Introduction to OYO Case Study
OYO, also known as OYO Hotels or OYO Rooms, is a global hospitality platform that boasts a rapid expansion of leased and franchised hotels, homes, and accommodations. In 2013, since its inception in India, OYO (On Your Own) now spans over 5000 cities in around 118 countries with over 1.5 million rooms. With a vast network of over 190K homes and hotels worldwide, a significant portion is in India, covering over 500 cities nationwide.
OYO case study tells OYO Rooms has become a household name in today’s world, thanks to its widespread reach and impact in the hospitality industry. The company gained even more recognition when its founder & CEO, Ritesh Agarwal, appeared as a “shark” on Sony LIV’s popular show “Shark Tank India” during Season 3.
In this OYO case study, let’s take a closer look at OYO and explore what makes it unique and why they have become a go-to choice for many individuals seeking a comfortable stay.
How was the journey of OYO and its founder?
In the OYO case study, Odisha boy Ritesh Agarwal was a college dropout, and in 2011, he relocated to Delhi with dreams of starting his venture.
As Ritesh traveled extensively, he noticed the inconsistent quality of hospitality services at various hotels. This sparked his desire to establish a platform offering top-notch accommodations, food, and services within budget constraints. In 2012, he founded “Oravel Stays Pvt. Ltd”, drawing inspiration from Airbnb‘s concept of bed and breakfast aggregation.
Starting his entrepreneurial journey at just 17, he transformed Oravel Stays into OYO Rooms in 2013.
Soon after launching Oravel Stays, Agarwal was awarded a $100,000 grant for the Thiel Fellowship, a two-year program backed by PayPal co-founder Peter Thiel.
OYO case study explores In 2016, OYO expanded internationally, starting with Malaysia. Later, it expanded to China (2017), the UK (2018), the US (2019), and more.
Ritesh Agarwal made headlines in 2020 by becoming the world’s youngest self-made billionaire, following in the footsteps of Kylie Jenner.
What are the business models of OYO?
OYO case study analysis Over time, OYO has transformed its business approach. Initially, it worked as a hotel aggregator but later shifted to a franchise model.
Here’s a brief overview
OYO Aggregator Model : OYO initially operated as a hotel aggregator, leasing rooms and branding them under its name. With this model, OYO standardized hospitality services at competitive prices as companies like Uber & set the standard in their industry.
OYO Franchise Model : As OYO grew, it changed its approach to a franchise model. That involved collaborating with hotels to operate under the OYO brand. While these hotels remain independent, they undergo upgrades to meet OYO’s standards, ensuring a consistent customer experience. The franchise model emphasizes user satisfaction, top-notch service, and using OYO’s technology, marketing, and operational help.
OYO Partnership Model : The partnership model of OYO involves a revenue-sharing setup. They agree to a certain percentage of the revenue from the bookings with their partner hotels. This arrangement gives hotel owners more exposure and access to a bigger pool of customers. It’s a win-win, as they can expand their business while being affiliated with the OYO brand.
In the OYO case study, every model plays a crucial role in OYO’s business strategy, contributing to its extensive growth and footprint in the hospitality sector.
How does OYO earn?
OYO case study tells OYO earns revenue from various sources.
Here’s a quick overview of their earning sources.
Commissions from Hotel Partners : Hotel partners typically pay around 22% commission to OYO. However, this percentage is subject to change based on the facilities offered by the hotels, their geographical location, and various other determinants.
Room Booking Fee : Customers pay a fee when booking a room, which depends on the services they choose. OYO collects this fee through their platform and earns a commission for each booking.
Franchise Fees : OYO partners with independent hotel owners by franchising its brand to them. These owners pay franchise fees to use the OYO name and benefit from its services and technology. These fees, whether paid once or periodically, contribute significantly to OYO’s revenue.
Membership Fees : OYO Wizard subscribers pay a fixed fee to access premium services such as Wizard Blue, Wizard Silver, and Wizard Gold. These services generate revenue for OYO.
Charging for Advertising : OYO earns revenue by showcasing ads from various companies on its app and website. This advertising opportunity contributes significantly to OYO’s earnings.
Charging for Collaborations and Sponsorships : OYO charges sponsors and partners to promote their brand through ads on its platform and earns significant revenue.
Charging for Consulting Services : OYO provides business consulting and data analysis services to partner hotels, clubs, organizations, and more. In return, they pay OYO for these services.
Ancillary Services : OYO can boost its revenue from extra services like selling food and drinks, arranging transportation, or booking tourist activities through its platform.
OYO case study presents In FY23, OYO reported consolidated revenue from operations of Rs 5,463.9 crore, up from Rs 4,781.3 crore in FY22. Its loss decreased from Rs 1,941.5 crore to Rs 1,286.5 crore during the same period, according to PrivateCircle sources.
In the OYO case study, Ritesh Agarwal, the CEO of OYO, mentioned that the company achieved an EBITDA of Rs 750 crore in 2023. He anticipates reaching an adjusted EBITDA of Rs 1000 crore in 2024, surpassing the earlier projected estimate of Rs 800 crore for FY2024.
What are the funding and investors of OYO?
OYO case study reveals that the company boasts robust backing from a total of 54 institutional investors, with the SoftBank Vision Fund leading the pack, complemented by 53 additional entities. Furthermore, the support extends to 14 Angel investors, among whom Sadeesh Raghavan is a notable contributor, alongside 13 others
Funding data is as follows :-
- Nov 2012: Seed Round, $74.3K from Lightspeed India, DSG Consumer Partners, SGR Ventures, RAAY Global Investments, Ashok Kumar Damani, Bharat Mehta, Bharat Banka, Anand Ladsariya, Sadeesh Raghavan, Ashish Nandkishor Agarwal, Rabi Kiran Sahoo, South Yarra Holdings, Nitin Agarwal, Vinod Sood.
- Feb 2014: Angel investment, Undisclosed funding from Sadeesh Raghavan.
- Mar 2014: Seed Round, $671K from Lightspeed India, DSG Consumer Partners, Peak XV Partners.
- Sept 2014: Series A Round, $25M from Peak XV Partners, Greenoaks, DSG Consumer Partners, Lightspeed India.
- Aug 2015: Series B Round, $100M from SoftBank Vision Fund, Greenoaks, Peak XV Partners, Lightspeed India.
- July 2016: Series C Round, $61.7M from SoftBank Vision Fund.
- Sept 2017: Series D Round, $260M from SoftBank Vision Fund, Hero MotoCorp, Greenoaks, Huazhuhui, Peak XV Partners, Global Ivy Ventures, Sequoia Capital, China Lodging Holding, Lightspeed India.
- Sept 2017: Series D Round, $10M from China Lodging Holding.
- Sept 2018: Series E Round, $1B from SoftBank Vision Fund, Greenoaks, Airbnb, Peak XV Partners, Grab, Didi, and Lightspeed India.
- Dec 2018: Series E Round, $100M from Grab.
- Feb 2019: Series E Round, $100M from Didi.
- Mar 2019: Series E Round, $74.4M from Airbnb.
Oct 2019: Series F Round, $1.5B from SoftBank Group, SoftBank Vision Fund, Airbnb, Peak XV Partners, Ra Hospitality, Lightspeed India. - Jan 2021: Series F Round, $7.4M from Hindustan Media Ventures.
- Mar 2021: Series F Round, Undisclosed funding from GSV.
- July 2021: Conventional Debt, $660M from Fidelity Investments.
- Aug 2021: Series F Round, $5M from Microsoft.
- Jan 2022: Secondary Market Round, $29.72M from Qatar Insurance Company.
What are the acquisitions of OYO?
By investigating the OYO case study, OYO has acquired 12 companies in various sectors and has invested over $148 million in these acquisitions.
Some notable acquisitions are:
• In March 2018, OYO acquired Novascotia Boutique Homes, a service apartment operator based in Chennai.
• In July 2019, OYO revealed its acquisition of Innov8, a co-working space located in New Delhi.
• In August 2022, OYO acquired Bornholmske Feriehuse, a holiday home operator based in Denmark.
What are the marketing strategies of OYO?
OYO case study shows OYO’s marketing strategies are varied and customer-focused, aiming to offer budget-friendly, consistent accommodations in different regions.
Here’s a quick look at them:
Customer-Centricity and Value-based Positioning : OYO is committed to providing a personalized and seamless experience for every guest. They use advanced data analysis to anticipate guest preferences and adjust their services accordingly. OYO offers budget-friendly hotels and luxurious accommodations with enhanced room service and green spaces to add value for customers. With this personalized approach, OYO ensures that every stay is comfortable and memorable, leaving guests with a positive and lasting impression.
OYO Marketing Offerings : In the OYO case study, OYO offers a variety of products and services designed to meet different customer needs. Here’s a quick overview of their offerings –
~ OYO Flagship : OYO Flagship hotels are directly leased and managed by OYO, offering guests a homely atmosphere with themed interiors for a unique luxury experience. Situated in prime locations, these hotels provide modern rooms with all amenities, striking a perfect balance between affordability and quality.
~ OYO Townhouse : This option is an upscale neighborhood hotel positioned in the mid-scale category. It’s tailored for millennial travelers, providing an exclusive, locality-focused experience.
~ OYO Home : OYO Home is known for India’s first Home Management System, where OYO manages private homes across various locations.
~ OYO Vacation Homes : OYO Vacation Homes is a part of OYO that offers travelers charming and distinctive vacation rental properties.
~ OYO SilverKey : This option caters to the specific needs of corporate travelers looking for high-quality accommodations.
~ OYO Wizard : OYO Wizard is a remarkable membership program of OYO that enhances customer engagement by offering highly rated and curated accommodations to loyal customers at the most competitive prices.
~ Capital O : It focuses on upscale hotels in prime locations, providing OYO’s quality-assured experience at affordable prices.
~ Palette : This category falls into the upper-end leisure resorts, ideal for those seeking an intuitive experience at reasonable prices.
~ Collection O : Collection O meets the needs of business travelers seeking suitable accommodation with booking and rental services.
~ OYO LIFE : OYO LIFE offers hassle-free co-living spaces, providing fully furnished homes with attached bathrooms and free Wi-Fi.
It targets millennials and young professionals looking for long-term rental rooms without the burden of brokerage fees.
~ Super OYO : Super OYO regularly evaluates each hotel’s performance based on various factors like customer ratings, room availability, and check-in experience, ensuring smooth operations.
~ OYO Workspaces : OYO Workspaces offers modern, flexible co-working spaces designed for professionals and businesses.
~ YO! HELP : This service is all about giving customers a smooth experience. It offers instant support and quick solutions to any problems you might have.
Value for Money : OYO prioritizes offering cost-effective accommodations without compromising on the standard of service. Accommodation costs vary, starting at Rs. 399 and can go up to Rs. 4000, reflecting the hotel’s positioning and the level of luxury offered.
By providing competitive rates, OYO ensures customers feel they are getting good value for their money.
Digital Marketing : OYO employs a comprehensive digital marketing strategy incorporating both paid and organic methods. The company utilizes Google search ads and actively promotes its brand across social media platforms like Facebook, Instagram, Twitter, etc. Additionally, in the OYO case study, OYO hosts digital campaigns such as #OneForEveryone, #AurKyaChahiye, #YeRishtaHaiKhiska, and more. Furthermore, they prioritize Search Engine Optimization (SEO) techniques to attract organic traffic by leveraging popular search terms.
Celebrity Endorsement : OYO case study tells OYO has incorporated celebrity endorsements into its marketing approach. They often feature Bollywood stars like Neena Gupta in their promotions to make them more attractive. Sonu Sood serves as the brand ambassador for OYO.
Segmentation, Targeting, and Positioning (STP) : OYO tailors its offerings to meet the changing needs of customers using demographic, geographic, and psychographic segmentation. For example, they have specific accommodations like OYO Townhouse for millennial travelers and OYO Vacation Homes for vacationers.
360-Degree Marketing : OYO ensures visibility across various media channels, both digital and traditional, such as print, television, Google ads, and social media. Their 360-degree ‘Contactless Check-in’ campaign, featuring actor Sonu Sood, emphasizes a smooth and seamless check-in experience for guests.
Leveraging Technology : OYO relies on data and technology to enhance customer satisfaction and operational efficiency. They’ve created algorithms and platforms where customers can rate their experiences, helping to improve quality from the ground up.
Who are the competitors of OYO?
OYO case study shows OYO, the Indian hospitality brand, competes with various companies in the hotel and hospitality industry.
Their top competitors are Airbnb (A worldwide platform providing distinctive stays and memorable experiences), FabHotels (A chain of affordable hotels in India providing standardized services), and Treebo Hotels (An Indian budget hotel brand operating through franchising).
What are the challenges faced by OYO?
In the OYO case study, since its inception, OYO encountered many more challenges.Here’s a quick overview of OYO’s challenges:
High Cash Burn Rate : OYO’s business model needs a lot of cash to book hotel rooms in advance for the whole year. However, OYO struggled with a high cash burn rate, especially during its fast expansion, notably in China in late 2018. In India, the losses dropped from 24% to 14% of revenue, about $83 million, while global losses reached $335 million.
Legal Disputes : Over the years, OYO has encountered several legal battles. According to the sources, there are 21 cases filed against the company, its subsidiaries, directors, and promoters. One notable dispute involves Zostel Hospitality, stemming from a failed merger between OYO and Zostel’s subsidiary, ZO Rooms, back in 2015.
Unpaid Dues : Investigations involving discussions with proprietors and staff of hotels, scrutiny of legal filings, and examination of correspondence, as reported by a leading publication, suggest that OYO may be imposing extra charges on hotels without disbursing the corresponding dues. Consequently, several hoteliers have resorted to lodging criminal allegations against OYO, accusing it of not remitting the payments due to them.
Impact of COVID-19 : During the COVID-19 pandemic, OYO encountered its biggest challenge yet. Lockdown restrictions imposed by the government resulted in a sharp decline in occupancy rates. Ritesh Agarwal stated that the company incurred a substantial loss of Rs. 450 crore in its EBITDA during the pandemic years.
Conflict with Hotel Partners : OYO has faced difficulties with certain hotel partners, primarily revolving around disagreements about sharing fees and revenue. However, OYO’s founder, Ritesh Agarwal, mentioned that these conflicts only impact a small percentage of their partners, approximately 2%.
What are the Future Plans of OYO?
OYO’s case study reveals that it initially filed for an IPO of over $1 billion in October 2021, and is now canceling its plans for a public listing. Sources revealed that the hospitality startup intends to withdraw its IPO papers from market regulator SEBI.
Additionally, in the OYO case study, OYO aims to add 1500 Super OYOs by the end of FY24, focusing on acquisitions and partnerships to drive business growth. Moreover, as of January 2024, OYO plans to expand its portfolio by 400 new hotels, with a focus on religious tourism.
Conclusion of OYO Case Study
In conclusion, the OYO case study presents the story of a company that has seen remarkable growth and notable obstacles.
OYO emerged as one of India’s standout startups, reaching a valuation of $10 billion in 2019, in the same year the company won the ASEAN-India Excellence & Achievement Award. Despite facing criticism and controversy, including accusations of being a Ponzi scheme with an unsustainable business model, OYO has solidified its position as India’s largest hotel chain.
Frequntly Asked Questions
The abbreviation OYO represents On Your Own, a renowned hospitality and property rental service that began in India. Based in Gurugram, Haryana, OYO’s vision is to become the world’s most beloved hotel brand.
OYO conveys that ‘On Your Own’ is a go-to hospitality partner that ensures a cozy stay packed with amenities, affordability, and top-notch service, making your experience truly comfortable.
The term “OYO” stands for ‘On Your Own’ which is more than just a brand name; it encapsulates the essence of independent travel. OYO Rooms operates as an expansive network of hotels and properties available for rent through its online marketplace.
“ओयो” शब्द का अर्थ ‘ऑन योर ओन’ है जो सिर्फ एक ब्रांड नाम से कहीं अधिक है; यह स्वतंत्र यात्रा के सार को समाहित करता है। OYO Rooms अपने ऑनलाइन मार्केटप्लेस के माध्यम से किराए पर उपलब्ध होटलों और संपत्तियों के एक विस्तृत नेटवर्क के रूप में काम करता है।
OYO OS empowers hotel managers to handle check-ins, checkouts, room rates, and property performance. Plus, they can track their real-time earnings and incentives in one place.
Ritesh Agarwal, the visionary entrepreneur from Odisha, is the founder/owner of OYO Hotels & Homes.
The latest share price of Oyo Corp (Symbol: 9755) stands at JPY 2266.00. Remember, this data reflects the last trading session, and prices may vary.
According to the current reports, OYO Rooms is an Indian multinational hospitality chain valued at Rs 74,000 crore.
Ritesh Agarwal, the 30-year-old young Indian billionaire entrepreneur, is the mastermind behind OYO as its founder and CEO.
As of March 2024, it is estimated that Ritesh Agarwal’s net worth stands at around ₹16,000 crore.
To take a franchise of OYO, you need to sign up by visiting the official OYO partner website and engage in discussions with the OYO team to explore partnership details. Next, participate in training sessions designed to uphold service standards and carefully review and sign the franchise agreement to seal the deal.
Want to earn money on autopilot? click here and explore a passive income opportunity that requires minimal effort for maximum returns.
Thanks for sharing. I read many of your blog posts, cool, your blog is very good.
Thanks for sharing. I read many of your blog posts, cool, your blog is very good.
Your enticle helped me a lot, is there any more related content? Thanks!
Can you be more specific about the content of your article? After reading it, I still have some doubts. Hope you can help me.
Thanks for sharing. I read many of your blog posts, cool, your blog is very good.
Can you be more specific about the content of your article? After reading it, I still have some doubts. Hope you can help me.
Thank you for your sharing. I am worried that I lack creative ideas. It is your article that makes me full of hope. Thank you. But, I have a question, can you help me? https://www.binance.com/ru-UA/register?ref=OMM3XK51
Your article helped me a lot, is there any more related content? Thanks!
Your point of view caught my eye and was very interesting. Thanks. I have a question for you.