OYO Rooms Case Study: Detailed Study about OYO

OYO Rooms Case Study: Is it On-its-Own Now? Or is there still hope for this home, away from home?

Here we have a detailed OYO rooms case study for educational and research purposes. Oyo is the largest hotel room chain and fastest-growing hospitality chain of living spaces, franchised hotel and homes in India and was started with a vision of providing budget living spaces in India. The Desi Airbnb, if you must.  Founded by Ritesh Agarwal, OYO was built keeping India’s price-sensitive, luxury-seeking and deal-conscious segment in mind. As the Government of India pushes the envelope on Make in India, OYO certainly pops up in the list among the few notably one. With its presence in all over the world including China, Brazil, Mexico, U.K., Philippines, Japan, the U.S. and so on. We are presenting this case study, for, the sheer passion and unprecedented growth this company has shown. With young ‘ns at the helm, OYO is the perfect example of the crawl, walk and run and how if you set your eyes on creating a difference, age doesn’t matter!

After Zomato case study, paytm and Delhi air pollution, and Flipkart Case Study we were very focused for OYO rooms case study.

A Detailed OYO Rooms Case Study by CIDM

In this OYO case study, we will discuss the business model, investment, social media strategy, revenue model and marketing in detail. OYO, at its very core, is a young company at heart. The CEO of OYO Rooms is Ritesh Agarwal. He penned a book called ‘Encyclopedia of Indian Engineering College’ when he was only seventeen years old.  He was travelling a lot and was feeling the gaps in the hospitality sectors. At the age of 18 in the year 2011, he launched Orawel Stays.  Though, his search for affordable ‘Bed and Breakfast’ hotels in India was still on. According to him, discoverability in the hospitality sector wasn’t an issue rather the consistency in customer support and services are.

Digital India Initiative Supported OYO Rooms

Digital India and Make in India initiatives by the Government of India also contributed to the success and promotion of a young company like OYO Rooms. Being young, this hospitality startup has a better grasp of youth’s demands and needs from this segment and is aligned better with their expectations. It started right from innocent and straightforward browsing from a smartphone regarding a ‘cheap hotel in Goa’ to ‘booking a hotel’ in a ‘safe for female patrons’ setup- OYO Rooms turned the Indian hotel industry upside down. 

OYO eliminated the unpredictability of staying in a hotel in a new city, the anxiety regarding its services, cleanliness and safety- and tossed it out of the window. In a virtual marketplace, you often don’t see what you get. You might be oversold on specific aspects such as location and ambience, and you might be misguided on features and price-point- With the ‘OYO Rooms’ standardisation becomes a regular feature for an otherwise obscure hotel. A segment that is worth Rupee 88,000 crores and untapped until now, however, with the technology and vision behind OYO Rooms, it became one of the fastest evolving and emerging sector.

The traditional hospitality sector is highly divisive and fragmented. It is managed personally and often is a huge contrast from what it is sold out to be. If you pay money; you get excellent service, feature and experience. You don’t; you don’t. OYO’s technology and a vision to bring budget hotels on board washed this segment with a plethora of changes,including being demographically-fit with its user segment.  While Orawel (Ritesh’s first venture) was more on the lines of Airbnb, OYO Rooms was meant for travellers from every walk of life. Be it leisure, medical or spiritual; it ensured that every traveller has a roof to stay across 100 cities through its wide-spread network of 10,000 hotels.

The reassurance of quality at a fraction of the cost caught on with families and couples. The concept of OYO rooms gained its popularity with the youth who were looking for good times, and wanting to ‘take a break’.

During its journey, the company brought upon several breakthrough hospitality concepts. Let us have a look at that.

OYO Relationships: Rooms for Unmarried Couples

Even though live-in relationships and unmarried couples are considered to be a taboo in India, it doesn’t absolve the need for couples of being intimate and spend some time together. This is why OYO walked the talk, did a ‘StayUncle’ and rolled out hotels exclusively for unmarried couples. However, here as well the brand ran into implementation as sometimes the hotel staff was sleazy or the customers ran into trouble with local authorities. Nonetheless, the idea was executed well on social media, particularly Instagram – an affluent niche segment where elderly aren’t around much, and if they are, they aren’t a conservative lot. OYO rooms case study shown as many attributes about a successful business plan.

OYO-We (Women’s Exclusive)

OYO rooms case study showing that OYO has good marketing sta=rategies. OYO recognised the need for female-centric ambience in the hospitality segment way before its peer. It launched OYO-We to cater to female travellers. Be it for leisure or profession, it catered to women who were travelling alone, and as per official record, they make for forty per cent of the customer base or Frequent Independent Travellers (FIT).

OYO Townhouse

The Townhouse by OYO is a friendly neighbourhood hotel offering comfort, efficiency, convenience and affordability to its millennial customers who are looking for premium features at budget prices. 

OYO Homes

Transferred? Relocated? OYO Homes is India’s first Home Management System completely managed by OYO for students and professionals living alone.

OYO Vacation Homes

Having collaborated with German Traum-Ferienwohnungen, DanCenter, Danland and Belvilla, OYO is now the world’s third-largest vacation home brand.

SilverKey

The fully-serviced stays, SilverKey is aimed at business travellers and is available in metro cities.

Capital O

OYO rolled out new brand names for its premium corporate properties, Capital O, without sidelining its budget proposition.                                                                                                       

OYO Palette Resorts

The upscale hotel category and signature suites under OYO Rooms and Homes are called OYO Palette.

OYO Life

OYO targets young office-goers and millennial folks looking for affordable, fully-managed rental homes called OYO Life. It can be a sublet with a friend or solely.

Collection O

The latest addition to OYO Rooms and Hotel is Collection O that appeals discerning business travellers looking for premium features in their hotel accommodation and don’t have money concerns.

OYO Branding Case Study

The brand exudes charm and warmth of being a go-getter. The company was the first to identify the need for branding the domestic hospitality segment and offer hotel rooms within the price range of Rupee 999- Rupees 3,000.  Before the advent of OYO, the low and mid-budget hotel segment wasn’t online and barely managed while always falling short of customers’ expectations and expected parameters. This hotel unicorn brought uniformity in a vague landscape.

The branding of OYO Rooms intends to offer:

Standardisation: For a customer, an OYO branding means consistent experience, extended to the real-life! An OYO hotel means they get what they have seen on the website or app and paid for.

Affordability:  Customer-centric practices, quality amenities at pocket-friendly prices have always been the USP of OYO.

Technology: Both the app and website are user-friendly and light! A boon for the hotels that weren’t Wi-Fi enabled, let alone having an online presence! The bookings are hassle-free and take just a few clicks!

Variety: OYO started out as an aggregation platform for hotel, underwent an unprecedented growth cycle and became the fastest-growing collaborator and chain of franchises. OYO now offers several flagships including OYO Life, OYO workspaces and Collection O. Customers can choose from an array of budget, features and type of stay. OYO branding implies that customers can expect all the above parameters from a hotel even if they are booking a hotel room at Rupee 999!

OYO Digital Marketing Case Study

OYO has been aggressively pushing fresh content to lure tier-2 and tier-3 cities. It wanted to reach out to its demographics of young people who are continually fidgeting with mobile and scrolling down until they find something worth their attention. OYO digital marketing campaign runs across multiple channels with a focus on personalised customer experience. Its Twitter account has over 60.3K followers and robust presence. After looking the digital success of there big brands, many people started enrollment for learning Digital Marketing course in India.

OYO Facebook has wide-spread reach with more than one million followers and likes. The company stays active, posts daily and maintains engagement with its customers.

Social media presence of the brand is marked by several popular videos, including the ones such as #AurKyaChahiye on YouTube, #OYOnauts, Jai Hind Campaign, and so on.                     

• #AurKyaChahiye: Highlighted the cost-effective proposition, particularly rooms starting from as less as Rupee 999 (It was pushed on radio and print media as well). This campaign was aimed to reach out to people in tier-3 cities and to make it a brand for everybody, including senior citizens who travel alone but get tickets booked by their kid.

• #OneforEveryone: Eight different short movies highlighting the customer segment, the diverse demographics OYO is catering to

• #OYOnauts: The social media team conducted a contest on Twitter where the users had to submit their story and a winner would get a sponsored trip

OYO YouTube

OYO has optimised YouTube to bring forward the ‘human’ side of doing business with it. It seemed to work pretty well for OYO too. Their channel rolls in testimonials and clients’ feedback in a highly professional way. It also documents the team’s day-to-day life and how the customers’ satisfaction and happiness is the number one priority for OYO. The playlists are ‘Heroes of OYO’, OYO FriYAY diaries, OYO Travel Diaries that is the perfect use case for influencer marketing!

However, it hasn’t had a smooth run, and the brand has more than a fair share of controversy. Unlike Zomato, it has not dealt with its customers, their expectations and challenges transparently. Each social media post is a telltale of how disappointed the customers are. It is understandable that hotels may or may not carry out the instructions, but the customers, who choose to trust the brand don’t want to deal with this headache, and they shouldn’t.

The brand also got in a virtual fight with Stayzilla when it inadvertently (or not) used its trademark for PPC ads.

Result: Netizens had a hilarious day over some #OYoMama jokes!

OYO took a competitor Zostel Hospitality to the courtroom for copyright infringement and hired a troll army to denigrate the latter with #OYOlovestrolls.

However, not the one to take it all lightly, Zo Rooms did what we can call a master class in ambush marketing. At the OYO launch app in India Habitat Centre, New Delhi, all guests could see was cheeky standees and signboards. Not a picturesque sight for Agarwal and team, indeed.

Search Engine Optimisation – OYO Case Studies

SEO is an integral aspect of OYO digital marketing strategy. Some of the most popular and highly competitive keywords for OYO Rooms are hotels near me, OYO Rooms Delhi, OYO Rooms, cheap hotels in Bangalore, OYO Hotels in Manali and many more. Besides organic SEO terms, the brand invests in paid search campaigns for keywords like hotel booking online, best hotel deals, hotel rooms cheap, hotels nearby, hotel prices in Delhi, and so on.

Influencer Marketing

Apart from YouTube’s Travel Diaries, OYO’s influencer marketing is extended to Instagram as well. However, it is not brazen, and the brand manages to maintain subtlety and entertainment quotient throughout the promotion. Have a look! In making OYO rooms case studies, its SEO and influencer marketing played a very well role.

Plugging in an employee’s testimonial to show her commitment to keeping the patrons safe and secure amid COVID-19 lockdown. 

OYO Mobile App Case Studies

Ritesh has always had a vision of bringing forward a mobile-first website so that OYO experience could be extended to everyone. The OYO mobile app rolls in the most extensive inventory of hotels, is super-light and reduces the sales funnels or click considerably. A customer can book a hotel room online in just three clicks and cancel in one! The home page is dynamic so that you can see your bookings and relevant cards right in front of your eyes. Besides, the OYO Rooms as a company includes the expertise and capabilities of ten business enabling apps, including standardisation audit, property performance trackers, geo-location, and hotel verification. The OYO mobile app has been the gold standard of mobile apps. It is search engine optimised, loads faster and is super light as well as dynamic. Our studies found that OYO app has played a major role in its Success.

OYO Competitors Case Study

OYO’s market value and share are threatened by the likes of Airbnb, Treebo, Zo Rooms and MakeMyTrip. However, OYO has outshined the homegrown MMT on social media, whereas Airbnb still stands tall owing to the perception of being a global and veteran player in this segment. Besides, MMT and ClearTrip model is commission-based, while OYO works as a reseller.

OYO Business Model

OYO Rooms collaborates with interested hotels and real-estate properties. While it invests in their quality and marketing for the sake of standardisation, it doesn’t own them. This business model works wonder for under-utilised and unorganised mid-level hotel segment, which often doesn’t have the resources or knowledge to reach out to as many customers. OYO’s technology-based platform enables them to generate more demand, more revenue and adjust prices according to the market while offering scalability and customer-centric features.

OYO Funding Case Studies

The hotel room aggregator-turned-franchise-chain has received funding from following investors

Investors	Share (in %)
Founders	18
SoftBank Group	45
Lightspeed Ventures Partners	19
Greenoaks Capital	10
DSG Consumer Partners	4

OYO’s largest investor is SoftBank,which owns forty-five per cent stake in the company. Last year, in 2019, OYO raised $1 billion funding from SoftBank, fuelling its expansion and strengthening its position in vacation rental business in other continents.

OYO Acquisition

The expansion of OYO Rooms has been fierce. The company has acquired properties and companies to fuel its expansion drive. As of now, the hotel aggregator-cum-franchise has acquired seven startups/companies to facilitate the experience for its customers.

For instance, OYO acquired Danamica, a pricing tool for vacation rentals. Mumbai-based Weddingz, an online marketplace for weddings and events, Novascotia- a Chennai-based management company for service apartment, IoT venture AblePlus and Boutique Homes were acquired by OYO.

Challenges Ahead: OYO and COVID-19

OYO doesn’t own hotels like Uber doesn’t own the cabs that ply. It is an aggregator that brings hotel at one place, at your fingertips. The journey of OYO started with one hotel in the year 2013 and went on to sign up more than 6,500 hotels until COVID-19 happened.

In doing a case study for OYO rooms, we found that its badly impacted by COVID-19. Coronavirus has impacted economies all over the world, but the hospitality industry is shattered. Flights aren’t operating, and customers are cancelling their bookings for the coming months. Forget international border, even domestic borders within states are closed.  The hotel unicorn, however, tackled it beautifully, until it gave up.

Its initiative of donating a night to homeless and needy people amid the pandemic threats, rooms for self-isolation for patrons who don’t want to endanger their families during the quarantine were innovative and appreciated.

Ivanka Trump, the senior advisor the U.S. President Donald Trump, also lauded its initiative to offer free stays in OYO Hotels in the U.S. to the first responders.

OYO Offers Heavy Discounts on Hotels

The startup also tried to salvage its business by offering a whopping fifty per cent off to its customers for post-lockdown travel plan.  However, with the pandemic, it has all become insignificant. It will take a few months for people to muster the courage to travel again for leisure or even business. Travel is anyway, a discretionary spending and economic collapse in the world, it is all downhill for the hospitality industry, including OYO.

Though even before the pandemic, the hotel unicorn was facing a few crises mainly for not honouring its contracts and delayed payments in India and China – its major markets but with COVID-19 it is headed towards an unmitigated disaster of ultimate proportions. Many thought of this unicorn brand being overvalued as WeWork (another SoftBank-funded startup peer). However,  the OYO management felt that it could wash this reckoning over by taking strict steps against inadequate performing assets and properties, reducing operational costs and asking more money as a commission from hotels.

OYO Capture Price Sensitive Market

Besides, the established hotel chains such as Marriott International, HTDC, Panoramic Group of Hotels, Lemon Tree Hotel have more significant turnovers and loyal patrons, which is unlikely a case with OYO- a platform operating on deals and profits and for the price-sensitive segment. Many times customers complain that they get better deals without an OYO booking as the hotel could easily give them a discount. The startup often counters it with the guarantee of services and facilities but, for a segment that doesn’t flex on price, it rarely matters.  No wonder, at the end of the fiscal year 2019, OYO reported a loss of about $335 million on revenue of $951 million.

While we can’t 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 perception of being only for the price-sensitive customer group. It is a technology-oriented marketplace and doesn’t have to encounter the usual challenges faced by a hotel. However, the urge to become a market power, increase valuation and to stay ahead of the curve is as-is. Besides, there are several e-commerce marketplaces such as Yatra and Trivago in the hospitality segment operating on similar lines of networking. Even the traditional hotels and hospitality giants are now online, and you can book your rooms within a few clicks too. You see, 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.

OYO COVID-19 Crash

However, in the wake of the COVID-19 market crash, Ritesh Agarwal shared a video message with employees stating that the revenue of the company has plummeted to an all-time low of sixty per cent and the cash runway is under extremely duress.

As a result, the company is now compelled to operate under severely reduced capacity. It means the company is shutting its door on all acquisitions and reducing capital expenditure drastically. In its pursuit of cutting every unnecessary operating cost and conserve cash, the company had already curtailed 5,000 jobs across departments. However, the once aiming-to-be-a-hotel-superpower in the world, Oravel Stays Private Limited or OYO has assured its 25,000-strong workforce to stay strong and not to fear any more “firing” as of now.

While Agarwal seems hopeful that the OYO family will emerge more reliable and more resilient after this, the ground reality is that it needs another saviour and a large round of capital to survive this scare.

The United States fiasco has also tarnished the brand’s reputation irreversibly. The New York Times has claimed in a report that the company is fuelling unethical practices and toxic work culture for its vision to become the largest hotel chain globally.  The report suggests that OYO advertises unavailable rooms to its patrons on the website, hands-out better rooms for free to lawmakers as a favour and sideline any complaint and refuses to pay its customers and collaborating hotels in case of a dispute.

Its shows lots of ups and downs in economic zone of OYO in make a complete research for OYO rooms case study.

Conclusion on OYO Rooms Case Study

Agarwal’s vision or risk-taking capabilities led the company to 80 more countries. Be it the Netherlands or the U.S; it bought hotel brands to affirm its presence and increase its reach in the offshore hospitality industry. It even ventured in China (notwithstanding China’s stance on foreign companies), and in just two years from its launch became the second-largest chain in the country.

However, at present, it seems that a high-risk strategy has cost the company dearly. No business is going to touch China for a very long time. It has already lost its stance and power on home turf due to several bad customer experiences and social media failures. International ports and borders will remain closed too. There will be severe travel restrictions, and as a result, the hospitality industry like OYO will suffer badly.

To stay afloat, the company has terminated contracts with employees and sent them on furloughs in international and domestic offices.  Agarwal too has forgone his salary for one year and has also evoked the Force Majeure clause with its partner hotels. It means that the hotels will be paid for bookings and not be handed out monthly payments for collaborations. The company’s official spokesperson has reiterated its commitment towards employees and assured that it is not terminating its employees or freezing out the operation in any country. However, it may revisit its business model by retaining only beneficial properties to raise more liquid cash flow.

References

http://www.ijemr.net/DOC/OnYourOwnAnOyoStory(325-331).pdf

https://www.business-standard.com/article/international/covid-19-ivanka-lauds-oyo-rooms-for-offering-free-stay-to-doctors-in-us-120032500250_1.html

https://www.thehindu.com/business/oyo-rooms-to-place-employees-on-furloughs/article31292772.ece

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