Exploring OYO’s Business Strategy: An Analytical Overview
The hospitality industry has always experienced unrivaled growth and competition. Many players have tried to gain a foothold in the industry, but only a few have managed to create a disruptive impact. One such company is OYO, which has made significant strides in the hospitality sector over the last few years. This article delves into OYO’s business strategy and explores how the company has managed to disrupt the traditional hotel industry.
The Birth of OYO
OYO was founded by Ritesh Agarwal in 2013 with a simple idea – to provide affordable accommodations to travelers without compromising on quality. Initially, the company started as Oravel Stays, a hotel aggregator that provided budget accommodations. However, after a few months, Ritesh realized that the hotels listed on the platform did not meet the expected standard of quality and customer experience.
To overcome this challenge, OYO invested in technology and a unique operating model that enabled it to tie-up with small budget hotels and convert them into standardized, branded properties. The company started using a franchise model and took complete control of the quality of the customer experience. This was a turning point for the company and the hospitality industry.
Growth Strategy
OYO has been following an aggressive growth strategy right from the beginning. The company has raised more than $3 billion in funding, and this capital has been utilized to expand its operations beyond India. Today, OYO has a presence in almost 80 countries, and its properties can be found in over 800 cities globally.
The company has been expanding inorganically through partnerships and acquisitions. For instance, in 2018, the company bought the Hooters Casino Hotel in Las Vegas for around $135 million, marking its entry into the American market. OYO has also partnered with SoftBank to expand its services in Japan, and it has plans to invest $100 million in the country over the next few years.
Technology
One of the reasons why OYO has managed to expand at an exponential rate is its focus on technology. The company uses data analytics, artificial intelligence, and machine learning algorithms to study consumer behavior patterns and personalize the customer experience. Additionally, OYO’s technology platform enables it to provide a seamless user experience from booking to check-out.
The company has also launched various tech-enabled solutions such as Krypton, an artificial intelligence-based chatbot that assists customers with booking queries, and OYO OS, a proprietary operating system for hotel owners that helps them manage their properties efficiently by providing real-time data and insights.
The OYO Business Model
OYO follows a franchise model, which allows it to expand without owning any physical assets. The company ties-up with small independent hotels and provides them with branding, operational and marketing support, technology integration, and other services. This has been a win-win situation for both OYO and the hotel owners.
OYO takes a percentage of the sales generated by its franchisees as revenue, and the hotel owners benefit from being part of a well-known hospitality brand, which translates into better occupancy rates and higher revenues. This business model has disrupted the traditional hospitality industry, and many hotel owners have joined OYO’s network worldwide.
Conclusion
OYO’s business strategy has been a game-changer in the hospitality sector. The company’s focus on affordable accommodations without compromising on quality, coupled with its unique franchising model, has led to unprecedented growth. OYO’s success can be attributed to its technology-driven approach, which has enabled it to provide a seamless customer experience, increase operational efficiency, and expand globally.
OYO’s growth story provides valuable lessons for other disruptive players in the industry, and its innovative business model and tech-enabled solutions have the potential to transform the hospitality industry as we know it.
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