ORAVEL STAYS LIMITED (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.
HOTEL INDUSTRY
As to a report analysis by Statista, the hotel 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 thorough research carried out by Statista, these estimates highlight a good picture for the hotel business, demonstrating ongoing expansion and changing consumer patterns.
FOUNDERS AND TEAM
Ritesh Agarwal is the co-founder and Group CEO of OYO. 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.
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 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 centred 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.
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.
The name OYO stands for 'On Your Own’ rooms. Earlier, the company was named 'Oravel' but later changed to 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.
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.
INVESTMENTS
OYO has invested in OYO LIFE, signaling a strategic move to diversify its portfolio beyond conventional hospitality services as of October 30, 2018.
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 then later went on to expand into the UK, China, the US, Indonesia, Europe, and other regions
OYO launched several 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 $2.7 billion as of August 2024.
COMPETITORS
The following are some of the top competitors of OYO:
Airbnb
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
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.
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 fundraising 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.
ORAVEL STAYS LIMITED
(ISIN: INE561T01021)