rooms to customers at reasonable prices.

• What does the franchise model mean in the hotel space?

Oyo will not buy and own hotel rooms that are listed on their site. Instead of that, Oyo renovates the hotel rooms according to its criteria of standard services, and make the hotel room a part of “standardized budget hotel chain” with Oyo’s branding.   

• What makes Oyo’s business model unique?

Business model of OYO is unique and different from other companies in hospitality sector, because of it's standardized quality services. It strongly focuses on user experience, instead of only room availability and low prices.

OYO's business model is based on a franchise model. OYO partners with independent hotel owners and provides them with technology, branding, and operational support. In exchange, OYO takes a percentage of the revenue generated by the hotel.

OYO provides a comprehensive solution to its partner hotels, which includes a range of services such as property management, revenue management, customer acquisition, and marketing. OYO also provides technology solutions such as a hotel management app, a central reservation system, and an integrated payment gateway.

OYO's business model has been successful in providing affordable accommodation options to travelers while also providing a profitable investment opportunity for hotel owners. The company's technology-driven approach has enabled it to quickly scale its operations and expand into new markets, making it one of the largest hospitality chains in the world.

How does Oyo make money?

How oyo managed to get funding.

After few hotels had partnered with Ritesh Agarwal’s startup Oyo, he needed funds to gain more growth. Silicon Valley-based venture capital firm named Lightspeed Ventures invested $600,000 in Oyo as seed investment. Later, slowly other venture capital firms and hedge funds followed it. Which includes Sequoia Capital, SoftBank Vision Fund and Greenoaks Capital.

  “None of them thought we would grow this quickly. The first one came when we were two buildings strong,"  – said Agarwal

With the help of new funds, Oyo started expanding its wings to all directions. Oyo Homes got attention of home-sharing giant Airbnb. which may have invested a rumored of $150 million in the company over the last few years.

How does OYO scaled it's business?

After Oyo got spread all over the India, it started expanding rapidly in China with about 500,000 rooms across more than 10,000 hotels, the Middle East, Europe and also 85 hotels in the United Kingdom.

  “Our Europe revenues are roughly 20 percent of our company now,”  – Ritesh said

After this, it helped the company to easily enter it's root in the United States this year. As of June 2021, the company already had 68 hotels in more than 40 American cities.

Ritesh Agarwal estimates that Oyo is opening a hotel per day in the United States. Now the company has a growing presence on the American landscape. Therefore, Oyo plans to invest $300 million for development in the U.S. for upcoming years.

OYO has scaled its business through a combination of strategic partnerships, technology-driven solutions, and aggressive marketing and expansion efforts. Some of the key factors that have contributed to OYO's rapid growth include:

• Franchise model: By partnering with independent hotel owners and providing them with technology, branding, and operational support, OYO has been able to quickly expand its operations and enter new markets.
• Technology solutions: OYO's technology-driven approach has enabled it to streamline its operations, reduce costs, and improve the customer experience. The company's hotel management app, central reservation system, and integrated payment gateway have been critical to its success.
• Strategic partnerships: OYO has formed partnerships with several companies and organizations, such as MakeMyTrip, Airbnb, and Flipkart, which has helped it reach a wider audience and expand its customer base.
• Marketing and brand building: OYO has invested heavily in marketing and brand building, which has helped it establish a strong brand image and increase brand recognition among travelers.
• Continuous innovation: OYO has continued to innovate and expand its offerings, such as OYO Life and OYO Workspaces, which has helped it diversify its revenue streams and tap into new markets.

These are some of the key factors that have contributed to OYO's rapid growth and scaling of its business.

What are the Challenges faced by OYO Rooms?

Some recent news about oyo and its founder ritesh agarwal.

• Ritesh Agarwal stepping down as CEO: In January 2021, Ritesh Agarwal announced that he was stepping down as CEO of OYO India and South Asia, to focus on his role as Group CEO and to drive OYO's global strategy.
• OYO's ongoing financial restructuring: In 2020, OYO underwent a financial restructuring exercise to streamline its operations and cut costs, which included laying off employees and selling off some of its overseas businesses.
• OYO's continued global expansion: Despite the challenges posed by the COVID-19 pandemic, OYO has continued to expand its operations globally and has entered new markets such as Mexico and the United Kingdom.
• Ritesh Agarwal's investments: Ritesh Agarwal has made several investments in startups through his personal investment firm, RA Hospitality Holdings. In 2021, he invested in an AI-based wellness startup and also in an Indian edtech company.
• OYO's valuation: As of 2021, OYO is valued at over $10 billion and is considered one of the most valuable startups in India.
• OYO's partnerships and collaborations: OYO has collaborated with several companies and organizations to offer accommodation solutions to their customers. Some of OYO's notable partnerships include collaborations with organizations like MakeMyTrip, Airbnb, and Flipkart.
• OYO's focus on sustainability: In recent years, OYO has been focusing on sustainability and has launched several initiatives to reduce its carbon footprint and promote environmental responsibility. These initiatives include implementing energy-efficient systems in its hotels, reducing waste, and promoting eco-friendly practices.
• OYO's new ventures: In addition to its core hotel business, OYO has also entered new ventures, such as OYO Life, which offers fully managed living spaces for long-term stays, and OYO Workspaces, which provides co-working spaces.
• OYO's response to the COVID-19 pandemic: Like many other businesses, OYO was impacted by the COVID-19 pandemic, with a significant drop in demand for hotel rooms. However, the company has since then adapted to the new reality and has implemented several measures to ensure the safety of its guests and employees, such as frequent sanitization and contactless check-ins.

Despite many struggles, This Startup Oyo got successful and success story of its journey is an inspiration for many small startups in India. Oyo has expanded its horizons beyond the bounds of India as well as just hotels. At the moment, Oyo is one of the India’s most gifted startups. Ritesh Agarwal has 30% of the profits of Oyo Rooms.

Is Oyo an Indian startup?

Oyo is an Indian startup and is founded by Ritesh Agarwal in 2013. Oyo today is one of the world's biggest chain of hotels, homes and spaces.

What is full form of OYO?

OYO: On Your Own

The full form of OYO is "On Your Own".

Who is the Owner of Oyo Rooms?

The Owner of Oyo Rooms is Ritesh Agarwal an Indian entrepreneur. Ritesh Agarwal is Founder and CEO of Oyo Rooms.

Oyo makes Money through Commissions, Room Reservation Fee, Membership fees, Advertising, Sponsors and Partnerships and Consulting Services.

Is Oyo Rooms a unicorn?

Oyo Rooms is a Unicorn startup from India and is owned by Ritesh Agarwal. Ritesh is Founder and CEO of Oyo Rooms.

Is OYO a Chinese company?

Oyo is not a Chinese company, it is an Indian startup company founded by Ritesh Agarwal. But, Oyo does have its business in china and many other countries.

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Oyo Case Study: Business Strategy, Success & Failure

• 20 June 2023

Summary: In this blog we are discussing Oyo case study . OYO company was founded by entrepreneur Ritesh Agarwal at very young age. Recently, company’s estimated revenue was over Rs 5,700 crore for FY2023. Born in 1993, Ritesh embarked on his entrepreneurial adventure at the tender age of 17, setting the stage for a remarkable story. In 2012, with the support of Patron Rajesh Yadav, Ritesh launched Oravel Stays Pvt. Ltd. However, it was in 2013 that he truly made his mark by transforming the company into OYO Rooms. This visionary move revolutionized the hospitality industry by providing affordable and standardized accommodations for travelers. However, it wasn’t easy. More discussed in this OYO business case study,

Interesting Facts About OYO Rooms

• Ritesh Agarwal, the mastermind behind OYO, once confessed that he encountered six failures before achieving the sweet taste of success in his OYO venture.
• OYO, the unstoppable force in the hospitality industry, has risen to become the world’s second-largest hotel chain and the fastest-growing provider of hotels, homes, and workspaces.
• Going Global: Today, OYO has expanded its footprint across 80+ Countries!
• OYO has a remarkable presence in China where it boasts a staggering presence in 338 cities and offers over 590,000 rooms, largest after India. ( source )
• Even in Indonesia, OYO is spreading its hospitality magic to 100+ Cities with over 27,000 rooms,
• Oyo has also grown its influence in 30 Destinations of UK managing over 3,500 rooms.
• Crossing the ocean, OYO has recently set foot in the United States, leaving its mark in 60 cities, 21 states, and providing over 7,500 room service.
• Oyo has employed 20,000 dedicated OYOpreneurs on board. According to the company, OYO is not just a hotel chain; it’s a community of passionate individuals working towards a common goal.
• OYO’s growth has not only benefited its own team but has also created economic opportunities for over 300,000 local hospitality enthusiasts worldwide.

Oyo’s story is nothing short of remarkable. From humble beginnings to becoming a hospitality giant, their journey is filled with twists and turns that will leave you inspired. So without losing a moment, moving on to this OYO case study.

Full form of OYO | OYO Ka Kya Matlab Hota Hai?

As we embark on the fascinating journey of exploring Oyo through this case study, let’s first unravel the meaning behind OYO.

OYO stands for “On Your Own.”

The term “On Your Own” signifies the empowerment and independence that Oyo offers to both its CUSTOMERS and PARTNERS.

In desi language it stands for “Apne Dum Par” which represents the founder’s success story as well who founded the company On his Own.

But the brand’s name even beautifuly justify OYO’s Business Model

For example – for customers, Oyo provides a platform where they can confidently book accommodations and have a sense of ownership over their stay.

On the other hand, Oyo’s value to business partners, such as hotel owners and homeowners, lies in the opportunity to operate their properties On Their Own, yet benefit from Oyo’s extensive reach and resources.

So, as we delve into Oyo’s journey through this oyo case study, keep in mind the underlying philosophy of “On Your Own” that has propelled Oyo’s Hotel success and influenced its approach to revolutionizing the hospitality industry.

Oyo Hotel Kya Hai? What is Oyo Hotel?

Now most people are still unaware of OYO hotel, to some it is an acronym for hotel, or a local hotel’s brand name or may be an object causing a buzz in the market.

So, What is OYO Hotel? Oyo Hotel Kya Hai?

Oyo Rooms is a growing chain of hotels that’s making waves in India’s hospitality market.

Starting with just 1 hotel in 2013 in Gurgaon, today, OYO is in more than 800 cities, with more than 23,000 hotels, 850,000 rooms, and 46,000 vacation homes, worldwide.

The company is still may be limited to a few cities and towns at the moment, but they’re expanding faster than a wildfire.

Now, you might be wondering ‘how they are purchasing so many hotels in such a short time?’

Well, they don’t own a hotel.

Instead, they team up with existing hotels, make them part of their business plan and ensure that they meet Oyo’s standards.

These standards are about offering quality and standardized services like in-room WiFi, breakfast, AC, and backup power, all at budget-friendly prices.

How OYO Started?

In the year 2012 Ritesh Agarwal (currently the founder of OYO) made his first enentrepreneur attempt by launching Oravel Stays.

Being a travel-freak guy, Ritesh observed a bigges issue with hotel sector “BUDGET ACCOMODATION.”

By that time it wasn’t easy to find a budget hotel.

This is where Ritesh Agarwal brought the idea of Oravel Stays Ltd to life with an aim to make it easy for people to find and book budget-friendly accommodations.

But that was just the beginning of Ritesh’s entrepreneurial journey.

In 2013, Ritesh Agarwal’s vision took a leap forward which resulted into the rebranding of the company Oravel Stays Ltd to OYO .

This move marked a turning point, as OYO began partnering with hotels to offer a consistent guest experience across various cities.

Ritesh’s determination to provide quality stays at affordable prices began to shape the hospitality landscape.

However, it wasn’t easy, without funding it was difficult to build a billion dollar company,

But, Ritesh successfully jumped above this obstacle as well.

A $100,000 Award that Helped OYO To Sprout

The real journey of OYO starts from here. Soon after launching Oravel Stays, Ritesh Agarwal caught the attention of Peter Thiel, the founder and former CEO of PayPal.

As part of the prestigious Thiel Fellowship in 2013, Ritesh received a generous grant of $100,000.

One of the notable parts of this oyo case study is that Ritesh Agarwal stood out among thousands of applicants, earning his place as one of the ten winners of the Thiel Fellowship.

Some says he was the only Indian to have won the Thiel Fellowship Award and recieved $100,000 funding.

The Thiel Fellowship, initiated by PayPal’s former CEO Peter Thiel, encourages young entrepreneurs under 20 years of age to skip college and dive headfirst into entreprenuriship.

Ritesh Agarwal proved himself as a prime candidate for this esteemed opportunity and the rest is the history. He was awarded with $100,000.

However, Ritesh had the option to have use this big amount to complete his all fantasies.

But he chose to fund his new business OYO Rooms which was indeed an upgraded version of Oracle Stays ltd.

Initial Business Model of OYO

OYO Rooms first business model was “Aggregator”. As per this model, Oyo Rooms established partnerships with property owners to showcase a portion of their lodging inventory under the OYO brand.

However, there’s a catch in this OYO business case study.

These owners had to ensure that their rooms met specific quality standards to be eligible for the OYO network.

Actually, OYO adopted a strategy of pre-booking a portion of hotel rooms at a mutually agreed price. As per this strategy,

Oyo would list these rooms on the OYO platform, branding them as their own (often at a higher rate).

Company revenue was the difference between the negotiated price with the hotel owners and the selling price to customers.

For example – Oyo rooms get a discount on the bulk reservation, let’s say 50%

Cost to OYO rooms = 3000*50/100= Rs. 1500

Oyo resells it at Rs. 1800 to customer

Profit to customer= Rs. 1200

Profit to OYO is Rs. 200/room.

By carefully managing the price differentials and leveraging their own branding, they created a win-win situation for both the property owners and the end customers.

But unfortunately this wasn’t a WIN for OYO.

Problems Faced By OYO as An Aggregator

Ah, the journey of OYO rooms, filled with challenges and hurdles at every turn. Let’s dive into some of the major roadblocks they encountered along their path.

High Cash Burn

The hotel aggregator business model involves a substantial cash burn rate due to the need for upfront investments in hotel room bookings and the heavy discounts offered during the expansion phase.

Since Oyo was focusing on its expansion, it tried to attract customers through attractive discounts. Company did this by booking hotel rooms for the entire year in advance. But this cut down company’s profit.

Standardization

OYO had lots of non-branded hotels in its network. Company found that these hotels lack uniformity and professionalism which posed a risk on the OYO’s brand value.

OYO faced the challenge of satisfying their customers at every interaction point. It was no easy task, given the varying standards and quality across the non-branded hotels they partnered with.

Competition

OYO’s dominant position in the industry has paved the way for other competitors. They’ve created opportunities, inspired innovation, and encouraged healthy competition.

It was a constant push and pull, with each player striving to outshine the other. Some of its famous competitor were trivago.in, agoda.com, fabhotels.com, airbnb.co.in, and more.

Malpractices

In this oyo case study, the most annoying cause which had shaken up the company’s business was the malpractices which was on rise. Most hotel owners were not loyal with OYO.

They would book the hotel at lower prices and benefit from OYO’s discounted services. However, this was the time when OYO owner realized the need for a change.

Second/Current Business Model of OYO

Oyo Rooms strategic steps to shift its focus from being a mere aggregator to managing entire hotel properties on behalf of the Hotel Owners had led the business to a right direction.

“Company has evolved its business to 100% exclusive franchise, manage or operating. We do not anymore do hotel aggregation and have become a full-scale hospitality company.” In 2017, Oyo CEO Agarwal announced

In this oyo case study, we discovered that OYO emerged as a popular name in the hospitality sector so far. As company switches to Franchise Model, it proven to be a game-changer for both Oyo and the partnering hotels.

By forging exclusive tie-ups, Oyo now manages the entire inventory of hotels under its own distinctive branding. This approach has proven to be mutually beneficial for Oyo and the hotels involved.

The partnering hotels reap the benefits of this collaboration since being listed on the Oyo platform gives them increased visibility and exposure.

Similarly, hotels attract more customers and generate additional business opportunities by leveraging Oyo’s established brand name.

Earlier OYO was paying to hotels to acquire rooms on lease, but now hotels were paying to OYO for bringing guests to them and assisting them through business standardization.

When it comes to the franchise model, Oyo Rooms levies a commission of 22% on its partners.

However, it’s worth noting that this commission can vary based on the specific services offered by the brand. So, it’s not a one-size-fits-all scenario.

Now, Let’s shift our focus to the customers.

When booking a hotel room through Oyo, customers pay a reservation fee as a commission to OYO. This fee typically ranges from 10% to 20% of the total booking amount.

Additionally, Oyo provides customers with the option to purchase a membership, which comes with its own set of perks. The membership fee can vary, ranging from 500 RS to 3000 RS, offering customers access to exclusive benefits and discounts.

There were some good reasons about Oyo franchise business model which gave this oyo room case study a positive turn.

Reasons Which Made OYO Franchise Business Successful

Oyo’s strategic move to manage the complete hotel properties brings numerous advantages to the business. The four main benefits were –

Reduced Operational Cost

Firstly, OYO witnessed a significant reduction in operational costs. By adopting the franchise model, they streamlined their operations and found smarter ways to manage expenses On Its Own.

The result? A leaner, more efficient business model that maximized profitability.

Improved Serviceability

Moreover, the switch to franchising brought about a remarkable improvement in serviceability. OYO was able to expand its reach and provide quality accommodations to more travelers.

The franchise partners (means hotel owners) were now more loyal towards the brand, services were standardized, which propeled customer satisfaction, and building of strong brand reputation.

Comprehensive Hospitality Solution

Furthermore, OYO’s embrace of the franchise model offered a comprehensive hospitality solution. It provided the company a complete control over their hotel networks.

This resulted into the standardization of the OYO rooms. Guest were now recieving complete services including Wi-Fi facility, TV, clean bed sheets, meals and many other things.

Competitive Benefits

Lastly, let’s not forget the competitive benefits that OYO gained through franchising. By empowering local entrepreneurs as franchise partners, OYO created a network of dedicated individuals who were invested in the success of their properties.

This collaborative approach enabled OYO to swiftly adapt to market changes, stay ahead of the competition, and deliver top-notch experiences to customers.

Read More: How You Can Start a Hotel Business Like OYO?

Owned Hotels & Co-Living Spaces: Two Other Business Models of OYO

During this OYO case Study, we found that apart from the two of the business models discussed above, OYO is actively engaged in its two additional model ‘OYO Owned Hotels’ and ‘OYO Co-Living Spaces.’

Owned Hotels

Firstly, OYO offers its hotel partners a choice: they can either manage the property themselves or hand over the operations to OYO. It’s all about flexibility and finding the best approach that suits their needs.

Moreover, OYO goes the extra mile by providing financial support to its partners. Through collaborations with financial institutions, OYO has facilitated loans for over 100 properties.

These loans can be utilized for various purposes, such as upgrading the space, managing working capital, and fulfilling other operational needs.

Co-Living Spaces

According to a combined report by Jones Lang LaSalle (JLL) and the Federation of Indian Chambers of Commerce & Industry (FICCI), Co-Living market is projected to experience a robust compound annual growth rate (CAGR) of 17% over the next five years.

OYO tried to keep pace with this evolving market and made its entry into CO-Living market in 2018 with Oyo Life, an integral part of its fully-furnished rental housing arm.

In coliving spaces by OYO, co-residents not only share the rent at affordable price, but also enjoy a range of add-on services together make life more convenient, including daily housekeeping, laundry facilities, on-call resident facility management, and curated meals, among others.

Oyo collaborates with prominent developers and independent asset owners, taking over entire buildings, towers, or independent houses. It’s important to note that Oyo Life is not just an aggregator; they take full responsibility for the end-to-end management of these spaces.

This includes leasing entire buildings, furnishing them, ensuring cleanliness, transforming them to meet the highest standards, and maintaining them impeccably.

OYO Business Case Study | Strategy Used By OYO

Oyo’s business strategy has been instrumental in its rapid growth and expansion in the hospitality industry. And as we are heading towards the end of this OYO business case study, here is a break down of all the strategies used by OYO to succeed:

Business Standardization

Unlike Airbnb, where the connection is established between the visitor and the host in a specific location, Oyo Rooms takes a different approach. They take full responsibility for delivering all the services promised to their customers.

• Room Cleaningess etc.

With Oyo’s standardized hospitality, customers can rest assured that their experience will be consistent experience at every location where OYO rooms are available. This level of accountability builds trust and fosters customer loyalty. Because almost every customer wants comfortable and hassle-free stay.

Pricing Strategy

OYO mastered the art of luring customers with their low prices, offering a significant discount compared to the original hotel rates. It’s like a magnet that pulls in budget-conscious customers, making them feel like they’ve hit the jackpot.

Meanwhile, Oyo Room’s competitors might scratch their heads, wondering how they manage to strike the right balance between quality and affordability.

The secret lies in OYO’s Smart Pricing Algorithm with the help of it determines the price value based on factors like geographics, inputs from hotels, promotions etc.

At OYO, both Engineering and Data Science teams, work very closely to keep its hotel cost less than others.

Promotional Strategy

When it comes to promotional strategy, Oyo Malik (means Ritesh Agarwal) know the power of social media. Through platforms like Facebook, Twitter, and more, Oyo strategically promotes its unique services and budget-friendly prices on these platforms

But that’s not all; Oyo takes customer loyalty seriously and goes the extra mile to keep them hooked. How, you may ask? Well, Oyo constantly introduces new discount offerings, slashing prices and big offers even further.

Leveraging the vast potential of these attractive offers, Oyo successfully captures the attention of new customers, enticing them with their irresistible offerings.

Customer Relationship Strategy

When it comes to customer relationships, the oyo case study found that OYO takes multi-faceted approach to stay connected. They have various means of communication, whether it’s through their hotel staff or their user-friendly app. Customers have the convenience of reaching out for assistance at any time, day or night, ensuring round-the-clock support.

Oyo understands the importance of keeping up with the ever-evolving digital landscape. Hence, they actively engage with their audience on multiple social media platforms. The OYO case study even found the company employing diverse marketing techniques, leveraging the power of social media to effectively communicate with the public.

A customer posts a query or shares feedback on Oyo’s social media page. Soon after, Oyo’s dedicated team jumps into action, responding promptly and providing the necessary assistanc e. They ensure that every customer interaction is handled with care, leaving no stone unturned in delivering top-notch service.

Oyo’s commitment to maintaining strong customer relationships is evident in their 24/7 assistance, user-friendly app, and active presence on social media.

Loss Prevention Strategy

In the face of the Corona Virus impact, strategies were crucial to overcome the challenges that engulfed the hospitality sector. Among the players in the industry, Oyo took proactive measures to ease the burden for its customers.

Recognizing the need for flexibility, Oyo implemented a customer-centric approach by making cancellations easier . They understood that circumstances were unpredictable, so providing this option was a wise move in OYO case study.

Moreover, Oyo went the extra mile by offering travelers credits. This ingenious solution allowed customers to rebook their stays at a later date, ensuring their loyalty and fostering a positive relationship.

Oyo case study serves an inspiring example for the hospitality sector. Their proactive measures in facilitating cancellations and offering credits not only helped customers but also cemented their position as a trusted brand.

OYO Hotel Case Study | Services Provided By OYO

Now let’s come accross oyo hotel case study, because services provided by OYO are also fairly interesting.

In the past, Oyo’s approach involved booking a portion of a hotel’s inventory, ensuring it met their quality standards, and reserving it exclusively for their esteemed customers. Essentially, they would lease a set number of rooms on anual basis at discounted prices, reaping profits by offering them to their own clientele.

Later, instead of leasing the rooms, Oyo operates them as Oyo Rooms franchises. Acting as franchisees, the hotels and property owners are obligated to operate in accordance with predetermined standards. In fact, Oyo even provides plans where they take charge of running the place, relieving the hotel staff or owner of their responsibilities.

Oyo Townhouse

Since competition in the hospitality industry is fierce, Oyo has stepped up its game with the introduction of Oyo Townhouse. This unique offering is tailored to meet the demands of the millennial traveler, setting Oyo apart from the crowd.

Oyo Townhouse takes a customer-centric approach, carefully considering the needs and desires of the millennial generation. The introduction of Oyo Townhouse is a strategic move by Oyo, aiming to capture the attention and loyalty of millennials.

With Oyo Townhouse, Oyo has strategically positioned itself to meet the evolving needs of millennials and deliver a unique, standardized hospitality experience that sets them apart from the competition.

Our OYO case study found that the townhouse includes

• Smart Spaces
• Smart Rooms
• And Smart Menus etc.

Studio Stays

Studio Stays is a service in which Oyo Rooms case study goes beyond just hotel accommodations. They offer fully furnished rooms and flats, perfect for those embarking on long stays for internships, corporate gigs, and more.

Picture this: you can rent these rooms and flats on a single occupancy basis or share with a companion, be it a friend or a colleague. Oyo Rooms has got you covered for both options, ensuring flexibility and convenience.

And here’s the cherry on top in this Oyo case study: the rental payments are made on a monthly basis, making it hassle-free and easy to manage. No need to worry about long-term commitments or complicated agreements.

Let’s now delve into another aspect of Oyo services : events and other long stays. It is that section of OYO case study where Oyo shines, catering not only to studio stays but also to a wide range of occasions that require extended accommodation.

Just like studio stays, Oyo steps up to the plate when it comes to hosting family functions such as weddings and parties. They understand the need for comfortable and convenient accommodations for guests who will be staying for an extended period.

Oyo doesn’t stop at family functions. They also excel in providing accommodation for corporate events like seminars, meetings, and parties. Whether it’s a large-scale conference or a small corporate gathering, Oyo ensures that guests have a comfortable and hassle-free stay.

OYO Commercial Spaces

That’s right, Oyo is not just limited to hotels anymore. Customers can now make bookings for office spaces through Oyo as well. It’s a game-changer for those in need of a professional setting to conduct their business affairs.

Moreover, Oyo’s foray into the commercial space arena means that entrepreneurs, freelancers, and businesses of all sizes can find suitable and affordable office spaces with ease. It’s a convenient and hassle-free way to secure a productive work environment we found in this OYO case study.

Ah, let’s dive into the world of Oyo Wizard, where magical discounts, deals, and cashback offers await! In OYO Wizard, the company has conjured up a subscription model that gives subscribers exclusive access to these incredible perks.

Moreover, with Oyo Wizard, you can unlock a realm of savings and enjoy discounts that will leave you grinning from ear to ear. Picture this: exclusive deals, tempting discounts, and even cashback offers, all at your fingertips through the Oyo Wizard subscription.

Since Oyo knows how to treat its loyal customers, they’ve crafted this enchanting subscription to ensure you receive the best value for your money which we believe one of the best parts of this Oyo Case Study.

How OYO Makes Money?

Firstly, it’s important to note in this OYO case study that as of fiscal year 2019, Oyo reported an impressive annual revenue of Rs 6,547 crore. Later due to recession, company generated Rs 3962 crore in financial year 2021. Then generated Rs 4781.4 crore in financial year 2022. And now Oyo’s revenue for financial year 2023 is expected to be more than Rs 5,700 crore. The OYO case study unveils that the company is back on track. But the important topic of this OYO business case study is still undiscussed, “the revenue streams of OYO”. So without further ado, let’s jump straigh to the topic.

Given below are the diversified revenue stream of OYO –

Commission From Hotels

Oyo charges approximately 22% in commissions from hotels owners on a monthly basis. This percentage serves as a benchmark for the fees associated with their services.

In addition, the specific amount of commissions can differ based on the services and features offered by Oyo. This variation ensures that hotels owners pay a fee that aligns with the specific value they receive.

Room Reservation Fees

Customers are required to pay a room reservation fee based on the services they choose. This fee is calculated as a percentage margin of the hotels’ prices, ensuring fairness and transparency. Moreover, let’s take an example to illustrate this concept.

Subscription Fees

Suppose a room is priced at Rs. 1,000 per night. Oyo, for instance, earns a commission of only 10-20% from this price, which constitutes their actual revenue.

Oyo Wizard offers a range of membership tiers to its users, catering to different needs and preferences. However, keep in mind that these premium perks come at a cost.

Moreover, users who subscribe to Oyo Wizard memberships are subject to membership fees. In this oyo case study , we discovered that these fees can also vary, spanning from a modest Rs 500 to a more substantial Rs 3000.

Advertisement

Oyo cleverly charges various companies to have their ads featured on its popular app and website. This strategic move allows Oyo to tap into additional sources of revenue, creating a win-win situation for both the company and its advertising partners.

Sponsors and Partnerships

Oyo doesn’t just stop at providing accommodation; they have a smart trick up their sleeve. They charge a fee from their sponsors and key partners, leveraging the power of advertising to promote their brand on the Oyo app.

With a keen eye for business opportunities, Oyo strikes partnerships that benefit both parties. By showcasing their partners’ brand names through advertisements, Oyo creates a win-win situation.

Consulting Services

Oyo’s consulting services cater to a wide range of clients, including hotels, clubs, and organizations in need of guidance and data analysis. They tap into their extensive database, which houses information about various locations, hotels, event organizations, users, and their preferences.

You see, Oyo’s ownership of this vast database is what enables them to offer such valuable consulting services. They leverage this treasure trove of information to provide meaningful insights and strategies to their clients.

However, here one thing is worth noting that despite the fact that OYO has diverse business models and revenue stream. One thing we cam accross in this oyo case study is that 90% of OYO’s revenue still comes from its Franchise Business Model.

Final Words

Oyo is a true game-changer in the hotel industry. The brand has successfully harnessed the power of technology, sparking a revolution like no other. It’s like they’ve waved a magic wand, redefining living spaces and elevating user experiences to extraordinary heights.

Thanks to Oyo’s seamless booking process, renting a room has become a breeze. And let’s not forget about the icing on the cake – their pricing is incredibly pocket-friendly, making luxury accommodations accessible to all.

But that’s not all; Oyo’s growth knows no bounds. They are constantly expanding into new markets, capturing hearts and rooms along the way. Their dedication to providing top-notch services at affordable rates is a winning combination that keeps guests coming back for more. The OYO case study is an evidence that Oyo has truly set a new standard in the world of hospitality.

Sahil Dhimaan

Hi, Sahil Dhimaan this side. I'm a passionate about entrepreneurship, startup, business, online marketing, innovative tech and online business growth.

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