OYO's Expansion Into Four-star Hotels Segment

India’s largest and world’s third-largest chain of hotels, homes, and living space, OYO Hotels and Homes, boasts of over 23,000 hotels and 125,000 vacation homes in more than 800 cities in 80 countries. Ritesh Agarwal, Founder and Group CEO, OYO, elaborates on the company’s expansion plans, entry into the four-star hotels segment and the best practices on franchise growth.

OYO has been quite aggressive in adding properties under its fold. What are the best practices you follow to enable the expansion?

We have developed an app, Orbis, to scientifically identify and onboard strategic buildings within a shorter time period. The app assists the team in identifying the right lead, pitching the right deals to owners and having the building transformed to OYO standards. We have set a benchmark in transforming and renovating assets in a record time of 14 days – a stark contrast to the industry standard of up to 90 days. Our efforts are supported by in-house design labs – OYOX Design and Townhouse Design Team.

How do you enable franchise owners grow their business?

We offer multiple app-based solutions to ensure hassle-free operations at our hotels while delivering quality-assured experience to our guests. Every OYO hotel works on the OYO operating system offering features, including express check-in, check-out, online procurement, and inventory management. The OS further offers apps for housekeeping and audits as well as solutions for expense management, staff training and engagement along with performance reviews and incentives for the hotel staff. In addition, we offer apps like Property Manager, Co-OYO (owner’s app), Krypton, OYO Optimus, Orbis and OYO Rocket for smooth and seamless management of the franchise business. These measures help maintain customer loyalty; over 70% of the revenues in India come from repeat customers. In addition, we have a team of revenue managers who derive the best pricing mechanism in the industry with the help of advanced machine learning and AI tools. Every hotel or asset that becomes a part of OYO’s chain witnesses an increase in average occupancy from 25% to 65% in a brief span of three months. In fact, we enable asset owners to increase their earnings 16 times on an average.

What are your expansion plans?

We are looking at the largest 15-20 markets of the world which are characterized by fragmented inventory. Our goal in these markets is not just to capture a handsome market share but to be bigger than the top 3-4 hotel chains combined. We have succeeded in executing this in India and are on a similar path in China. We will continue to explore opportunities in markets like Southeast Asia, Middle East, Europe and the US.

So far, Oyo was associated with budget-and mid-segment hotels in India, it is now also entering the four-star hotels segment. What’s your plan?

We are entering the four-star hotels segment to cater to business travelers. The premium segment holds a lot of promise for us given the rapid growth of the hospitality industry over the last few years. The global upscale and luxury hotel market is predicted to witness tremendous growth. Our deep understanding of Indian consumers and trends, coupled with our operational and technological capabilities, will be a game-changer for us in the upscale segment. We have plans to add more premium and upscale hotels.