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Business

Model of OYO Rooms


OYO Rooms is an aggregator that provides a market place for online hotel booking similar to Uber, which
provides a marketplace for online cab booking. Started in the year 2013, OYO is turning into Indias
largest chain of hotels. It has a very simple business model where it adopts hotels, get them to follow
certain basic standards of services, features, sta, pricing and security and then list them on its web
portal and sells them under its brand, earning a part of the prot from the deal. Currently the company
is following invest and expand mode. Till now it has received funding from the big rms like Sequoia and
is esKmated to be worth $400 million aNer its latest round of funding in August this year, where it
received $100 million.
OYOs asset free business model has now challenged the capital heavy hotel industry. The company does
not own any of the properKes listed on its site. It only invests in markeKng and quality improvements for
the hotels under its banner. The model provides a win-win situaKon for both the small budget hotels and
owners of spare properKes, who do not have enough capacity, network and knowledge of smart
markeKng. OYO has helped them increase their bookings by more than 100% thereby improving their
yields.

Unique Selling Proposition


Finding hotels in India is not a big problem, the major issue is the trust factor and predictability of
services. OYO founder, Ritesh Aggarwal, capitalized on this basic need by providing standardized hotel
rooms across the country. The complete model of hotel industry is based on consumer experience, and
with the beauKful amalgamaKon of technology and quality control mechanisms has improved customer
experience even at economical rates. The complete model is designed keeping in view the consumer
experience, right from booking to nding hotel to standardized services to high technology room service
opKon. To further enhance the customer experience, company has Ked with Airtel to provide its
customers a world class in-room internet and TV viewing experience at no addiKonal cost.
OYO rooms has also started two new sub-divisions to increase its hold on the market:
OYO Premium Moving from the budget room segment, company has also started premium room
service in metro ciKes to increase its customer base. OYO premium rooms will cater those business
travelers or families who are looking for premium services and are ready to shell out few extra bucks for
higher comfort.
OYO WE OYO WE a Women exclusive brand, started by OYO Rooms to cater for women travelers with
all women sta and special ameniKes for women. Some of the features parKcular to this category
include automaKc door locks, hair dryer, full length mirror in rooms, doctor and beauty services on call,
apart from library with magazines for women and cab services outside the property.

Customer Segment
The soul of any business lies in the customers it serves. No business model can survive without taking
into consideraKon the customer segment it wants to cater its product or services. And then create the
rest of the model based on needs and demands of your customer.
Since OYO works as a pla\orm that serves two interdependent customer segments, the visitors and the
hosts:
1. Hosts
In this secKon the company targets anyone who has a spare room or property that can be rented giving
the owner extra income. The owner has to spend some iniKal amount on the room to make it as per the
standard set by OYO. Currently it has Ke-ups in 158 ciKes in the country and has around 5000 hotels.
2. Visitors
The hotel industry in the country has been tradiKonally dependent on tourists both travelling across the
country and the tourists from abroad who come to see the diverse culture, climate and historical places.
Another growing segment of the customers are business travelers. This segment prefers comfort and
normally have a long stay which may even extend to months in many cases depending on the project
requirements.
Even for budget hotels of the category of OYO, these two customer segments stand valid as the trend of
staying in luxury hotels has recently shiNed to budget hotels where along with low costs, people feel
more connected to the place. It also proves to be economical for business travelers who have to stay for
prolonged duraKons and are looking for a more authenKc staying experience than the one they get in a
hotel.

Another consumer segment that has emerged lately is the students, families and entrepreneurs who are
looking for short duraKon stays. Some of the entrepreneurs have been permanently staying in such
rooms that cost around 1K, and proves to be cheaper than 3 BHK at, where they also have to pay for
brokerage, electricity and basic ameniKes. Also this gives them an opKon of shiNing from one locaKon to
another on need basis and they do not have to bother about hunKng for new places to stay. For students
who come on weekends to metros to take coaching, this is a good opKon as they can rent rooms on
sharing basis, thereby reducing there need to rent a place in metros.
Oyo Rooms claims that its target audience is divided between customers and consumers. Its customer
ages between 21 year to 35 year while its consumer is between the age of 16 year and 65 year.

Value Proposition
Value proposiKon basically denes the value being served to the customer segment that you have
chosen. It denes the parKcular need of the customer that your product or service is saKsfying. This can
also be seen as the dierenKaKng factor that makes your customer come to you rather than other
compeKtors in the market. Dierent kind of value proposiKons can be newness, performance,
customizaKon, design and price.

1. Standardization
The major problem faced by the consumers is the lack of predictability in the Indian hospitability
industry. More than 50% of the bookings by travelers are now being done online, and the numbers are
further increasing. In most of the cases, people feel dissaKsed with the services that are oered when
they reach the hotels as compared to the services shown online. To tackle this problem, the company
has introduced an intensive standardizaKon process. As a part of this process they send their sales
representaKves to partner hotels to collect data and take pictures based on which all the hotels are
ltered. Only those hotels that meet the standards are included in the por\olio.
The company has also came up with an applicaKon to make sure that the process of standardizaKon
remains same in all the hotels across 150+ ciKes. All the sales representaKves that go for site visits follow
the app on their tables. The app has dened parameters based on which any hotel will be evaluated. The
representaKve checks down the complete checklist to make sure nothing is leN as a part of the
standardizaKon process. Also the applicaKon takes into consideraKon the customer reviews which plays
crucial role while evaluaKng any hotel. Making use of the applicaKon and technology, the company has
been able to come up with strict quality checks across all the locaKons where they exist.

2. Technology
Success lies in taking the best use of available technology in a way that maximizes eciency of your
business thereby leading to higher customer acquisiKon and thereby prots. A lot of innovaKon these
days is happening around making the consumer experience beger with the help of latest technology.

1. Mobile Application for Hotel Booking


The key factor where technology plays a major role is in making the transacKon cycle smaller. In the
hospitality industry where you are always in a touch-point with customer, the company focused on
creaKng a highly ecient, easy to use mobile applicaKon for the customers. The company managed
to develop an applicaKon where a customer can book the hotel within 2 steps. In rst step, you
search your query, based on which the applicaKon comes up with a number of suggesKon in the
locality. The second step will be just to click the book bugon to conrm your booking. This is an
agempt of the company to provide a simple and seamless way to access and manage your booking.
A major contributor to the two-step process developed is the standardizaKon process which has
made the used comfortable in booking without worrying about reviews of the place.

2. Tablets in Rooms
This is another step taken by OYO Rooms, where the company has come up with a tablet applicaKon
for hotel owners that allows them to keep a track of room status and room service requests. The
tablets have been installed at all the hotel locaKons by the company. This helps both the hotel

owners and the company. The app provides the owners logisKcs of their inventory whereas also
provide beger visibility and data about the hotel to the company.
The company has now also come up with an idea to put up a tablet in each room in some of the
hotel rooms. Customers can order room service directly via the tablet. The applicaKon designed for
the tablet also includes other informaKon like hotel directory along with the list of restaurants and
other places to visit around the hotel.

3. Low cost
Another major value proposiKon provided by OYO is the prices at which rooms are available. The
prices are normally 35% below other hotels of similar standards. Also this is the rst Kme in India
that services like tablet and online booking are being provided in budget hotels.

4. Ties up with Airtel


To further increase its value proposiKon, OYO rooms has recently made a strategic agreement with
BharK Airtel. As a part of this agreement Airtel will provide seamless internet connecKvity and
Direct-To-Home (DTH) services across more than 3,000 OYO Rooms pan India enabling OYO Rooms
customers to enjoy a world class in-room internet and TV viewing experience at no addiKonal cost.

Channels
This secKon caters to the channels through with the chosen customer segment want to be reached.
Either you reach them directly or indirectly, physically or digitally. OYO connects with its customers via a
number of channels:

1. Mobile Application
OYO Rooms launched the Mobile ApplicaKon pla\orm that allowed the customers to do last minute
hotel bookings. With the help of the applicaKon, booking has been made extremely simple. A room can
be booked within a minute just by following two simple steps of searching and clicking on book.
ApplicaKon also provides the opKon to order room service.

2. Web Portal
A customer can book a room online through web portal as well where all the partners of OYO have been
listed. A booking can be made free of cost and payment can be made at the hotel. The portal also
provides informaKon about the city you are planning to visit along with the details of places to eat and
shop nearby.

3. Telephone
In case a person is not able to connect to internet, there is also a provision to make the booking via the
channel of Telephone. A customer can make a booking by calling 9313931393. CancellaKons can also be
done with this channel.

4. TV Commercials and Social Media


OYO has also made its presence felt to customers via mass commercial and social media. OYO Rooms has
3 lakh fans on Facebook and 9000 followers on Twiger. The social media campaign of JaiHind that
featured Manoj Bajpai and Raveena Tandon was the most successful campaign of OYO Rooms. The
startup has also launched three commercial on Television with #AurKyaChahiye campaign. As per the
company the reason for taking the mass media route is that although the brand has been a product of
digital domain, but its consumer base includes even those who are not present on digital media. By
providing there commercials on television the company is agempKng to connect with those masses that
live in small towns and are not tech savvy.