You can hardly find a person in today's world who does not know about OYO. Such has been the expansion and influence of this hospitality company.
The growth of OYO Hotels & Homes has been phenomenal. From starting out in April 2013 to becoming the world’s third-largest and fastest-growing chain of leased and franchised hotels, homes & living spaces, OYO has come a long way.
For those who don’t know, OYO stands for ‘On Your Own’. The platform has now become a synonym for budget-friendly rooms. People know it for its affordable accommodation services. The company has kept on adding feathers to its cap ever since it came into the market.
Its founder Ritesh Agarwal has achieved the feat of being the World’s Youngest Self-made Billionaire after Kylie Jenner in February 2020. Amid all this success, the company had to face many challenges as well.
We all know the success the company has got but very few people know the whole story behind OYO. How was it started? How does it extend its services? What is the business model of OYO?
Through this blog, we have tried to answer all these questions.
The Story behind OYO
Ritesh Agarwal, a college drop-out, always had the intention to start something of his own. At the mere age of 17 years, in 2011, he came up with the idea of Oravel stays which was later re-launched in 2013 as, what we know today, OYO Hotels & Homes.
There are some stories behind the setup of this platform, starting with the early life of Ritesh Agarwal.
The Journey of Ritesh Agarwal
Ritesh Agarwal was born in Rayagada, Orissa. He went to the Sacred Heart School in Rayagada. Right from his school days, Ritesh was inclined towards computers, software and coding.
In 2009, Ritesh left for Kota with an intention to get an entry in top IIT colleges. Later, he realized Kota wasn’t a place to learn coding and hence gave up on his coding dream. He was left with a lot of spare time, so he started working on a book: ‘Indian Engineering Colleges: A Complete Encyclopaedia of Top 100 Engineering Colleges’. This was a hit.
Since Ritesh used to travel a lot, amid his trips, he stayed in different hotels. This gave him a realization about the poor hospitality facilities he got at different places.
This motivated him to create an accommodation system where people can get the best rooms, food, staff, and other services in a given budget. He created Oravel Stays in 2011, an aggregator of breakfast and bed stays, inspired by Airbnb’s model.
“Leaders shouldn’t just build and accumulate wealth but give back to society.”
- Ritesh Agarwal, Founder and CEO, OYO Hotels & Homes
In 2013, Oravel Stays was relaunched as OYO Hotels & Homes to create India’s largest chain of affordable, standardized hotels.
Also, Read - How OYO Uses Technology
About OYO’s success
OYO did not become a success overnight. It also had to go through some sequence of events and rough phases. The company’s business was also impacted by the COVID outbreak.
After starting in 2013, OYO went on to acquire rooms in hotels across the country and transformed them into OYO. The company’s sole aim was to make accommodation good and affordable for its people.
OYO has continuously grown after 2013. It first started its services in India, and today, after 8 years of establishment, it operates in 800 cities in more than 80 countries of the world.
The company started its international operations in 2018 starting with Malaysia. It then entered into the markets of the UK, UAE, Dubai, China, Singapore, Indonesia, and others.
In 2018, the company became a 100% leased & franchised hotel chain. It recorded global stayed room nights of 75 million in 2018, almost six times more than in 2017, and collected a revenue of $211 million. In 2017, 2016, and 2015 it recorded global stayed room nights of 13m, 6m, and 4m respectively.
In 2019, OYO generated a revenue of $951 million and witnessed an increase of 740 million dollars, 4.5 times more than 2018.
As of now, it has acquired more than one million rooms in over 43 thousand hotels. Through its vacation homes business, the company offers travellers and city dwellers access to over 130,000 homes around the world.
OYO now operates under the name ‘OYO Hotels & Homes’.
Timeline of OYO’s Journey
OYO was also surrounded by some crises and controversies that made headlines. The company was accused of cheating and fraud. Some suspect incidents also took place in some of the OYO.
In 2019, a Bengaluru hotelier filed a cheating case against Ritesh Agarwal and six others claiming that they had not paid him his dues. According to the complaint, he claimed that OYO was supposed to pay him ₹7 lakh a month but they have failed to do so. However, OYO rejected any such allegations.
The hospitality company was also alleged for fraud. Hotel owners had raised a point that the company charges a franchise fee of 20% on room revenues, it ultimately takes more money through different sources that aren’t disclosed initially.
In the same year, a national-level shooter was found dead in an OYO hotel reportedly due to electrocution. In 2018, an OYO hotel employee in Gurgaon was accused of raping a woman when her husband was away. In both cases, OYO said it was coping with authorities and helping in the investigations.
Impact of COVID on OYO
Like all the businesses, OYO being a hospitality company was also hit severely by the outbreak of coronavirus. Ritesh Agarwal in his address to OYOpreneurs said that the revenue and occupancy went down by over 50-60% in April 2020.
He also pointed out in the video that its global partners incurred a loss and the revenue went down by 75%. As a result, its employees had to go through a pay cut by 25%.
Hear what else he had to say through this video.
Since OYO was started by a young boy, merely seventeen years of age, it required funds to grow its business. Ritesh’s idea made a great impact on investors and has attracted so many of them over the years.
After receiving a grant of $100,000 under the Thiel Fellowship, OYO in 2014 raised Rs 4 Crore from LightSpeed Venture Partners (LSVP) and DSG Consumer Partners at a pre-money valuation.
In March 2015, OYO received funding of $25 million from its investors namely Lightspeed India, Sequoia, and others. The same year in July, OYO received a whopping amount of $100 million in a Series C round of funding from the most prominent and powerful investor in the world, Japanese investor SoftBank.
In September 2018 OYO got itself listed in the list of unicorn companies after it raised $800 million from SoftBank.
In 2019, OYO raised a total of $807 million from Ritesh Agarwal-led RA Hospitality Holdings and SoftBank in series F funding. Apart from this, OYO bagged funds from Airbnb and Didi.
OYO’s latest funding has come from Microsoft in July 2021. The firm invested $5 Million.
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OYO meeting consumer needs across segments
After victoriously conquering the budget hospitality space through their first brand OYO Rooms, OYO Hotels & Homes presently holds a multi-brand approach, through well defined offerings addressed towards the varying requirements of the travellers in today’s world.
The platform combined its hotel brands (OYO’s Townhouse, Collection O, SilverKey), OYO LIFE (student housing and co-living), OYO Workspaces as well as OYO Home businesses into Frontier businesses.
SilverKey provides furnished accommodation to corporates for their personnel stay. Established at the core of business hubs and accompanied by spacious rooms, upscale interiors, meals, and dining areas, it attends to all the needs of business travellers.
Collection O provides larger and spacious rooms having facilities like premium furnishing and linen, on-request laundry, unlimited breakfast, 24X7 in-room dining, high-speed WiFi, workstations for each room, and OYO-trained customer services.
Weddingz.in offers customers a fully managed, one-stop platform for all their needs to organize a superlative wedding experience including providing beautiful and spacious venues, managing themed decor, end to end catering, in-house photographers and makeup artists guided by a dedicated wedding planner, all at guaranteed best prices
OYO LIFE provides long-term rented accommodation furnished with amenities at affordable prices. OYO Life is targeted at millennials and young professionals who need managed homes on long-term rent. Under this category, OYO offers tech first, comfortably furnished stays with amenities such as wifi, housekeeping, power backup, and community kitchens with a strong assurance of safety and hygiene
Established in July 2019, OYO Workspaces debuted its multi-brand approach to the managed workspaces opportunity in India (a first for the market) with two organic co-working brands- Powerstation and Workflo, alongside acquiring Innov8 and providing ergonomically designed workspaces befitting for every pocket.
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OYO Business and Revenue Model
Stepping out into the world in 2013, the young hotel startup, OYO Hotels & Homes, is now the world’s leading chain of Hotels & Homes, having a presence across 800 cities and 80 countries across the world. The company operates an asset-light chain of predictable, easy to book, low-cost accommodations globally and also allows its 43,000+ hotels and 150,000 vacation homes to gain from the rise in occupancy, and hence revenue.
On a global scale, OYO has started out as a leading vacation home rental platform, offering beautiful homes across Europe through its brands Belvilla, Dancenter, and Traum Feirenwohnugen. The company recently acquired TUI Ferienhaus from e-domizil GmbH that has helped OYO in becoming the second-largest global vacation home business by the number of homes.
The focus of the platform is serving its customers with dependable, sanitised, value-oriented stay experiences, which is done by simplifying booking and offering a large range of hotel options for their customers to select from in the same neighborhood, at a price that is in pace with their budget.
In the case of asset partners, OYO offers its proprietary technology and tech-driven solutions to guarantee hassle-free operations on the ground. It provides end-to-end revenue ownership, that includes pricing, third-party distribution, and higher revenue for partners via its direct channels while also eliminating day-to-day operational hassles.
When it comes from the perspective of the company’s employees, OYO is a workplace that allows thousands of talented professionals the opportunity for achieving their full potential. There’s never a dull day for OYOpreneurs. From solving complex issues and enjoying the opportunity of collaborating with the best global talent, they can in turn seek to make their own mark.
The platform is backed by key investors, who include SoftBank Vision Fund, Sequoia Capital, Lightspeed Ventures, Hero Enterprise, and China Lodging Group, and some others.
The company plans to raise Rs 8,430 cr or $1.2 bn through the public listing in early 2022. The offer comprises fresh issuance of up to Rs. 7,000 cr or $966 million and an offer for sale aggregating up to Rs 1,430 cr or $197 million.
OYO Awards and Accolades
Business World Young Entrepreneur Award (2015)
Digital Champion of the Year at Brand Excellence Awards (2015)
Star Youth Achiever Award at 8th YOUTH MARKETING & SOCIAL MEDIA FORUM (2016)
NDTV Dream Chaser of the Year (2016)
Forbes 30 under 30 - Consumer Tech (2016) (Global, India, Asia)
Fortune 40 under 40 (2016) 1
The Economic Times 40 under 40 (2016)
Asian Centre’s New Age Entrepreneur Award (2017)
Gaurav Samman by The Government of Haryana (2017)
GQ India - 50 Most Influential Young Leaders (2016, 2017)
Real Innovation Awards by London Business School - If you don’t succeed at first category (2017)
Best Entrepreneur of 2018 by International Hospitality Council (IHC) (2018) 3
StartAP Entrepreneur of the Year Award (2018)
Forbes India Tycoons of Tomorrow (2018)
Dataquest IT Person of the Year (2018)
CNBC’s Young Turk of the Year (2019)
The Open Republic Achievers Awards - Business New Age category (2019)
BTVi National Awards for Marketing Excellence: Young Achiever of the year (2019) - Ritesh Agarwal
BTVi National Awards for Marketing Excellence: CEO of the year (2019) -Ritesh Agarwal
Ritesh Agarwal, Founder & Group CEO, OYO Hotels & Homes won 'The Millennial Maverick' Award at GQ & Mercedes-Benz Restless for Tomorrow Awards (2020)