MBA-IB (17-20)

Supply Chain Management

Group 5 Project: OYO ROOMS

Submitted to:
Prof. Nitin Seth
Submitted by:
Megha Khatri # 26
Navdeep Singh #27
Sugandha Kumari # 49
Vidit Goyal #57
 OYO ROOMS

Table to Content:
1. Introduction……………………………………………………………………………………………..…………………………….3
2. Supply chain at a Glance…………………………………………..……………………………………..…………………….6
3. Differentiating Feature……………………………………………………………………………………….………………….8
4. Competitive advantage………………………………………………………………………………………………………….15
5. Challenges………………………………………………………………………………………………………..….………………..18
6. Suggestions/Recommendation…………………………………..…………………………………….……….………….22
7. Future Strategy……………………………………………………………………………………………………………………...23
8. References………………………………………………………………………………………………………..…….……………..24

`2
 OYO ROOMS

Introduction
OYO Rooms is India’s fastest growing branded network of budget hotels founded by young
entrepreneur Mr. Ritesh Agarwal on 2013. Within a short span of time, OYO Rooms is currently
operating more than 8500 hotels in 230 cities of India, Malaysia, UAE, Nepal, China and
Indonesia. According to a research carried out by CB Insights, a US based business analytics firm,
for The New York Times, OYO Rooms is among the companies that may be the next start-up
unicorns. As it provides standardized rooms at budget hotels with features such as an air condition,
complimentary breakfast and Wi-Fi with 24 hours customer service support number of guests
using OYO Rooms App for booking hotels has been increasing exponentially. Since, the services
are fully IT enabled guests can also order beverages and request room service through the OYO
Rooms app. Hotel owners who partner with OYO Rooms are connected via world’s first tablet
based property management App and become part of the OYO brand.

The man behind the concept Mr. Ritesh Agarwal is an Indian entrepreneur, the founder and CEO
of OYO Rooms. He started his entrepreneurial journey at the age of 17 and is considered to be one
of the youngest CEOs in India. Oravel1 Stays Pvt. Ltd was his first startup in the year 2012. Oravel
was designed as a platform to enable listing and booking of budget and premium accommodations.
In simpler terms, it was meant to be destination for short and midterm rentals for bed and breakfast

1https://www.livemint.com/Companies/TShGVuld6KXneBoxMoiXhN/OYO-Rooms-raises-100-million-from-SoftBank-
others.html
`3
 OYO ROOMS
joints, private rooms and serviced apartments. Soon, Agrawal realised that just a combination of
bed and dinner would not fulfill the expectations of budget travelers in India so he transformed
Oravel stays to OYO ROOMS, 2013 with the key proposition of offering affordable and
standardized accommodation.

OYO hotels don’t own hotels; instead, it ties up with certain hotels and acquires some rooms to be
given out to people who want to avail OYO services. It focuses on standardizing the hotels in the
non-branded hospitality sector. OYO Rooms is a very successful venture as it has managed to
solve the issue of affordability, cleanliness and availability of budget hotels across all Tier-I and
Tier-II cities in the country. The company is able to provide wide range of services, offers and
affordability of rooms at a reasonable price to make it easier and happier for people to stay in
hotels. With the launch of its app, OYO assure to assist with marketing and promotion of its
services for support in market.

Business Model of OYO:

Business Model of OYO room is hotel Aggregator Model. The parties under the name of Brand
OYO project their hotels and further are linked with OYO app. Just like Uber, Oyo provides
rooms with standardized quality and price. 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. OYO has started working on Franchise Model. It makes a contract and
signs the properties under its flagship with 70% hotel share and 30% OYO share.

Through this model, the guest check-in issue reduces and many hotel categories launched under
OYO are as follows:

`4
 OYO ROOMS
Smart
property
(budget)

OYO
OYO
Townhouse Hotel OYO flagship
category

OYO flagship
and frontier

Fig: Hotel Category under OYO

With the aggregator model, Oyo has partnered with different hotels across the country to provide
rooms to the customers under their own brand. The qualification criteria for hotels to as its
partners, their rooms and services have to meet certain guidelines such as the standardization of
certain essential services, features of rooms, staff quality, security availability, pricing and other
such important. While other business models in hospitality industry solely focus on the standard of
hotels and their pricing, Oyo’s business model focus more on user experience which in turn takes
care of hotel standardization. Due to the presence of strict standardizing guidelines, it is very easy
for Oyo Rooms to expand their branding with various organized and unorganized hotels across the
country exponentially. Furthermore, due to the ensuring standard of rooms, the users ditch other
hotel booking platforms and blindly trust on Oyo Rooms. They stopped caring about the hotels and
paid more attention to the rooms provided. This, in reality, led to the disruption in the hospitality
sector and Oyo Rooms came out as a winner.

Fig: Glimpse of Growth witnessed by Oyo based on the funding of Softbank

Source: TOI Crunchbase
`5
 OYO ROOMS
The growth of Oyo rooms has witnessed an impressive run with backing from large banker such as
Softbank and Tencent. Further, the overall strategy is also defined as basic startup model which
has now reached to full-fledged company.

Oyo rooms has also witnessed an increase in customer loyalty and reached to 42% in June, 2017
and further has reached to around 49% by September, 2018. This figure is highest in India.

Figure :NPS Score for customer loyalty, highest in the country 2

Supply Chain Framework

The SCM framework of companies like OYO can be better defined as e-commerce aggregator.
The companies act as brand which has certain set standards, accordingly which it will provide its
franchise to hotels who wants to incorporate rooms lent out at Oyo app.

2 https://www.oyorooms.com/officialoyoblog/2017/07/28/oyo-report-card-fy-2015-2017-2
`6
 OYO ROOMS
Supply chain management in general focuses on the management of supply chain activities to help
to take advantage of customer value and attain a sustainable competitive advantage. It represents
effort by supply chain firms to develop and run supply chains in the most effective and efficient
ways possible. Supply chain activities focus on product development, sourcing, production, and
logistics, as well as the information systems needed to coordinate these activities.

Typical supply chain structure of Oyo is as follows:

➢ Procurement of toiletries: The vendor who is designing specific toiletries for Oyo is very
important for the whole supply chain. The standard toiletries order has to be processed in
relatively less lead time. Thus it is taken care upfront as preventive approach to maintain
the stock. Biotique is partner for Oyo for their toiletries. Though for such function Oyo
doesn’t maintain any inventory and further no distribution is done by Oyo. The role of
logistics and distribution is also taken up by Biotique, whereas monitoring and providing
the real data to Biotique is taken care by Oyo rooms itself.

➢ Inspection: On joining the app, the hotel owner shall be better assessed by Oyo, which
shall be sending its representative to inspect the hotel condition and accordingly valuing the
particular hotel and its negotiation and finalization of agreement for certain time period.
The time period of contract shall be based on the quality of hotel and its standards as per
industry norms.

➢ Website / App functioning: The team running the software / app for running the business
on website and mobiles. The teams shall require proper intimation from the operations
team and shall have access to information all along the value chain of Oyo services. The
team is equipped with ERP system for validating and considering checks at different points
and further data inclusion for displaying at website and apps.

➢ Customer Services: Customer service is integral part of such e-commerce business. The
queries/issues are resolved via e-mails, calls etc. as per the requirement of customer. Thus
the methodology of bot placing for solving the query as well as cold calls have seen major
solving issues for the customer. Further, the promotion strategies and related customer
attractive features needed to monitor and delivered based on the proper SCM management
for maximizing profit.

➢ Managing the Hotels: Supervision and real time tracking of functioning of hotels (like
availability of rooms etc.) shall be done. Also it is seen that it should be synced with the all
others operation for streamlining the profits of company.

`7
 OYO ROOMS

OYO Value Chain

•Development of new products
•Improvement of existing products
•Customer surveys
Research •Increasing customer base
•Development of new operative & information systems

•Improvement of structures & facilities

•Maintenance work
•Purchasing
Service •Outsourcing of services
Production •Staff Training & professional development.

•Reception service
•Hall service
Service •Room service
•Additional Services
Providing

•Booking services
•Communication
•Promotional Formulas
Marketing •Public Relations
•Customer Database

Differentiating Features of Oyo Hotels

1. Blue Ocean Strategy:
Consistent quality is one thing that stands apart. As per Blue Ocean Strategy, we can see in
Oyo’s success, Value Innovation at work. Value Innovation is a central concept in Blue Ocean
Strategy. Through this concept organizations can unlock immense value to customers and
simultaneously reduce the cost to the company. Value is usually attached to tangible things,
but, true value to customers need not be something path breaking. For example, by providing
valet parking when you visit your bank’s down town branch, the bank can unlock huge value.
But valet parking is such a silly and trivial aspect as against bank’s core product features that
bank may see it as a distraction rather than value add.

`8
 OYO ROOMS

Oyo brings ‘predictability’ as a key value that is usually missing with budget hospitality sector.
For prices as low as Rs.1000 per night, one gets free wifi, breakfast, flatscreen TVs, spotless white
bed linen of a certain thread count, branded toiletries, 6-inch shower heads, a beverage tray, etc.,
Oyo also have room recommendations for solo travelers, couples, business travelers, women, etc.
Most of what us see in 3-star hotels such as fancy lobbies, elegant lounges, superior spa, etc. are
often not the reason one chooses such hotels. Instead, basic hygiene, descent environment and
predictable service drive customers to such branded hotels.

`9
 OYO ROOMS
The core to Oyo’s value innovation is to eliminate fancy aspects but retain aspects such as hygiene
and predictability. As a result, Oyo can drastically reduce the price per room (in comparison to 3
Star) and simultaneously but disproportionally increase the value to customer. Oyo unlocks
disproportionate business by attracting 3-star customers to trade down while non-star customers
trade up to Oyo Rooms. Thus, Oyo is capturing the both segment of customers! To understand this
better, let’s look at that strategy canvas3, a critical tool of Blue Ocean Strategy used to create value
innovation.

Strategy Canvas is one of the simplest, yet most powerful tools of Blue Ocean Strategy to visually
identify the factors that any given industry is competing on. It helps to strategize how
differentiation can be carved out as against competition. Each factor in the graph that unlocks
value to customers is rated in the 10 point scale and compared against competition or industry

3 https://www.collaborat.com/oyo-rooms-in-blue-ocean-a-strategy-that-is-working-well/

`10
 OYO ROOMS
strategic groups. Oyo is a evident case of Blue Ocean because in comparison to either the existing
star hotels or non-star hotels, Oyo has chosen to differentiate themselves by Eliminating some
existing features, Reducing some features, Raising some and simultaneously Creating few new
features. Traditionally companies focus on outserving the competition but Blue Ocean advocates
differentiation through Elimination, Reduction, Raising and Creating. Although, Oyo Rooms isn’t
the first hotel ever to try this. There are many such as Formula1 Hotels, Ginger Hotels, etc. which
have attempted to create a differentiation. However, we should credit Oyo not only for their
excellence in execution, but also in striving to find innovative ways to keep the financials intact.
For example, Ginger Hotels unsuccessfully tried to target the same segment despite having
own/leased properties. On the other hand, Oyo Rooms has positioned itself as an aggregator brand
rather than a traditional hotel chain. This has helped them to stay fit on capital and operational
costs, and more importantly, ramp up in no time. In order to create profits in the hotel industry,
OYO must have considered the following steps as mentioned below:

Fig: Commercially viable Blue Ocean Strategy

`11
 OYO ROOMS

2. Oyo Townhouse :
Delighting Guests and Improving The Equilibrium Across Comfort, Location And Price

OYO is architecting the present and future of the hospitality and travel industry in India. In our
endeavour to do so, we have continuously introduced brands that befit consumer choices and bring
innovations that delight and surprise our guests, meeting their every possible travel need.

As we are already aware, their journey started with their staple brand OYO Rooms that will soon
be 100k exclusive rooms across 150+ cities. OYO Rooms continues to expand aggressively with
adding 10k new rooms every month. While building the OYO Rooms brand, they have also
learned how to provide a better balance across quality, location and price to different customer
segments. This has led to development and creation of newer brands under the house of OYO. The
ongoing success of one of such new brands – OYO Townhouse, which is also the most loved
consumer brand within OYO. It will also give the insights into their brand proliferation strategy,
and a glimpse into some of the new brands that they have recently launched under OYO’s
umbrella.

1. The proposition and the innovation: OYO Townhouse – based on the needs of the
millennial traveller, combines experience and value at a scale that has never been attempted
before in the Indian hospitality landscape. Smarter locations, smarter buildings with
smarter rooms and services, OYO Townhouse is fueled by re-engineered elements – from
the breakfast menu to the booking process. All the elements combine to create a brand that
is the go-to default choice for millennials, for whom price, convenience and a differentiated

`12
 OYO ROOMS
experience play an important role in determining choices. Every Townhouse is built on 6-
layers of innovation and below mentioned depicts what makes these hotels unique.

`13
 OYO ROOMS
These hotels break away from the decades-old hotel industry templates. Brand new systems and
services have replaced the older conventions of the past. The minimalist approach with the room
interiors, upgraded furniture, cafe, and lounge spaces with access to hand-picked merchandise all
come together to whet one’s appetite for comfort living.

2. Scaling new heights by ‘wowing’ customers: With Townhouse, OYO has captured the
white space that existed in the hospitality industry and offered India its most-favourite and
loved mid-scale hotel chain.

Launched in 2017, today, OYO Townhouse is present in 12 cities across India including Delhi,
Gurugram, Mumbai, Goa, Bengaluru, Chennai, Pune, Hyderabad, Ahmedabad, Noida, Ghaziabad
and Kolkata and they are enjoying a tremendous growth rate. With an average price point of ~INR
3000, these hotels enjoy an occupancy of ~90%, with ~80% of their guests giving them the highest
ratings post their stay with them. Almost 50% of their guests choose to return to a Townhouse for
their travels.

With OYO Townhouse, they have successfully created a perfect equilibrium between quality,
location and pricing for their customers while generating employment opportunities starting at the
grassroots level. We’ve collaborated with several campuses, NGOs and industry bodies for
recruiting staff across our chain of Townhouse hotels. At our OYO Skill institute, we are
supporting our staff through training and upskilling them with state-of-the-art digital curriculum,
interactive sessions and practical training. We aim to transform the hospitality experience in India,
with a universal promise of quality and reliability.

All these facets come together to ensure that with Townhouse they are running successful
businesses with a very lucrative RoI4 for their asset partners.

4 https://www.oyorooms.com/officialoyoblog/2018/06/23/oyo-townhouse-creating-an-equilibrium-of-comfort-
location-and-pricing
`14
 OYO ROOMS

The robust economic model has given confidence to various partners under the OYO Rooms brand
to upgrade to Townhouse. In Bangalore, Mr Krishna Reddy, their partner for the first two OYO
Townhouse hotels is now investing in a third Townhouse.

Thus, Oyo doesn't focus just on discoverability of the partners among the users but also on the
standardized quality of the services provided.

Product Differentiation: Standardized Oyo Rooms promises to provide the same amenities and
the same awesome experience across all its rooms.

Competitive Advantage:

Oyo has some of the inherent internal features like Valuable, Rareness, Inimitable, Non
Substitutable (VRIN)

1. Valuable:
➢ Operational and Process know how
• OYO has a unique skill in being able to work with hotel owners and complete transform
a whole hotel both in its physical features and service process to conform to OYOs
standardization.
• This also applies to staff training and its 150 point standardization checklist along with a
30-point audit checklist which company conducts every three days.
➢ Complete integration of hotel service with a powerful mobile app and website.
• App is used both for customer interaction/experience as well as for the service provider.
• Enables strong tracking of customer and service provider data which outputs are used
for pricing algorithms and marketing insights.
➢ Growing Brand Identity

`15
 OYO ROOMS

2. Rareness:
➢ Managed Inventory Model-full and partial (OYO branded)
➢ Business Traveler and Millennial Segment—OYO Townhouse.
➢ Staffing Model: OYO provides hotel staffing, training and process expertise. However, it
does not manage any rooms. Hotel owner can choose to take OYO brand or not.
➢ OYO Homes and SilverKey: C2C and Extended Stay Segments
➢ By operating in various models and segments it has expanded its brand name and user
base. No other aggregator or traditional hotel is running like this.
➢ First B2C player in aggregation segment of hotel industry.

3. Inimitable:
➢ Historical Conditions: OYO had a first mover advantage and built a strong supply side
user base (hotel owners), thus, eating up the early market share. Switching cost for hotel
owners is high, thus, making it difficult for competitors on supply side.
➢ There are currently two imitators in the market Treebo and Fabhotels, so OYOs model is
not difficult to understand and can be imitated. However, OYO would be both difficult
and costly to imitate.
➢ There is a high cost to OYO expanding so rapidly and into different segments and varied
business models. Possible to imitate but would come at a high cost of financial and
operational resources.

4. Non-Substitutable:
➢ The resources and competencies of OYO are distinct and difficult to copy. Its their
combination of that gives OYO their strength.
➢ Though, another firm could potentially substitute the OYO model with a lower cost
model. However, as mentioned this would be very difficult.
➢ Biggest threat to OYO could be substitutes from other segments that meet that same
utility—a place to sleep or that don’t meet the need of the consumer. Guest houses,
hostels, family or friend home, AirBnB and different types of hotels.

Organizational Capabilities
➢ Compared to its competitors, OYO is leveraging economies of scale in currently being
the lowest cost hotel aggregator. Thus, they are able to compete on price in both budget
and business traveler segments.
➢ Because of their core competencies-process know how, utilization of tech and data, etc.
They are steadily increasing in the learning curve and leveraging economies of scope by
entering into new segments, complementary services and markets.

`16
 OYO ROOMS
➢ They have developed capabilities in routine processes which have brought consistency
and standardization measures among their Pan-India hotels. Advantage over inconsistent
budget hotel experiences.
➢ Hospitality Services is a sector which can have high variability in consistency-thus, this
aspect helps to differentiate them from competitors. Consumer does not need to wonder
what kind of experience they’ll have based on customer reviews and host dynamics.
OYO provides one of their own “captains” at each hotel to take care of customer and
service provider needs.

Competitor Analysis:

Parameters
OYO Treebo FabHotels AirBnB Make My Trip
Industry Budget Hotel Budget Accomodation Hotels
Private Living Space
Segment Budget Standardised Hotel Hotels (All budget)
Sharing
Business Model B2C C2C B2C
Managed
Inventory Yes Yes Yes No No
Model
Managed Model
Yes No No No No
(Townhouses)
Brand leasing
(Staffing & Yes No No No No
Expertize)
Market Place No No No Yes Yes

`17
 OYO ROOMS
Challenges in Room Aggregation Business in India

Tracing
Location
Unregulated
market
Standardization

Competition

High Cash
Burn rate

➢ High Cash Burn Rate

• This business involves a very high cash burn rate. Since companies are in their expansion
mode they are offering a lucrative discount to acquire the customers. Yes they are doing it
with investor’s money and are not profitable yet. Oyo Rooms chief growth officer Kavikrut
said, “We have been growing at 100 percent growth rate MoM and with this pace, we are
likely to be profitable in three years.”

➢ Competition
• It is true that leaders define the path. Leaders with big pockets are able to afford heavy
discount like Oyo. Oyo rooms in talks to buy Zo rooms- one more consolidation in high
cash burning industry like Rooms Aggregators. Leaders with big pocket like Oyo and now
MakeMyTrip and Goibibo too, are able to afford heavy discount. This becomes a two side
sword for the new and smaller players, who are neither able to build more inventory nor
can they offer huge discount due to lack of funding. Thus, it becomes highly difficult for
small players to compete with Oyo and other established brands. We can hope for more
consolidations in the coming time as funding dries up.

OBAs (Online Budget Room Aggregator) are not only competing with each other but also with
OTAs (Online Travel Agencies) who
• cater to the entire spectrum of travel from tickets to hotel.

`18
 OYO ROOMS
• They already have a huge customer base, thus cross-selling budget hotels is very easy to
them
• Since they are 6-8 year-old companies, customers trust them more
• As some of them do not brand the hotel under their name, rather brand the hotels on their
website thus increases the chances of hotels opting for them over OBA
• They are already profitable companies and can use their positive cash flows to give head-
on competition to the OBA.

➢ Standardization
• Standardization is a major issue. In the race of growth, quality of services and its
conformance is often compromised. This is the biggest pain point of the customers. As
OBAs do not brand the property, the customer does not know to which hotel he is going
and on reaching the destination if one receives substandard or below expected service it
could result in losing the customer forever.

Since these companies are dealing with non-branded hotels, the level of professionalism is low and
thus becomes a challenge for the aggregators to delight their customers at every point of contact.

➢ The unregulated market

• Since this is a new business model and an unregulated one, many a times hotel owners
dishonor the contract by switching between the brands.

➢ Tracing location
• As most of the aggregators do not promote the hotel brand on their website, sometimes it
becomes highly difficult for customers to locate the rooms. On booking a room through
Oyo, location is received through a message and on reaching the destination billboards
directs the customer to the hotel. Although this might seem to be a small problem but the
process might result in a nightmare experience for a customer who may not want to return
back to the site again. To overcome this issue, MakeMyTrip’s Value+ promotes the hotel
brand on its site.
Although we have discussed the problems and challenges in room aggregation model there are
many positive factors that support the business and makes it a potential venture.
New companies are backed by wealthy investors, thus enabling them to capture the market fast, after all, it
is all about scale- ‘the more, the merrier’. Extensive use of technology and their focus on niche market
segment stands them out from the competition.

`19
 OYO ROOMS

Porter’s Five Forces – Framework of OYO

Threat of New Entrant

Medium

Market place like Air B&B

Imitate business model

Bargaining Power Suppliers Existing Rivalry Bargaining Power of Buyers

LOW HIGH HIGH

Average occupancy rates of
Highly Competitive Deal seekers
budget hotels is low compared to
Luxury Hotels Very Price Sensitive Options from aggregators

Threat of Substitutes

HIGH

Various options of staying at

Guest House, Relatives,
aggregators like Make My
Trip, Trivago, Air B&B

Other Challenges:
Existing Players:
With Oyo rooms, even after gaining quite a good market share, it is not going to be an easy road to
become the market leader. Well, it is facing competition from several already existing big players
in the market, some veteran players and some from other industries who are eating out its market
share indirectly but quite vigorously. There are some direct competitors to Oyo Rooms which work
in the same field of the hospitality industry and provide the same facility and second category is of
Indirect competitors which are working in different sectors and providing many more services
other than hospitality.
One of the similar ideas is that of Funstay which started in early 2015. The company has a simple
goal of providing homestay accommodation to travellers, this group is a journey of 5 friends. Other
companies like Fab hotel, Room on call, Stay Bazar, Vista Rooms, Trivago, and Treebo all
are in hospitality industry providing room services, house stay, apartments, villa and much more

`20
 OYO ROOMS
accommodations to traveler at a very reasonable price and providing the best service like Oyo
Rooms and these are the direct competitors for Oyo Rooms.
Indirect competitors are mostly in travel and tourism industry such as Goibibo which is one of the
leading company providing quick search, fast payments, settlement and booking air ticket, railway
ticket and hotel booking. The reason for their survival is the large amounts of discounts and
clubbing rewards which the customers receive on booking from them. Likewise, there are lots of
big name such as Makemytrip, Yatra, Paytm and much more that not only provide hotel booking
but also the flight booking facility and thus proving to be a comprehensive package for the
customers.
Looking at the current scenario it looks like the competition might become tough, the numbers
game is going to be quite interesting as indirect competition may be the rank holder in this game.
Indirect competitors are providing more convenience of booking at the same platform where they
book the flights. In addition, coupons and deals in double booking prove to be a game-changer at
this point. They are providing best facilities, focusing on quality and standardisation at a
reasonable price with discount, who wants to go anywhere else when all the facilities are getting at
one point. However, on the other hand, some customers are quite particular with what they are
getting from where and Oyo Rooms can easily grab that share. Lots of challenges are there for Oyo
Rooms and the most important and interesting thing will be watching Oyo Rooms to overcome all
the obstacles.
It is definitely going to be exciting to see how the further journey of Oyo Rooms unfolds. It’s not
been long enough for Oyo Rooms to be in the market yet it has been successful in creating a brand
image and earn a significant amount of market share. It has already received the Most Promising
Hotel Network, 2017 Award 5 from Holiday IQ and is expected to earn several more accolades in
the coming time with its strategic planning.

5 https://www.oyorooms.com/officialoyoblog/2017/05/16/oyo-named-the-most-promising-hotel-network
`21
 OYO ROOMS

Suggestions & Recommendations:

Oyo Rooms is already facing the heat of competition of me-too brands. In order to sustain position,
Oyo will have to constantly refine its offering to unlock value for customers. For example, it is
found that none of the Oyo Rooms has overnight laundry or iron box on the house. Customer can’t
land up for client meeting in wrinkled outfit. Similarly, none of them have tea bags and kettles in
the room and room service does not start before 8 AM. So, these factors must be looked upon by
them.

1. 20% creation 80% distribution: There is not much engagement on social media by OYO
even after having good number of likes and followers. Facebook paid ads can give them a
great result and viral content will make the page look good.

2. Building relationship with customers: There is a disconnect between OYO and its
customers. For Hospitality industry word of mouth works like charm. OYO need to hear
them, care and reward them. Community building has become utmost important for any
brand now-a-days. To engage they can ask users to share their OYO story / travel stories.
People love to read about others and write about themselves. This can be conducted in form
of weekly competition where users will be rewarded for the best story.

3. Campaigns targeting home: People book Oyo when they are not at home and to tell users
that OYO provides home like feeling they can run different campaigns. Say for a tagline
"Home away from home" they can launch campaigns at a different tourist place with hot air
balloon. For cities near sea like Mumbai they can have a floating home telling something
like "missing home? Welcome to OYO!" can be thought more to make it like guerilla
marketing.

4. Affiliates: Finally, OYO must consider affiliates to be the best way to market for free and
get leads while they are still making money per transaction. Oyo pays a good commission
to its affiliate. Why not motivate bloggers to promote it heavily with bloggers meetups?

`22
 OYO ROOMS

Future Strategy
➢ Push for multiple sources of competitive advantage to create “causal ambiguity” making it
difficult for competitors to diagnose OYOs source(s) of competitive advantage and to
imitate.
➢ OYO can continue expanding into new customer and/or market segments. Could take on
AirBnB directly for market share in the C2C space.
➢ Extend services to organize and take market share from local travel agents with tour guides,
excursions and travel packages or even get into vacation resorts. Banquets, parties,
conference rooms, meeting spaces, etc.
➢ Continue rapid expansion of Indian market by “acquiring resources” by tying up with
strong value hotels before the competition. Flood the market with OYOs brand in its
various segments it currently operates.
➢ Increase in Corporate Tie-ups, Expand to Tier-3 Cities Central & State Govt Tie-ups, Tie-
ups with MSME / SME’s for Bookings of Standard/ Premium Rooms Category, Expansion
in Asia & Europe.
➢ Expand the market by going international in other parts of Asia. Get a first mover
advantage in various Asian countries. In some scenarios may need to look for a JV (i.e.
China market).
➢ Currently, OYO is trying to take both a cost leadership and a differentiation strategy with
their flagship/OYO rooms and OYO Townhouse/SilverKey respectively.
• If looking at the perspective of traditional hotels OYO is pursing cost leadership.
• If looking among other aggregators they are using a differentiation strategy while
trying to take cost leadership. Porter says cannot do both.
➢ Continue leveraging and seeking to improve economies of scale and learning.
➢ Implement tactics to build customer loyalty to the OYO brand as well as create customer
switching costs.
• Increased loyalty benefits. Instead of offering as heavy discounts, create discounts
that are reimbursed into OYO wallet that customers can use on more OYO services.
➢ Grow through M&A to keep extending OYOs reach in the Indian market. Acquired a full
service technology based wedding planning company Weddingz.in Aug 2018.

`23
 OYO ROOMS

References
➢ https://www.business-standard.com/article/companies/oyo-is-clocking-annualised-revenue-
of-400-million-ritesh-agarwal-117080201348_1.html

➢ https://www.livemint.com/Companies/TShGVuld6KXneBoxMoiXhN/OYO-Rooms-raises-
100-million-from-SoftBank-others.html

➢ https://www.ndtv.com/people/at-21-hes-the-mind-behind-multi-million-dollar-start-up-
oyo-1204353

➢ https://inc42.com/flash-feed/oyo-rooms-launches-operations-in-malaysia/

➢ https://www.oyorooms.com/officialoyoblog/2018/06/23/oyo-townhouse-creating-an-
equilibrium-of-comfort-location-and-pricing

➢ https://www.collaborat.com/oyo-rooms-in-blue-ocean-a-strategy-that-is-working-well/

➢ https://www.oyorooms.com/officialoyoblog/2016/03/16/building-partnerships-with-oyo

➢ http://www.exploringstartups.com/challenges-in-room-aggregation-business-in-india/

➢ https://www.oyorooms.com/officialoyoblog/2017/05/16/oyo-named-the-most-promising-
hotel-network

`24