PROJECT REPORT ON

GENERAL MANAGEMENT

AN INDIAN ENTREPRENEURIAL MODEL FOR THE OYO ROOMS

SUBMITTED IN PARTIAL FULFILLMENT FOR THE AWARD OF

THE DEGREE OF

MASTER OF MANAGEMENT STUDIES

UNIVERSITY OF MUMBAI

SUBMITTED BY MR. HRISHIKESH PILANKAR

ROLL NO. 2022166

2022-2024

UNDER THE GUIDANCE OF DR. ARATI KALE

LALA LAJPATRAI INSTITUTE OF MANAGEMENT

MAHALAXMI, MUMBAI – 400 034

 DECLARATION

I hereby declare that this project report submitted by me to the partial

fulfillment of the requirement for the award of MASTER OF
MANAGEMENT STUDIES (MMS) of the University of Mumbai is a
Bonafede work undertaken by me and it has not been submitted to any other
University or institution for the award of any other degree or diploma certificate
or published any time before.

Name: Hrishikesh Pilankar

Roll No : 2022166 Signature of the student

 CERTIFICATE

This is to certify that the “AN INDIAN ENTREPRENEURIAL MODEL

FOR THE OYO ROOMS”, has been successfully completed by Mr.
HRISHIKESH SUDHAKAR PILANKAR during the MMS II, SEM IV in
partial fulfillment of the Master‟s degree in Management Studies recognized by
the University of Mumbai for the batch [2022–2024]. This project work is
original and has not been submitted earlier for the award of any degree, diploma
or associateship of any other University/ Institution.

Date : 31/3/2024

Dr. Arati Kale Dr. H. J. Bhasin

Project Guide Director

 ACKNOWLEDGEMENT

This project has been a great learning experience for me. I take this opportunity to thank Dr.
Arati Kale, my internal project mentor whose valuable guidance & suggestions made this
project possible. I am extremely thankful to her for his support. He has encouraged me and
channelized my enthusiasm effectively.

I express my heart-felt gratitude towards my parents Mr Sudhakar Pilankar & Mrs Sneha
Pilankar, siblings and all those friends who have willingly and with utmost commitment
helped me during the course of my project work.

I also express my profound gratitude to Dr. H.J. Bhasin, Director of Lala Lajpatrai Institute
of Management Dr. Neetu Singhwal the HOD of Finance for giving me the opportunity to
work on the projects and broaden my knowledge and experience.

I would like to thank all the professors and the staff of Lala Lajpatrai Institute especially the
Library staff who were very helpful in providing books and articles I needed for my project.

Last but not the least, I am thankful to all those who indirectly extended their co- operation
and invaluable support to me.
EXECUTIVE SUMMARY of General Management Project

The study being presented investigates the factors that led to the development of OYO
Rooms, a brand of budget hotels in India. It looks at the entrepreneurial pattern that has
developed in India as a result of creative technology utilisation and marketing strategies. The
success story of Ritesh Aggarwal, the entrepreneur and founder of OYO Rooms, is
highlighted, who used his budget-friendly hotel project and hospitality idea to attract sizable
investment in this market. The report highlights how important it is for investors and the
Indian government to support and promote businessmen like Ritesh Aggarwal as a part of the
"Make in India" campaign. According to the study's findings, it is important to develop an
atmosphere that is conducive to young entrepreneurs emerging and boosting the economy of
the nation. Overall, this study highlights the potential for entrepreneurship to encourage
economic growth and development in the nation and highlights the major factors that
influence startup success in India, such as the significance of technology, marketing, and
government support.
 CONTENTS OF GENERAL MANAGEMENT PROJECT

Chapter Description Page No.

No.

1. Introduction 1 - 22

1.1 Tourism Sector In India 1

1.2 Introduction To Oyo Rooms 11

2. Literature Review 23 – 24

2. Oyo‟s Business Model 25 – 34

3. Oyo‟s Marketing Strategy 35 – 40

4. Oyo‟s Competitor Analysis 41 – 44

5. Challenges Faced by OYO Rooms 45 – 48

6. SWOT Analysis 49 – 51

7. Conclusion 52 – 53

8. References 54
 1. INTRODUCTION

The Prime Minister's or Shri. Narendra Modi's appeal for "Make In India" sparked several
changes in how India was portrayed. Even though it has been beneficial for a while to
concentrate on manufacturing as a trade export model for sustainable economic growth, it is
now time to celebrate the emergence of a new breed of entrepreneurs who are
demographically aligned to a young company. The Indian businessman has started to take
advantage of the chances that are opening up as hundreds of millions of netizens and citizens
have used their mobile smartphones and other hand-held smart devices to converge on a
shared virtual market. One of the first companies to recognise the possibility to brand India's
unbranded budgeted hotel industry, estimated to be worth 88,000 crores, is Ritesh Aggarwal's
OYO Rooms. Aggarwal's genuine innovation in the application of technology in the hotel
business has not only earned him high praise but has also brought in significant investment.
India is no longer known as the mythical country of snake charmers, which restricted travel
to the traditional regions, primarily the Himalayas, Agra, Rajasthan, Kerala, the North East,
and Varanasi. Demographics and cultural standards have been greatly influenced by the
tourism and travel industries' fast growth. This drift in the emerging segment is marked by
„individual‟ and „noting of technology‟. Self-management is favoured by its segment's
customers when looking for the greatest experiences at a reasonable price. Inclusions in this
section include "visiting friends and relatives on vacation," "the frequent independent
traveller as opposed to group travellers," and "business travel, pilgrimage, and medical
tourism," to mention a few. And it is therefore imperative that the travel and tourism sector
respond to the demand and reorganise itself in order to meet the difficulties and seize the
chances presented to them by an abundance of changes in the macroeconomic environment.

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1.1 TOURISM SECTOR IN INDIA
India is a multicultural melting pot and one of the oldest civilizations in the world. Due to its
numerous attractions and vast history, the country is among the most popular tourist
destinations in the world. India covers a land area of 3,287,263 sq. km, ranging from the
snow-capped Himalayas in the north to the tropical rain forests in the south. Due to its
diverse ecosystem and rich cultural heritage, the nation's tourist industry has experienced
substantial growth. When it comes to contributing to Gross Domestic Product (GDP), India's
tourist industry comes in ninth. The tourist sector in India generated US$ 247.3 billion in
revenue in 2018, a 6.7% rise from the previous year and a contribution of 9.2% to the
national GDP. The industry ranked among the top foreign exchange earners (FEEs).

Current status of the Indian Tourism Sector:

Numerous reforms were put into place in India to promote tourism after the COVID-19
pandemic; these measures have greatly boosted the industry. Comparing January to July 2022
to the prior year, India's total number of FTAs increased by 406.6% to 2,764,975. The US
was among the top 15 source countries during this time, contributing the most to FTAs in
India with 25.88%, ahead of Bangladesh (18.61%), the UK (10.99%), and Australia (5.16%).
India's travel and tourism sector generated US$ 6.96 billion in foreign exchange in 2020. This
is expected to increase further after the pandemic.

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The Delhi Airport, one of India's top 15 airports, has the greatest percentage of FTAs from
January to July 2022 (31.66%), followed by Mumbai Airport (13.92%), Chennai Airport
(10.41%), Haridaspur Land Check Post (8.82%), and Bengaluru Airport (6.70%). Domestic
travel inside India increased by 11.05% in 2021, from 610.21 million to 677.63 million.
Tamil Nadu had 115.33 million domestic visitors, followed by Uttar Pradesh with 109.70
million, Andhra Pradesh with 93.27 million, and Karnataka with 81.33 million.

India expected to witness 13.34 million inbound tourists by 2024: Visa –

PATA Destination Forecast

According to findings of the forecast exclusively shared with ET Travel World, Asia is
projected to remain the dominant source region over the forecast period, while Europe and
the Americas, the second and third major suppliers of visitor numbers into India, , are
projected to have visitor share contractions. Notably, India received 10.93 million inbound
tourists in 2019.

Global digital payments leader Visa joined hands with the Pacific Asia Travel Association
(PATA) for the Asia Pacific Destination Forecasts 2022-2024: India report and highlighted
key travel trends, observations, and forecasts for the industry and country specifically. As per
the findings of the report, Asia is projected to remain the dominant source region over the
forecast period, while Europe and the Americas, the second and third major suppliers of
visitor numbers into India, are projected to have visitor share contractions.

Looking at the Indian travel and tourism industry, the report predicted that India is expected
to witness 13.34 million inbound visitors by 2024, which is around 22.1 higher than that of
the pre-pandemic year 2019. That year, India received 10.93 million inbound tourists.
Tourists travelling to India are forecasted to increase year-on-year
between 2022 and 2024. To start with 4.1 million in 2022, which would double in 2023 to 8.5
million and 13.34 million in 2024.

Over the last two years, inbound tourism not just globally but in India as well suffered badly,
and numbers came down drastically. Due to the impact of the Covid-19 pandemic, the
number of international visitors to India reduced dramatically to 2.74 million in 2020, a 74.9
per cent drop in comparison to the previous year mainly due to stringent border control
measures, lockdown, and other pandemic-related restrictions.

3
Trends and forecasts
As per PATA, the numbers of inbound visitors in 2021 have also gone down significantly to
hit a new low with only 0.75 million international travelers coming into India. The Ministry of
Tourism, Government of India, which keeps the record of India Tourism statistics and releases
the number of tourist arrival in the country is yet to reveal the official figures with data for
2021.

Moreover, three scenarios were developed for this forecast period. Under the first scenario
(mild), visitor numbers in 2024 are forecast to reach 13.34 million, 22 per cent higher than
pre-pandemic (2019). Similar trends are predicted under the medium and severe scenarios but
with lower recovery rates.

(Check the graph below).

4
The PATA and Visa report also highlighted that if the prediction goes by historical arrival
trends, the number of inbound tourist arrival is expected to reach 3.44 million by the end of
2022, 6.21 million by 2023, and 10.10 million by 2024.

Income and expenditure

As per the report, Consumer income in India is anticipated to be more than double by 2040,
and purchasing power will be concentrated in the hands of the present-day Gen Z, the young
affluent consumer base.

It also said that, over the 2020-2030 period, India is projected to increase by one position and
rank 19th out of 84 countries in Euromonitor International's Wealth Index.

Sharing his thoughts on the forecast and the Visa - PATA report, Ramakrishnan Gopalan,
Head - Products, India and South Asia, Visa, "The uptick in travel makes it important for a
country to provide a superior travel experience to its visitors, and digital payments
infrastructure should open these commerce and revenue opportunities for merchants
everywhere. Small businesses and merchants across categories and geographies can then
provide their customers the convenience of contactless payments and acceptance of cross-
border transactions, in addition to seamless, secure, and speedy payments that international
travelers are accustomed to."

5
Importance of Tourism Sector:

 Employment Generation

Travel, tourism, and hospitality can exponentially create jobs, which is important for India‟s
demographic dividend, as 72% of India‟s population is below 32 years with the average age
of 29.Travel and tourism account for approximately 8.1% of the total employment
opportunities. In 2019, it contributed 9.3% to India‟s Gross Domestic Product (GDP) and
received 5.9% of total investments.

 Multiplier Effect

An added aspect of the travel and tourism sector is that not only does the sector provide high-
quality jobs, it also enhances an investment in India, accelerates development, and showcases
India‟s unique treasures-acting as a tool for soft diplomacy.

 Potential Areas of Tourism

India offers amazing diversity in tourism, ranging from 38 UNESCO World Heritage sites to
the different physiographic features to medical and Wildlife Tourism. India is ranked third
(behind US and China) in the World Travel and Tourism Council (WTTC)‟s Travel and
Tourism Power Ranking, 2019.

Growth Drivers for Tourism in India:

The number of FTAs with India has dramatically increased recently. There are a number of
government policies and India-specific variables that may be responsible for this rise in
FTAs. The following is a description of a few of the key growth factors-

 Vaccination Drive

India's vaccination programme to protect its citizens against COVID-19 started on January
16, 2021. The main objective of the campaign was to provide every person with free
vaccinations. Nearly 200 crore vaccines were distributed during the first 18 months of this

6
campaign, which was very successful. This promoted India's economic liberalisation and
improved its appeal as a safe tourist destination.

 Medical and Wellness Tourism

India has one of the most affordable healthcare systems in the world, with top-notch medical
staff and resources. The nation's wellness sector is highly renowned on a global scale.
Medical tourism in India has significantly increased thanks to the convergence of Eastern
healthcare knowledge and Western medical know-how. The 'Heal in India' and 'Heal by
India' programmes were introduced by the Indian government in May 2022. The fundamental
objective of these initiatives is to further develop the traditional medicine sector and turn
India into a centre of the global medical business. India had 1.83 lakh FTAs for medical
purposes as of 2020.

 Rise in Domestic Tourism

After the pandemic, domestic tourism in India increased significantly. This expansion could
be largely attributed to rising disposable income and the expansion of the working class in
India. When compared to business travel, the nation has seen higher spending on leisure
travel.

Underneath Challenges of India’s Tourism Sector:

 Entry/exit Issue: Despite the introduction of an e-visa facility, visitors find the process
of applying for a visa still cumbersome. This process will further get complicated in
the post- Covid era.

 Infrastructure and Connectivity: Deficiencies in infrastructure and inadequate

connectivity hamper tourist visits to some heritage sites. For example, many tourist
destinations like Kangchenjunga, are still not easily accessible.

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  Tourism segments or circuits: India has various tourist destinations but few circuits.
Also, many announced tourist circuits are yet to be implemented on the ground.

 Promotion and Marketing: Although marketing related to India‟s tourism has been
increasing, still online marketing/branding remains limited and campaigns are not
coordinated. Tourist information centres are poorly managed, making it difficult for
domestic and foreign tourists to access information with ease.

 Skill Deficit: The number of adequately trained individuals for the tourism and
hospitality sector is a key challenge to giving visitors a world-class experience. A
limited number of multi-lingual trained guides, and the limited local awareness and
understanding of the benefits and responsibilities associated with the tourism industry
act as constraints on the sector‟s growth.

Government Initiatives:

The Indian government has just come to understand how crucial tourism is for generating
foreign cash and jobs. As a result, it has implemented a number of steps to promote both
domestic and foreign travel, greatly assisting the travel and tourist industry. The following
describes a few of these actions-

 Swadesh Darshan Scheme

The Ministry of Tourism introduced the Swadesh Darshan initiative, a flagship programme,
in 2014–15. The programme aims to promote, advance, and maximise the tourist potential of
India by encouraging theme-based travel. By March 2022, the Ministry of Tourism has
approved over 76 projects totaling Rs. 5,500 crore (US$ 687.84 million) across 31 states and
union territories. More than 500 tourist attractions also have infrastructure connected to
tourism that was created by the ministry. The government approved 10 additional projects in
April 2022 with the historic circuit concept.

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  National Integrated Database of Hospitality Industry

NIDHI is an effort to help Aatmanirbhar Bharat empower companies using technology. This
project strives to comprehend the geographic distribution, size, structure, and capability of
the hospitality industry. There were 45,152 lodgings registered on this platform as of August
27, 2022.

 E-Tourist Visa

This project was introduced by the Indian government in October 2014. This scheme intends
to make it easier for foreign nationals to get a tourist visa. The country's tourism has
benefited from this initiative's promotion. The government issued 2.36 million e-tourist visas
in 2019.

 Advertising Campaigns

Through its 'Incredible India' campaign, the Indian government has promoted tourism and
highlighted the nation's rich cultural heritage to the world. The programme intends to
promote Indian tourism on a global level. The government has launched a number of efforts
in recent months to boost tourism. For instance, it introduced Incredible India Reconnect
2022, a virtual roadshow, in Italy to entice travellers from outside to visit India. The Ministry
of tourist displayed various Indian tourist goods in the Arabian travel industry in May 2022.

The Indian government has implemented a number of infrastructure improvements to support

tourism, and this pattern is expected to persist. The FICCI predicts that by 2027, the Indian
travel industry would reach US$ 125 billion. The sector that creates the most jobs in the
nation is the tourism and hospitality sector. The tourist industry supported 79.86 million
direct and indirect employment in FY20. It is anticipated that this tendency would persist and
assist India in earning foreign currency. Additionally, India is probably going to place a lot of
emphasis on the North Eastern states, realising the enormous potential of the area's incredible
landscape and rich cultural heritage. The Ministry of Tourism approved 16 new projects in
9
the area in February 2022, totaling more than Rs. 1,300 crore ($162.58 million); projects like
these are expected to promote tourism and help generate jobs and opportunities in the future.

OYO UNVEILS TELEVISION CAMPAIGN ‘OYO – RAHO MAST’;

SHOWCASES ITS MULTIFACETED VALUE PROPOSITION FOR
GUESTS THROUGH THREE QUIRKY AD FILMS

10
1.2 INTRODUCTION TO OYO ROOMS

OYO Hotels & Homes, a firm that owns the top hotel chains in the globe, is well recognized
for its hotel start-up. The OYO group assures its customers that they will have access to city
inhabitants at more than 130,000 houses across the world. The picture includes hotels and
homes as well as fully operational hotels with more than 43,000 hotels and more than one
million rooms, as well as vacation homes and business stays. OYO now has operations in
more than 800 locations across 80 nations. The OYO Brand has started to master the
technique of revitalizing old, worn-out properties and giving them a fresh OYO flair.

OYO Rooms has long been a fierce rival; its profitable hospitality is the largest registered
branded network of hotels, with 4,50,000 listings now active in 5,000 locations in Indonesia,
China, India, the UAE, Nepal, and China. The OYO aimed to implement its objectives by
creating corporate business replicas in other global locations. Oyo Rooms have become a
synonymous name with the hospitality sector in India. Because of its recent growth,
conventional hospitality outlets now have valid concerns about how their day-to-day
operations will fare. Oyo Rooms has climbed the ranks in India's start-up ecosystem thanks to
a revolutionary business strategy that makes high-quality hotel rooms accessible.

Dynamics of the Unorganized Hotel Business:

Many hotel owners in the unorganised sector ran lone establishments. Scaling up was a huge
effort for such hotels in the lack of resources like qualified staff and cash. Standardisation
was clearly lacking in this situation. Low staff-to-guest ratios were a defining characteristic
of many hotels. These hotels frequently fare poorly on the client experience metric.
Customers found it challenging to evaluate the level of service provided by these hotels and
predict how their stay would go. Due to a lack of resources, decent hotels in the unorganised

11
sector were unable to draw travelers. Some of them didn't get enough foot traffic because
they were in unremarkable locations. The sole means of luring customers remained price and
location. The crux of the matter was that customers scouted for quality living spaces but did
not find them. The hotels provided high-quality lodging but lacked the ability to distinguish
out and draw attention. Such market incongruity gives a chance for innovation (Drucker,
1985). OYO recognized the disparity in the market for low-cost hotels and offered a remedy.
OYO wasn't only a website for booking accommodations. It served as a search and booking
tool for hotels that upheld the OYO guarantee of spotless rooms, sanitary bathrooms,
undamaged bedding, pleasant stays, Wi-Fi connectivity, and electronic payment methods.
Before making the hotel accessible to clients through its network, OYO developed an
approval criterion and improved it.

The Initial Stage:

Ritesh Agarwal, an 18-year-old from Cuttack, Orissa, developed Oyo in 2012 under the
original name of Oravel. He detested spending time in Kota studying for his IIT examinations
because he had dropped out of college. He became accustomed to travelling to Delhi every
weekend to network with young entrepreneurs. Oravel was initially made by Ritesh as a
website to aggregate, enlist, and book budget accommodations. He pursued three months of
research by travelling and living at bread and breakfasts (B&BS), small hotels, and guest
houses and then turned Oravel into Oyo in 2013.

Ritesh Agarwal was awarded a "20 under 20" Thiel fellowship worth $100,000 from Peter
Thiel after developing the Oravel Stays business. Entrepreneur located in the US named Peter
Thiel founded PayPal, an online wallet. The young entrepreneur's current multi-million-dollar
success may be attributed to having a clear objective, commitment, and a lack of dependence
on instructions. In 2013, famous Business Insider selected Mr. Ritesh Aggarwal as one of the
eight top young adolescent start-up developers in the globe. At the age of 17, he also attained
the title of youngest CEO ever. Agarwal continues to serve as Oyo Rooms' CEO today.

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Abhinav Sinha, a Harvard and IIT-Kharagpur alumnus, has also been hired by him as his
COO.

Funding:

The initial capital of INR 30 lakh was given to Oyo by Venture Nursery. In the year March
2015, Oyo Rooms ran their first round (Series A) of funding which ended up being a
successful venture. A total collection of USD 24 million was raised from 4 investors – Light
speed Venture Partners, Sequoia Capital, Green oaks Capital, and DSG consumer partners.

The business held a second round of investment in August of that year and secured an extra
USD 100 million from the Softbank Group. A year later, in 2016, the Softbank group,
Innoven Capital, and the prior investors once again demonstrated their faith in Oyo by
contributing USD 90 million. At this period, the corporation was valued at a constant USD
400 million. The firm received Series D investment in 2017, since it was currently expanding.
The company secured a staggering USD 250 million in this series, driven by influential
figures in the capital market. Hero Enterprises and erstwhile funders Sequoia Capital,
Greenoaks Capital, and Lightspeed Venture Partners were a few of them.

Growth:

Oyo began as a little service that was made available in 5 Indian cities. Today, it has
developed into a global service that collaborates with 8500 hotels across 230 cities, including
those in Malaysia, Nepal, China, and Indonesia.

OYO’s Expansion

OYO Expansion is has always been important topic. „OYO– rooms experience‟ to the
humans, pilgrim travelers, Leisure across 100 cities with a network of 10000 hotels. The

13
OYO was started in 2013. The rooms were amongst the first to identify the opportunity to
initiate the process of branding the domestic budget hotel segment, as the person is serving
people in the price range of Rs 1000 to Rs 3000.

OYO – is a stock light of reserving site offers clean, wi-fi, air adapter and empowering spots
to remain with breakfast. Now the chain of this marked lodging that begins with a cost tag of
Rs. 999/ – just having the quality in crosswise over 70 Indian urban areas with a stock of
12000 or more rooms. OYO has not own any property it just rented over internet enabled
hotels and serves for them.

Ritesh is clear about the objectives client as he putted it briefly “our vision is to give a
standard encounter – The OYO experiences to anybody, anyplace searching out for a place to
remain when not at home. The mind works differently from other startup founders his belief
is that he is building a mobile-first for a company using above 10 business enabling apps
such as standardization of every perspective audit, hotel verification, quality and property
performance tracers, audit reconciliation etc.

OYO isn‟t an independent organization in the market and it is now confronting rivalry from
Zo rooms and Treebo. Other companies like goibibo, Cleartrip, MakeMyTrip etc. work on
commission basis for booking of the rooms and hotel but OYO rooms has now worked on the
different business model on reselling basis. The portion needed to solidify in future because
advertising is going to get greater, remembering the current financial development rate also
and ascend in buying intensity of the clients.

OYO’s Revenue Model

 Commissions

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

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  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’s Contribution to the Tourism Sector of India:

According to tourism minister KJ Alphonse, the Oyo's upgrading of mid-market rooms in the
nation and inclusion of them in the organised segment is good news for tourism, but disputes
need to be settled directly between the hotel bodies and the unicorn flush with cash regarding
issues like contracts and room rates. There aren't any high-quality rooms in the mid-market
segment, so the hotel associations and Oyo need to directly resolve their disagreements,
demonstrating the level of Oyo's involvement in the tourism industry. If Oyo is bringing the

15
inventory of midmarket hotels into the organised segment through some upgrading, it
suggests out to be good news.

The company has now developed into one of the top hotel chains in the world, hosting
millions of visitors from countries such as China, the United States, Europe, Southeast Asia,
the Middle East, Japan, and others. This has been made possible by the company's ongoing
focus on providing value for asset owners and on earning the trust of customers through
loyalty. As a result, with more than a million rooms worldwide, they raised revenues by "3X"
in the calendar year 2019. One of India's most valuable new brands, according to brandZ, is
Oyo.

In hotels and vacation homes in 80 different countries around the world, the year 2019 saw a
host of tourists and city dwellers. OYO had over 180 million visitors from over 120 different
countries. Every night in December 2019, 750,000 people were selected to stay at an OYO.
As a result, they kept delighting their visitors, earning an average rating of 7.5+/10 on OTA
(Online Travel Agency) platforms. As a result, they were honoured to be granted the chance
to serve visitors from all over the world. This put a great deal of pressure on every
OYOpreneur to carry out the company's objective.

Oravel was initially made by Ritesh as a website to aggregate, enlist, and book budget
accommodations. He pursued three months of research by travelling and living at bread and
breakfasts (B&BS), small hotels, and guest houses and then turned Oravel into Oyo in 2013.
Oravel was initially made by Ritesh as a website to aggregate, enlist, and book budget
accommodations. He pursued three months of research by travelling and living at bread and
breakfasts (B&BS), small hotels, and guest houses and then turned Oravel into Oyo in 2013.
The repeat rate and organic demand metrics are a testament to the fact that the customers are
loving their experience at OYO which is shown below-

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And so, from the above chart it could be concluded that repeat rate has been increasing on a
stagnant rate in all quarters with an initial spurt in the first quarter of 2019 leading to an
overall increase at the last quarter of 2019. Thus, constituting a 90% demand to the
hospitality sector of India.

Apart from the above statistical representation there is a contradictory chart shown below
representing the hotel booking apps growth globally- Thus, it is evident from this diagram
that with repeat, paid and organic rates significant growth there is also a rise in the Oyo app
user‟s as till the month of October 2019.

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Financial Performance of 2019 as a growth Indicator

The audited financial results is being included in this part of the report for FY19, which
ended on March 31, 2019. With the pronouncement of a new standard for revenue
recognition – India‟s 115 (similar to IFRS-15) – which is applicable to OYO for the financial
year 2018-19 onwards, OYO is required to account for revenue on a gross basis.

The comparative figure for the year 2017-18 has been grossed up retrospectively.

FY19 Revenue – 4.5x increase in total revenue to USD 951 million, led by India and China.

The consolidated revenue for FY19 stood at USD 951 million, which is 4.5X YoY growth
over FY18.

The fiscal year also marked our transition from an India-centric business to a global
organization.

 Nearly 36.5% or USD 348 million of our fiscal revenues were from outside India. A
year ago, this was a small part of our overall business.

 India contributed nearly 63.5% or USD 604 million of the Oyo revenues and they
recorded

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2.9X YoY growth in the market.

On scaling the mature markets, Oyo had demonstrated consistent improvement in their
economics, in mature markets like India, and expect to follow a similar pattern in other
markets. Their net loss reduced from 24% to 14% in India in FY19.

Decoding Oyo’s financial health in FY22

The pandemic wiped out the scale of travel and hospitality companies across the globe during
FY21. Oyo‟s numbers show it was one of the worst affected startups from India in FY21 with
its 100 plus subsidiaries and a presence in almost every continent. However, the company has
gained some lost ground in FY22 and its revenue from operations grew 20.7% to Rs 4,781
crore in FY22.

The SoftBank-backed company‟s losses also dwindled 51% to Rs 1,940 crore in FY22, as per
its fresh financial document file with SEBI. Oyo also disclosed its Q1 FY23 results and
during the three-month period, it collected Rs 1,459 crore in operating revenue and booked a
loss of Rs 414 crore.

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While we will come to the company FY22’s expense part and its revived IPO
plan in a bit, let’s focus on the revenue part in this section.

The sale of accommodation services and commissions from bookings were

two primary sources of operating revenue which accounted for around 90%
of Oyo’s total collection. These incomes grew 12.6% and 42.3% to Rs 3,189
crore and Rs 1,127 crore in the fiscal year ending March 2022.

20
Income from rental and cancellation fees, sale of tours, food & beverages,
subscription, and value-added services have cumulatively registered 37.5%
growth and stood at Rs 465 crore in FY22.

When it comes to expenses, employee benefit emerged as the largest cost

element for Oyo forming around 27% of the overall cost. This cost grew only
7% to Rs 1,862 crore in FY22. It’s worth noting that employee benefit costs
include Rs 680 crore as employee stock option (ESOP) expenses in FY22.

Lease rent and service components of the lease are other significant costs
for Oyo which surged 10.7% and 13.7% to Rs 1,316 crore and Rs 1,262 crore
respectively in FY22. Finance costs grew 32.6% to Rs 744 crore which also
includes Rs 539 crore as interest on borrowings. It also added another Rs
546 on commissions and brokerage pushing the total cost to Rs 6,984 crore
in FY22

With a notable surge in scale and cost control, losses of the company
dwindled 51% to Rs 1,940 crore in FY22 from Rs 3,945 crore in the previous
fiscal year (FY21). Cash outflows for Oyo also decreased 62% to Rs 922 crore
as a result of austerity measures.

21
On a unit level, the company spent Rs 1.46 to earn a rupee of operating
revenue in FY22. EBITDA margin and ROCE of the company also improved to
-21.12% and -20.67% in FY22.

Oyo’s financial performance has improved drastically during FY22

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 2. LITERATURE REVIEW
This literature review aims to explore and analyze the entrepreneurial model employed by
OYO Rooms, a leading Indian hospitality company. By reviewing relevant literature, this
study seeks to provide insights into OYO's unique business model, strategies for growth and
expansion, and its impact on the Indian hospitality industry.

OYO Rooms has emerged as a disruptive force in the hospitality industry through its
innovative business model. The company operates on an asset-light approach, partnering with
existing hotel owners to offer standardized and affordable accommodations. Research by
Chesbrough (2010) highlights the significance of disruptive business models in creating new
market opportunities.

OYO Rooms leverages technology as a core component of its operations, enabling efficient
processes and enhanced customer experiences. The company utilizes a proprietary
technology platform to manage room inventory, pricing, and customer bookings. Studies by
Lacity and Willcocks (2016) emphasize the transformative role of technology in business
operations and customer service.

OYO Rooms has adopted a market aggregation strategy, bringing together a network of
independent hotels under a single brand umbrella. This approach enables OYO to leverage
economies of scale, negotiate better deals with suppliers, and provide consistent quality to
customers. Research by Tiwari and Buse (2017) highlights the benefits of market aggregation
in enhancing competitiveness and customer value.

OYO Rooms places a strong emphasis on understanding and meeting customer needs. The
company utilizes data analytics and customer feedback to continuously improve its services

23
and offerings. Research by Fitzsimmons and Fitzsimmons (2016) emphasizes the importance
of a customer-centric approach in building customer loyalty and gaining a competitive edge.

Collaborative Ecosystem: OYO Rooms has established a collaborative ecosystem by

partnering with various stakeholders, including hotel owners, travel agents, and online travel
platforms. These partnerships enable OYO to expand its reach, access new customer
segments, and enhance its distribution channels. Studies by Garg and Sharma (2020)
highlight the significance of collaborative ecosystems in driving business growth and
innovation.

OYO Rooms has revolutionized the Indian hospitality industry through its disruptive
entrepreneurial model, characterized by an asset-light approach, technology-driven
operations, market aggregation, customer-centricity, and collaborative ecosystems. By
leveraging these strategies, OYO has rapidly expanded its presence and disrupted traditional
hotel chains. Future research could explore the long-term sustainability and scalability of
OYO's business model and its implications for the global hospitality industry.

24
 3. OYO’S BUSINESS MODEL

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.

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. 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.

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.

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  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.

2. VALUE PROPOSITIONS OF OYO

Value proposition refers to unique strategies a company uses to gain a greater market space.
The value propositions of Oyo are its standardization of services to enrich the guest
experience. OYO ROOMS looks after the standards of services. Besides this, the app of OYO
ROOMS is easy to use and enhances accessibility. OYO ROOMS has also created many
services in line with its core business. The services are represented in the chart below.

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 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

 Blogs

 Social media networks like Twitter, Facebook, and Instagram

 Neighborhood hotels

 Student organizations

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 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.

 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.

 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.

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

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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.

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

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 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

 Legal cost

 Other operational and administrative cost

9. REVENUE STREAM OF OYO

As of fiscal year 2019, Oyo has annual revenue of $951 Million. The company now gets 90%
of its revenue from hotels under the franchise model, according to Ritesh Agarwal, OYO‟s
founder. OYO ROOMS earlier focussed on aggregator model but it had challenges like high
cash burn rate, lack of standardization and malpractices. Hence, OYO resorted to a new
revenue model after 2018. It is a franchise model.

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31
 3. OYO’S MARKETING STRATEGY
Oravel was transformed into OYO Rooms in 2013 when Agrawal realized that combination
of bed and dinner is not sufficient. He proposed to make it an affordable and standardized
accommodation. In order to standardize different measures in each room, OYO Rooms
partners up with hotels, including free wifi and breakfast, flat-screen televisions, spotless
white bed linens, toiletries with a brand name, 6-inch showerhead, drinking cup, etc.

SEGMENTATION, TARGETING AND POSITIONING OF OYO

OYO uses a mix of demographic, geographic and psychographic segmentation strategies to

understand the changing needs of the customers in the competitive market. OYO segments
the market in the following manner:-

 OYO Townhouse targets Millennial travelers.

 OYO SilverKey caters to the need of corporate travelers.

 OYO Vacation Homes target the people who come on vacation at the beach or a
villa on an exotic island.

 OYO Life provides residential space.

Targeting strategy is the cornerstone of the product development process. OYO uses a
differentiated targeting strategy for different products categories.

 Corporate tie-ups for airline travelers.

 Tours and travels.

 College students or working professionals who are in search of fully managed

homes on long-term rentals at an affordable price.

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OYO uses a value-based positioning strategy for its customer by providing:-

 Standardized budget hotels.

 Luxurious productive place.

 Open grass greenery.

 Better room service.

MARKETING MIX OF OYO ROOMS

As OYO Rooms concentrate on co-branding, they operate differently from OTAs (Online
Travel Agency). They state that they are working with zero-to-2-star hotels and guest houses,
'standardizing' them and getting them customers through their website and apps. Usually,
other hotel aggregators simply connect the customer with the hotel by listing hotels on their
website and take a commission as their revenue. They would work out a deal with the hotels
with a minimum order guarantee per month and are able to provide discounted rates and deals
on the room rates compared to the rates provided by the hotels directly to a normal guest.

OYO‟s market coverage has swiftly increased because of being listed with travel aggregators
like MakeMyTrip, clear trip and hotels.com. Their aim is to target small business travelers
and budget tourists to eminently swift-cash and that works in favor of OYO because revenue
gets realized quicker too.

1. Product in the marketing mix of OYO

Oyo has a wide range of products and services that they offer to their customer as per their
need. OYO Rooms, OYO Hotels & Homes has a multi-brand approach. These include:

 OYO Townhouse

 OYO Home

 OYO Vacation Homes

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  SilverKey

 Capital O

 Palette

 Collection O

 OYO LIFE

 YO! HELP

2. Pricing in the marketing mix of OYO

 The strategy of OYO Rooms is to attract customers with a lower room price than the
hotel's base price.

 The primary objective is to provide for an unequaled price that suits the user's budget.
The room price varies depending on the location and luxury of the hotel, between Rs.
399 and Rs. 4000.

 Overall Oyo Rooms follow a very sensible approach, aimed at providing rooms with
outstanding facilities at a moderate rate and generating customer loyalty.

3. Place in the marketing mix of OYO

 Oyo rooms work fully online where one can book the available hotels at an
approximate cost either via an app or through online platforms.

 Once booked with a confirmation one can avail of the service on reaching the booked
hotel on a specific date.

4. Promotion/Advertising in the marketing mix of OYO

 OYO prefers to promote via various social media sites such as Facebook,
Twitter, Instagram, Pinterest, etc. With its exclusive offerings and reduced costs, Oyo
uses the digital platform to draw new customers.

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  OYO organizes several online campaigns such as #AurKyaChahiye on youtube,
#OneForEveryone contest, #OYOnauts, Father's Day Celebration campaign, etc.

 Many of the promotions have featured artists from Bollywood to make them more
appealing. Sonu Sood is the brand ambassador of OYO.

5. People in the marketing mix of OYO

 Oyo team comprises 17000 young and professional people who deliver maximum
both for the company and individual growth.

 With a dynamic team, Oyo provides excellent customer service, creates a positive
experience for its customers, and in doing so markets its brand to them.

OYO DIGITAL MARKETING STRATEGIES

OYO has shifted its business model from hotel aggregator to the fastest-growing chain of
franchises offering OYO hotels (OYO flagships, townhouses, studio stays Collection O,
Premium), living spaces (OYO Life), and workspaces (OYO Workspaces).

Marketing Approach Adopted by OYO Rooms

Prices in the real estate sectors are rising day-by-day still OYO has managed to provide the
best places to people at an affordable price. The Internet brought the world closer and digital
media became a huge marketing platform. In today‟s digital and connected world, it is
important to stay ahead of the competitor. OYO makes use of a 360-degree marketing
strategy. OYO used all forms of digital as well as traditional media to reach its customers.
Traditional media include both print and television whereas digital media include Google
search ads, social media ads campaigns and OYO's own website and app.

Search Engine Optimization For OYO Rooms

Search Engine Optimization is done to ensure maximum traffic to the website by using
particular keywords that have the highest searches from their customer. They understood

35
their customer‟s needs and intentions and updated their website accordingly. This ensured
people searching for hotels would be redirected to their website.

Social Media Marketing Strategy

OYO uses Facebook to share location-based posts, promotional posts, and posts related to the
detailed progress of the organization. These posts helped people to browse destinations to
travel, regular promotional posts provided customers with offers and discounts, encouraging
them to book OYO.

OYO repost pictures taken by travelers and users of OYO on their Instagram handle. Along
with this strategy they implemented Facebook marketing strategies to Instagram. This
strategy leads to an engagement rate and encourages people to tag OYO in their posts.

OYO often works with influencers who create content around travel. This is either done via
posts or re-posts. These posts are about the experience these influencers have during their
vacations and not about the stay at OYO. The core idea of OYO's influencer marketing is that
you will need a place to stay whenever you go out for a vacation and here comes influencers'
experiences.

OYO tweet as well as retweet informative content such as award wins and events, news as
well as companies' CSR activities which adds credibility to the brand in a not-so-obvious
manner.

OYO BRANDING

The branding played as one major strategy outcome to attract the customers, where people‟s
perception towards hotels in India was studied to which the branding structure was created
through OYO rooms in the following ways-

 Standardisation- In which a customer, the OYO brand means consistent experience,

extending the real-life. An OYO hotel meant they get what they have seen on the
website or app and paid for.

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  Affordability- Based on customer-centric practices, quality amenities at pocket-
friendly prices which is the USP of OYO.

 Technology- The app and website are user-friendly and light, a boon for the hotels
that weren‟t WiFi enaled, letting alone have an online presence, the bookings made
hassle-free and would take just few clicks.

OYO CAPTURING PRICE SENSITIVE MARKET

Apart from the established hotel chains like Marriott International, HTDC, Panoramic group
of hotels, lemon tree hotel have more significant turnovers and loyal patrons, which is
unlikely a case with OYO the platform operating on deals and profits for the price-sensitive
segment. Many times the customers explained that they got better deals without an OYO
booking as the hotel could easily give them a discount. The startup often countered it with
twgh guarantee of services and facilities but, for a segment that doesn‟t flex on price, it really
mattered. Not to be wondering, at the end of the fiscal year 2019, OYO has reported a loss of
about $335 million on revenue of $951 million.

The industry leads said that they can‟t be put OYO Rooms in the same league as of
traditional hotel chains, since it is an aggregator and a startup, it still needs to overcome the
perceptive of the only for the price-sensitive customer group.

It is a technology surrounded marketplace and doesn‟t have to face the usual challenges like
by a hotel. Above than that the urge to become a market power, increase valuation and
staying ahead of the curve is as it is.

Above than this, there has been a several e-commerce marketplaces such as Yatra and
Trivago in the hospitality segment operating out on similar lines of networking. The
traditional hotels and hospitality giants are now online, and anyone can book their rooms
within a few clicks, its been seen that, technology is hardly a disruptor anymore, services and
perceptions are- OYO spent over $3 billion in the last four years in on boarding and retaining
more hotels to its website. The technology remains the core component of this unicorn startup
along with its human assets.

37
OYO EXPANDING WITH THE SUPPORT OF YOUTUBE

OYO with unveiling „Raho Mast‟ campaign with three quirky ad films as with the aim of
reaching 75 million consumers across the globe, the campaign was set o go live across digital
channels and YouTube was one major platform were the investment for digital advertisement
would procure returns per view as increase in the number of views on YouTube platform
would cover up the advertising cost as well as channelizing the pay in the retain earnings and
so penetrating into the human minds to show up the presence of OYO and making digitally
aware that how it stands out from its competitors with short time advertisement videos.

For years, it was more often than not only the travellers and the city-dwellers were forced to
compromise on location, quality, and price. OYO nullified the price disparities that we have
come to expect from the interference of touts and ensures that safe and secure, comfortable
hospitality options are available to everyone, everywhere at the tap of a button. Rooted by his
thoughts, the true essence of OYO - Raho Mast comes alive with the idea that OYO exists to
help fulfil your purpose to get out there, to travel, to work, to relax, to bond, to just be, to lead
a good life and with OYO we might find a quality living space in your budget, more options
and a chance to dream bigger and better.

Thus, inspired by the real-life experiences of much diverse travellers, the campaign creatively
narrated the three stories showcasing challenges faced by varied consumer segments. And
through a humorous take, three films illustrate the consumers‟ behaviours, changing needs
and resulting trends; ultimately highlighting OYO‟s differentiated offerings for everyone (to
live a good life or raho mast). The three films got the look into the lives of a family, business
travellers and couples and subsequently, how they have found the best solution with OYO,
during their usually chaotic travel and stays.

Reflecting on the television campaign, Aditya Ghosh, CEO, India & South Asia, OYO Hotels
and Homes said, “They were excited about this new “Raho Mast” brand establishment

38
campaign. It is observed that when you are answering to the consumer's needs, doing it
consistently and delivering on your promises. With its funny, quirky and yet a perfect
relevant approach, the Raho Mast brand campaign reflects on what the average Indian
consumer goes through and how OYO could help them to make the experience hassle free at
every touch-point. The red and white OYO sign stands for the enduring belief that low cost
has nothing to do with low quality, which is a very apt fact and draws consumer every time to
make bookings with OYO.

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OYO ACQUISITIONS

Oyo Rooms have acquired 8 companies to date. Denmark-based data science firm, Danamica
was the last company that was acquired by OYO on September 2, 2019, at $10M, after which
Oyo acquired Direct Booker on May 9, 2022. The Croatia-based hospitality service provider
has more than 3200 homes with it and has serviced 2 mn+ customers so far. The acquisition
of the Nikola Grubelic and Nino Dubretic-founded company is expected to strengthen Oyo's
presence in Europe, especially in Croatia.

The successive acquisitions by OYO has provided to access the edges over every aspect of
the hospitality sector in order to provide a cumulative solution without seeking the
outsourcing services, in order to high class affordable facility to travellers and city dwellers.

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 4. OYO COMPETITOR ANALYSIS

1. Treebo

Treebo is headquartered in Inn Bangalore, Karnataka. Rahul Chaudhary is the Co-Founder of

Treebo. Treebo has raised a total of $56.6M in funding. Treebo has acquired 1 company, with
the most recent being Events High for an undisclosed amount on May 2018.

Treebo’s analysis

The company has been making a losses of Rs 114.94 crore in FY 2017-2018, from August
2018, the startup claimed that it has to be slashing and thrashing its cash burn by over 80
percent. The team is also gunning towards shooting and doubling revenue growth, as per the
act Registrar of Companies filings.

The today‟s Treebo is slowly stabilising, and has one goal - profitability by 2021. For this,
Treebo have to make a drifting shift to ensure a reduction and compulsion of the cash
burnings in three ways - adding secondary source of income - Hotel Management CMS
SuperHero to cater out to hotels that there won‟t be any Treebo branded, and removal of
minimum guarantee for hotel owners.

Unfortunately, the layoffs were also a part of the cash burn that made everyone saw the brand
in the eye of a storm. It was estimated while the number of people we fired is still
undisclosed, it definitely was a number that made us uncomfortable. However it made the
exiting as smooth as possible with payments, and helping them with job connections,” said
by, co-founder, Treebo. It was recalled that when starting up, the team believed it needed
swift and thrustful action, and therefore more people. The co-founder felt that this was one of
the biggest mistakes made.

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 1. Fab hotels-

Fab Hotels is headquartered in Gurgaon, Haryana. Vaibhav Aggarwal is the Co-Founder &
CEO of Fab Hotels. Fab Hotels's investors include Goldman Sachs, Accel Partners, and
Qualcomm. Fab Hotels's main competitors are OYO, Treebo and Vista rooms.

Fab hotels analysis

India has been a distinguished hotels market, it's a multi-billion-dollar segment but it's largely
and mostly deranged as well as unorganized. More than 85 % of the room supply is within
the budget segment scheme but there isn't much of a branded presence. So, the online hotel
penetration is also low compared to China or the US and Europe.

Fab Hotels operates in the $30 per night, value-for-money, 3-star hotel segment. Our hotels
are located conveniently near a business hub, airport or railway station and are typically the
best 3-star or business budget hotels in that neighbourhood. We work on a 100% exclusive
franchisee model with long-term contracts. This is along the lines of global brands like Ibis or
China's Home Inns and China lodging.

It‟s been seen that strong incoming interest from hoteliers across India. Noticeably, the
budget hotels operate at 50-55 percent or half capacity. On increasing occupancy and also
providing operational support. It gained highly valued by the franchisee partners.

2. ZEN Rooms-

ZEN Rooms is a Private company. Nathan Boublil is the Co-Founder & CEO of ZEN Rooms
and has an approval rating of 78 from the members. ZEN Rooms has received a total of
$20.1M in funding.

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Zen analysis

ZEN and Yanolja had the plan to introduce the new technologies into ZEN locations starting
Q1 2020, enhancing customer experience and optimizing operating costs, thus allowing
value-for- money improvements.

ZEN Rooms was created in 2015 to address out the operational and technological challenges
among hotels and hospitality sector in Southeast Asia, as well as to make up the budget
accommodation in the region more affordable and safer.

Going up with 13,000 rooms under franchise, it‟s one of the top three hotel franchises in the
region and is the largest hotel chain in the Philippines.

And so said by Jongyoon Kim, CEO of online business at Yanolja: “Since first investing in
ZEN, they had shared the same vision of operational excellence and customer centricity to
radically improvise the Southeast Asian hospitality market. Last year, the ZEN and its team
has taken major steps to ulfil this vision 1 and had grown exponentially while displaying top
inventory quality. With this kind of exciting agreement, Yanolja plans to fully support and
spurt out the potential of ZEN as to solidify its status as the market leading full‐stack
hospitality company in the region.

3. Vista Rooms-

Vista Rooms is headquartered in Mumbai, Maharashtra. Ankita Sheth is the Co-Founder of

Vista Rooms. Vista Rooms has raised a total of $776K in funding. Vista Rooms's main
competitors are FabHotels, Treebo and OYO.

Vista Analysis

According to experts citation, inclusion of fresh services is critical and drastic for the success
of such businesses in long term. Making it logical and apt sensefully to enter niche and

43
untapped segments which are connected or rooted to accommodation sector and follow up the
same business model," said by, cofounder of Vista Rooms.

An existing backend setup for the hotel business, wont be taking much time to start
leveraging and accelerate the same to offer new services, ATQ sources.

In the past couple of years, several start-ups have established themselves in the
accommodation business and taken up the challenging conditions of standardising smaller
and standalone hotels. Moreover, in a bidding to incentivise and attraction of customers,
aggregators had been offering their properties at lowered price points, a practice that puts up
pressure on revenue. And so with newer segments, there is consistent revenue flow and
which has all the elements such as contracting, operations, etc. in place which helps in easily
diversify.

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 5. CHALLENGES FACED BY OYO ROOMS
Despite the shiny, successful exterior, OYO‟s reputation has been dubious soon after its
founding. OYO‟s work culture raises questions about the proficiency of its business,
according to financial filings, court documents and interviews with 20 current and former
employees along with the others familiar with the startup‟s operations.

High Cash burn rate

Hotel Aggregator business model involved a very high cash burning rate. Specially advanced
booking of the hotel rooms for the whole year needs a lot of cash burn. Also, since the
company was in their expansion mode they are offering heavy discounts in order to made the
acquisition of customers.

Standardization

One of the major issue was of pervasive standardization which was faced by OYO. Since the
company had its dealing with non-branded hotels, the level of professionalism was much
lower than competitors. It soon became challenging for OYO to delight out their customers at
every point of contact they made.

Competition

OYO is the market leader and it is true that leadership always defined the path. Oyo has
opened paths for many other competitors to bring up various strategies.

Unethical growth strategies

OYO offers rooms from unavailable hotels, those that have halted its service, according to
the company‟s chief executive and nine of the current and former employees. This boosts the

45
number of rooms listed on OYO‟s site. Thousands of rooms are from unlicensed hotels and
guesthouses, its executives have acknowledged.

To save the trouble from the authorities over the illegal rooms, OYO sometimes provides free
stays to the police and other officials, according to nine of the current and former employees
and internal WhatsApp messages, as viewed by The New York Times."

Having a huge base of unmarried couples, a scheme involved workers at properties run
directly by OYO conspiring to keep the guests checked in after they left. The workers then
cleaned and resold the rooms for cash to other guests and nabbed the money, says an ex-
worker.

Complaint of unpaid dues

OYO charges extra on hotels while refusing to pay the amounts to the hotels, which they
claimed they were owed, according to the interviews with several hotel owners and
employees, legal complaints, and emails viewed by The New York Times. Some hotel
operators have filed criminal complaints against OYO, which said it retained payments.
Aditya Ghosh, OYO‟s head of India operations, dismissed the argument as “noise,” he said,
“the disagreement is about the penalties we charge on customer service failure”.

Protests by hotel owners

Independent protests by small-scale hotel owners are surfacing up in mid-tier towns like
Pune, Kota, Manali, Ahmedabad and Jaipur as well as Delhi and Bengaluru. They claim that
OYO has been eluding them of their promised returns and minimum guarantees by imposing
a ream of charges, often without informing them. Many of these charges are not specified in
the contract between the owner and OYO.

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The protestors state that OYO‟s accounting and auditing process, and the penalties associated
with petty faults and errors, are so heavy that they sometimes find themselves owing money
to OYO at the end of the month.

Covid-19 Impact

Almost every business suffered a lot due to Covid-19, OYO was not any different. The
hospitality business suffered a lot, and the occupancy rates of the hotels slow down due to all
the lockdown curbs imposed by the Government. Even after the lockdown was over, people
were being cautious and were avoiding travelling, so naturally, the occupancy rates were not
increasing.All the restrictions created a negative impact on the revenues of the business.

A PEAK TO RECENT ISSUES

Making and having it said all of this, growing at the pace at which OYO has in the past few
years, it sometimes got ahead of anything and pressure-tested out the organization at multiple
levels. It was seen opportunities to improvise in multiple areas like guest satisfaction, partner
relations and sustainable economics, which includes right-sizing our workforce. In 2020,
many initiations were taken to address this, which is elaborated below-

 Employee restructuring: Over the past weeks, it has been reorganized and framed the teams
across businesses, functions and geographies in-line and timely with goals and objectively
for 2020, and beyond. On driven-off tech-enabled synergy, enhanced efficiency and
removed fabrication of effort across businesses or geographies, unluckily, some of the roles
at OYO had become redundant. This was a deeply disheartening decision for everyone,
giving its impact on the affected employees. And on being tried to make their transition less
painful by adopting out the principles of fairness, and it was committed to doing everything
by everyone can to ensure that their outgoing colleagues received much assistance and
support as possible through the transition period. Having it all said that, they were acutely
aware of about the responsibilities and are accountability for building a business with
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 sustainable economics, and therefore it was negligible that they went through this process
of restructuring.

 Partnership Issues: In the year 2019, it was understood the importance of partnership/
alliance formation with the offering to customers. Its absentism resulted out an increase in
customer escalations and not so favourable media coverage. Thus, getting committed to
provide 100% of the guests a seamless experience. For it was to happen, they needed to put
in place very strong steps and clear out the expectations from our partnership spreads and
involved taking out all necessary measurements in that direction.

 Opportunities area wise in delivering best-in-class Guest Experience: On looking back at

2019, it could be found that many instances where the guests had a less than perfect
experiences and it could have done far better. The endeavourism to improve and the ability
to connect with guests and resolving their concerns. The metrics across these dimensions
had a hand (first response time, resolution times etc) and improved by 20-40% this year.

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 6. SWOT ANALYSIS OF OYO ROOMS

STRENGTHS

 Standardization: Of course, the rooms that OYO takes upon itself are assets of
different providers. But they have a standardized OYO permit. That, in turn,
guarantees the „OYO experience‟ in the different OYO rooms worldwide.

 Ever-growing network: Initially, what OYO had was a one-room resort in Gurgaon.
The picture now looks so different. OYO Rooms currently owns 86500 hotels to its
credit. As if that was not enough, the company also collaborates with over 4000
motels and homestays.

 Spirit of innovation: At the beginning, the idea for OYO Rooms was a one-stop shop
for a budget visit in India. That, by itself, was an innovative idea at the time. Till now,
the company does not fail to keep introducing innovations into its business.

 Subsiding hotel stays: Just like Ola and Uber, OYO also cares about making its
services affordable. OYO finances different rooms to make them more low-cost for
consumers.

 Young and highly spirited leader: The establisher of OYO is a fantastic

entrepreneur who always has a new message to convey. His name is Ritesh Agarwal.
Because of him, OYO continually takes upon up-to-date methods to remain
successful.

WEAKNESSES

 A strategy of co-branding: OYO advertises a lot of rooms for its consumers.

However, a weak point of the company, is that it does not have a hold on any of the
rooms. OYO acts more as a mediator between the buyer and the seller.

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  Poor service quality: OYO has been performing exceptionally at offering rooms. It
makes sure that customers are happy with the amount of money they pay. However,
we can not say the same thing about OYO‟s services. The quality and reliability of
the services of OYO are pretty controversial.

 Tight margins: Some hotels that are currently cooperating with OYO can also take
upon other companies like such. If that happens, OYO cannot interfere by any means.
That makes the pattern of OYO‟s marketing grow purely from the margins they give
their hotels. At the end of the day, that can cause uncertainties for OYO.

OPPORTUNITIES

 Growing demand for aggregators: The world revolves around the outcomes of
recessionary trends, pay cuts, and job declines. That makes it challenging for higher-
end hotels to keep up with supply and demand. That broadens the range for
accumulators such as OYO. That is because a considerable number of hotels would
fancy getting outer care for their new businesses.

 Focus on budget accommodation: People these days tend to be smarter with the
way they spend their money. Especially young people choose to save up some of their
income. Hence why they are more likely going to choose budget hotels. That, in the
long run, makes the job of OYO Rooms worth it.

 A surge in the number of business travelers in emerging economies: In

developing economies, more people are starting to go on business trips. Thus, of
course, they are going to think more and more about their budget. Which, again,
increases the demand for companies like OYO Rooms.

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THREATS

 Competition: Every upcoming entrepreneur is facing accumulating services. That is

because the blocks to entry are lowered. Lots of online portals such as Trivago,
Makemytrip, and Ibibo suggest variations of services comparable to OYO.

 Growing concerns about safety: As of now, travelers face threatening stays. They
can, for example, be harassed by hotel staff. Unfortunately, that is something
unpredictable and a massive threat to hotel companies.

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 7. CONCLUSION

OYO Rooms has emerged as a game-changer in the tourism sector of India, revolutionizing
the concept of budget accommodations. Through its innovative business model, effective
marketing strategies, strategic expansion, and acquisitions, OYO has successfully disrupted the
traditional hospitality industry and established itself as a dominant player.

OYO's business model canvas, built on technology and partnerships, has been instrumental in
its rapid growth. By collaborating with hotels and property owners, OYO has expanded its
inventory and provided standardized rooms, ensuring a consistent experience for its customers.
This partnership approach has not only benefited OYO but has also helped hotels improve their
occupancy rates and revenue.

The company's marketing strategy, encompassing segmentation, targeting, positioning, and

digital marketing, has played a crucial role in its success. OYO has identified different
customer segments and tailored its offerings accordingly. Through aggressive branding and
digital marketing strategies, OYO has become a recognized and trusted brand in the hospitality
industry.

OYO's expansion efforts, both within India and globally, have contributed to its market
dominance. By acquiring local players and integrating them into its network, OYO has rapidly
increased its market share and expanded its presence in Southeast Asia, Europe, and the United
States. These expansion endeavors have been supported by significant investments, further
fueling OYO's growth and global reach.

Competitor analysis reveals that OYO has effectively differentiated itself from rivals like
Treebo, Fab Hotels, Zen Rooms, and Vista Stay. OYO's scale, brand recognition, and
operational efficiency have given it a competitive edge. However, the company must remain
vigilant in a highly competitive market and continuously innovate to maintain its leadership
position.

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While OYO has achieved remarkable success, it faces challenges that need to be addressed.
Maintaining quality standards across its properties is crucial as the company continues to
expand.

OYO must prioritize quality control measures, regular audits, and customer feedback
mechanisms to ensure consistency and customer satisfaction. Managing the expectations of
customers and partnering hotels is another challenge that requires a delicate balance between
affordability and elevated experiences.

A SWOT analysis of OYO reveals its strengths, weaknesses, opportunities, and threats. The
company's strengths include a strong brand presence, extensive network, and technological
capabilities. However, weaknesses such as quality control issues must be addressed to maintain
customer trust. Opportunities lie in expanding into new markets, diversifying offerings, and
creating a comprehensive ecosystem for travelers. OYO must also remain vigilant about threats
such as intense competition and potential regulatory hurdles.

In conclusion, OYO Rooms has transformed the budget accommodations segment, making
significant contributions to the tourism sector in India and beyond. Its innovative business
model, effective marketing strategies, expansion efforts, and acquisitions have reshaped the
industry. While facing challenges, OYO has demonstrated agility and adaptability, positioning
itself as a leader in the hospitality industry.

As the travel and tourism industry evolves, OYO has the potential to continue shaping the
future of budget accommodations. By leveraging its strengths, capitalizing on opportunities,
mitigating threats, and maintaining a customer-centric approach, OYO can sustain its growth
trajectory and contribute to the advancement of the tourism sector.

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REFERENCES
 https://newsface.co/oyo-rooms-case-study-marketing-strategy-revenue-
modelfunding-expansion/

 https://www.owler.com/company/vistarooms

 https://yourstory.com/2019/11/hospitality-startup-treebo-hotels-profitability-
bengaluru

 https://www.owler.com/company/oyosports

 https://www.owler.com/reports/oyo/oyo--indian-hospitality-unicorn-oyo-says-it-
has- ca/1590703334908

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PROJECT REPORT ON GENERAL MANAGEMENT TITLE OF THE PROJECT

“AN INDIANENTREPRENEURIAL MODEL FOR THE OYO ROOMS”
SUBMITTED IN PARTIAL FULFILLMENT FOR THE AWARD OF THE
DEGREE OF MASTER OF MANAGEMENT STUDIES UNIVERSITY OF
MUMBAI Submitted by Mr. HRISHIKESH SUDHAKAR PILANKAR ROLL NO.
2022166 Batch: 2022-2024 Under The Guidance of DR. ARATI KALE / LALA
LAJPATRAI INSTITUTE OF MANAGEMENTMAHALAXMI, MUMBAI – 400 034

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