OYO CASE STUDY

Submitted By:

Group: C2-G6

Members:

Aman Khare FT213012

Brindha K N FT213021
Hitesh Kumar N FT213031
Kshitiz Agrawal FT213040
Maryada Kashyap FT213048
Pragya Sharma FT213057
Pushpendra Pandey FT213066
Business Environment Analysis

Factors Description
Political NA
Economic Increase in middle class income.

Low cost airlines facilitating more travel, which led to more number of hotel-bookings.

Social No trust when it comes to staying in hotels because advertised amenities were absent and
advance room reservation was not frequently honoured. Furthermore, people rather
preferred staying at relative’s place.

Price conscious travellers.

Technological There was a significant increase in number of mobile internet users.

Seamless management of operations by leveraging technology in the following ways:

OYO App: Used by customers to book rooms.

Krypton App: Used to evaluate the condition of a room.
Corporate App for organisation and Mitr App for agents used technology to
communicate with hoteliers and managed operations.
App for hotelier, staff, Online and cashless billing are major benefits of their online
booking.

Environmental NA
Legal NA

Competitor Analysis

Unorganized Sector Organized Sector Online Travel Agencies

Key Players Budget Hotel, Indian- ITC & TAJ Make My Trip
Unbranded (96%) International- Marriott and Goibibo
Carlson Rezidor Hotel Group Yatra
Features Low Staff to Guest Ratio Branded Hotels with a Provide wide range of
minimum rating of 3 stars. hotel options (excluding
Limited Rooms & OYO) to its users.
Services Provides personal attention,
24 hours service, In-house
Low Cost-ARR $24 spas, gyms, restaurants, bars,
and salons.

Traditional booking method.

ARR $93

Value Propositions Budget Friendly Rooms Luxury Stay, Personalized Provides discounts and
experience and Premium loyalty points while
Services like spas, gyms etc. booking a room through
their apps and websites.
Target Audience Price Sensitive Audience Leisure and Business Travelers Mobile Internet Users.
Other Players

 Fortune Park, Ginger, Gateway low tier brands started by big players like TAJ & ITC to cater mid-class
audience. However, they were unsuccessful because the cost structure of organized sector is high.
 Treebo, Fabhotels copied OYOs business model. However, their accommodation property is not
comparable with OYO.
 Airbnb is a direct competitor to OYO Homes. Airbnb primarily offers business ready homes that
provides standard business amenities. Its target audience are millennials who are looking for authentic
experience.

PORTER’S FIVE FORCES

Threat of
High- 96% of hotels are unbranded and OYO has acquired only 1.5% of India's budget room
new market.
entrants

High- According to exhibit 4, the accommodation properties of MMT and Yatra are
Threat of
established approximately 7-8 times higher than those of OYO.
rivals

Threat of
Moderate- Airbnb has more homestay listings (45000) when compared to OYO.
Substitutes

Power of
Moderate to High-Customers can always opt for alternatives.
Buyer

Low- the suppliers i.e. the hoteliers do not have a say in pricing. Pricing of hotel room is
Power of
Suppliers
dependent on demand and is controlled by OYO.

Value Proposition offered by OYO for different offerings

OYO's 4 core promises to its customers, cater to customer experience, customer centricity and value added services.

Predictability
1. Standardization

a) Provided and fulfilled OYO ‘Five Promises’  clean washrooms, spotless linen, AC with DTH, Free
breakfast and WIFI.
b) OYO investing in amenities enhancement (branded toiletries kits). (Basically, upgraded the room). 
have a team to upgrade the rooms personally.
c) Predictability, regular audits and quality checks resulted in customer retention.
d) Collaborated with budget hotels and upgraded it on a whole.

2. Made sure customer has a delightful experience  It focuses on user experience more. OYO focused on
providing a better space to customers.

3. OYO Values feedback of customers and works on the problems/ complaints provided by them, e.g. delisting
of hotels after two strikes. This made the customers feel valued and their opinion matters to OYO.
 Availability
1. Dense network of 70,000 rooms PAN India
2. OYO brands
a) OYO rooms for budget travellers.
b) OYO flagship and OYO townhouse for customers willing to pay a little extra for better
experience. OYO cafes and stores are available in OYO townhouse.
c) OYO rooms and OYO flagship are in busy locales and the footfall is high for both
whereas OYO townhouse is mostly situated in a non-commercial, residential neighbourhood.
d) OYO Homes launched in tourist locations by partnering with small guest houses and hotels in order to
target the tourists.
Ease of use
1. They created a mobile app which was convenient to use.
a) OYO mobile app  hassle free booking experience. room with a 2-step process, easy to use app.
b) They focused on end to end customer experience Ensured that customers can search and book
hotels easily to use check in/ check out facilities.
c) OYO app helped in placing breakfast orders for customers so that misplacement or delay does not
happen.
d) OYO made sure the information and images provided in the app/ website about the hotel matched
with what the hotel was providing.
2. OYO provides staff training and accommodation. This resulted in happy employees which in turn
made the staff do a better job and resulted in better customer service by them.
3. OYO Captain is never more than 30 minutes away in case of urgent on-site assistance.
4. Transparency in daily cash transaction by introducing cashless and online billing.

Affordability
1. OYO tries to keep its prices low for the price sensitive group of customers. They have captured price sensitive
market.
2. The price range of different OYO brands varies between $23 to $60, thus providing an affordable price to all
segments (budget, mid-scale and premium)
3. The ARR of OYO was $24 which was especially for price conscious travellers like small business owners,
millennials, families who had money restraints.

7 P’s of Marketing

Product- OYO is an Indian hospitality chain of leased and franchised hotels.

Promotion- Through digital campaigns and tie-ups with brands like Hard Rock Café.
Price- Dynamic pricing ranging from $23 to $60.
Place- Tie-ups with hotels across India.
People- Highly-trained hotel staff.
Process- Online and Offline service-based model
Physical Evidence- Standardized rooms with promised amenities including superior interiors.

3 C’s Score System

 Constant Availability of Room

 Compatible Rooms
 Customer Review
Issues
1.) They were rapidly changing their business model. From a technology company (OYO Room) , they were
moving to OAM (Oyo Asset Management) a real estate management company.
2.) Their rapid expansion in international market and mid-range segment involved heavy investment when OYO
was not ready.
3.) They were aiming for inorganic growth at the time when they losses were surpassing the growth trajectory.

Solutions

1.) OYO has been following the same revenue model for OYO 1.0, OYO 2.0, OYO Room OYO Flagship and OYO
Townhouse, whereas the value proposition for each model should be different. The value perceived by
customer is different in each section.
2.) Customer target segment was not defined. They started from budget friendly rooms and then they ventured
into new verticals like premiere segments without any pre-planned strategy.
3.) Try to pull the organic growth with the internal business, which will lead to breakeven or reduce losses.

Given the current situation, pandemic COVID-19, planning is paramount. Concentrating on marketing strategies and
creating a strong presence in the respective sections becomes vital.

They should continue with their OAM model. Before expansion, they should conduct proper market research,
strategically expand and move to premiere segments in a phased manner. OYO should utilize the funding in
strategical manner and improve the efficiency of existing processes.

Furthermore, they should focus on customer retention and branding.