PROJECT REPORT

OYO ROOMS

SUBMITTED BY:
SHIKHA CHAUHAN
MCOM SEM III
GROUP D
INTRODUCTION
Oyo Rooms is a network of budget hotels based out of India. Launched by
Ritesh Agarwal the concept was fairly new and thus was accepted well by
urban India. What started off as a one room one city thing in Gurgaon today
has around 70,000 rooms across 8500 properties in 230 towns? The
concept of Oyo rooms was that of an aggregator which was essentially a
listing of budget hotels and homestays which users who wished to arrange
accommodation could select and book.

The website was known as Oravel. Later this was upgraded to a set of
rooms which provided budget accommodation to people. Today Oyo has
services in India, Malaysia, and Nepal and is slowly emerging to be a
solicited option for the budget stay by both families and single travelers.
They also have tie-ups with corporates and business houses
for extended stay options.

How did RITESH AGARWAL’S

journey begin?
 The journey of our hero began rather early than normal! Ritesh was born to a
business class familY Bissam Cuttack in Orissa and attended the Sacred
Heart School in Rayagada, Orissa.
 During the growing up days in Rayagada, Odisha, it was all about fun and
learning for him but his ways were rather unconventional from those of
other kids.
 Interestingly, he had started coding when he was just eight years old. So
software had obviously become his love. And by the time he reached his
 10th grade, he had made up his mind that he wanted to take up coding for a
living.
 In 2009, Ritesh left for Kota to join IIT and in no time he figured that Kota
was anything but a place where one could learn coding. Hence, his dream of
coding took a backseat and as he had a lot of time to spare, he started
attending Bansal Tutorials that his dad had got him enrolled into. The rest of
the time he used to just chill and travel around a lot.
 He even started writing a book and ended up inscribing – ‘Indian
Engineering Colleges: A Complete Encyclopaedia of Top 100
Engineering Colleges’. This book turned out to become huge on Flipkart
and was sold out in a while too. In fact, the tutorials he went to also had this
book and his picture was right on the cover.
 When he turned 16; Ritesh was chosen among the 240 children to be a part
of the Asian Science Camp held at the Tata Institute of Fundamental
Research (TIFR) in Mumbai. The camp was an annual forum for pre-
collegiate students who aimed at promoting discussion for the betterment of
science in the region.
 During that time; Ritesh also used to travel a lot, and stayed in PG’s, budget
hotels, etc. And because there was nothing left to interest him about Kota, he
often used to take a train to Delhi. He used to stay at odd bed & breakfast
(B&B) places and attend events and conferences to meet entrepreneurs and
because he couldn’t afford the registration costs, he would often just sneak
in.
 , Ritesh during his days had seen and always felt that budget hotels in India
didn’t even meet the very basic needs of a budget traveller. Hence,
capitalizing on this opportunity, he started his first venture in 2012 – Oravel
Stays! It was an aggregator of bed and breakfast stays across India.
 In simpler terms, it was meant to be destination for short and midterm
rentals for bed and breakfast joints, private rooms and serviced apartments.
 In a matter of no time, he also secured funding of Rs 30 lakhs from
VentureNursery, an accelerator firm which brought together a bunch of
storied investors to nurture start-ups.
 With sufficient money in his pockets, he started working on his new found
interest and at the same time, he also presented his idea at the Thiel
Fellowship – a global contest intended for students under the age of 20. He
managed to reach amongst the top ten winners who received a sum of
$100,000 [over two years (about Rs 2.7 lakhs / month)] as well as guidance
and other resources, to drop out of school and create a start-up, from PayPal
co-founder and Facebook investor – Peter Thiel.
 With the new found confidence, he started working even more rigorously
but to his hard luck, their business model didn’t seem to be picking up. And
as much as he tried, things just weren’t falling in place.
 Ritesh even got Manish Sinha of Gurgaon based Cinnamon Stays, as their
co-founder but unfortunately, it still didn’t help and Manish eventually had
to quit the company. As a matter of fact, they even tried replicating the
AirBnB model but that also didn’t work and the company was not able to
pick up or get substantial transactions.

FUNDING
 In March 2015, OYO raised Series A round of funding $24 million
from Lightspeed Venture Partners, Sequoia Capital, Greenoaks
Capital and DSG Consumer Partners.[12] In August 2015, OYO raised
another $100 million from Softbank Group, a existing investor.[13]A
year later, in August 2016, OYO raised $90 million from Softbank
Group, Innoven Capital and existing investors.[14] In September 2017,
OYO announced it had closed a $250 million series D round of
funding led by Softbank Group, new investor Hero Enterprises led
by Sunil Kant Munjal, Sequoia Capital, Greenoaks Capital
and Lightspeed Venture Partners.[15] China Lodging made a strategic
investment of $10 million in OYO in September 2017.[16]
 In late 2017, OYO launched OYO Home, an Airbnb-like marketplace
for short-term managed rentals. OYO Home has presence in more
than 10 leisure destinations of India including Goa, Shimla,
Pondicherry, Udaipur, Kerala etc. In April 2018, OYO launched its
first international OYO Home in Dubai.[17][18]
 OYO raised it first ever funding from DSG Consumers Partners,
Lightspeed on 1st MAY 2014,which is estimated to be $ 650k.
 The second funding was a turning point, The amount was about 25
Million dollars, It was by Greenoaks Capital, Lightspeed Venture
Partners, Seqouia Capital.
 Later Softbank a well known Japanese Company, Took a lead by
investing 100 Million dollars.
  Looking at the rapid growth and potentials of OYO Rooms, Softbank
has invested another 250 Million dollars in the firm.
 OYO Rooms eyes another 500 Million Dollar investment from
Softbank, To enter the unicorn club(for startups valued at 1 Billion
Dollars).

BUSINESS MODEL
Consistent quality is one thing that stands apart. Value Innovation is a
central concept in Blue Ocean Strategy. Through this concept
organizations can unlock immense value to customers and simultaneously
reduce the cost to the company. Value is usually attached to tangible
things, but in reality, true value to customers need not be something path
breaking. For example, by providing valet parking when you visit your
bank’s down town branch, the bank can unlock huge value. But valet
parking is such a silly and trivial aspect as against bank’s core product
features that bank may see it as a distraction rather than value add.

Oyo brings ‘predictability’ as a key value that is usually missing with budget
hospitality sector. For prices as low as Rs.1000 per night, one gets free
wifi, breakfast, flatscreen TVs, spotless white bed linen of a certain thread
count, branded toiletries, 6-inch shower heads, a beverage tray, etc., Oyo
also have room recommendations for solo travelers, couples, business
travelers, women, etc. Most of what you see in 3 star hotels such as fancy
lobbies, elegant lounges, superior spa, etc. are often not the reason one
chooses such hotels. Instead, basic hygiene, descent environment and
predictable service drive customers to such branded hotels. The core to
Oyo’s value innovation is to eliminate fancy aspects but retain aspects such
as hygiene and predictability. As a result, Oyo is able to drastically reduce
the price per room (in comparison to 3 Star) and simultaneously but
disproportionally increase the value to customer. Oyo unlocks
disproportionate business by attracting 3 star customers to trade down
while non-star customers trade up to Oyo Rooms. Thus Oyo is capturing
the both segment of customers! To understand this better, let’s look at that
strategy canvas, a critical tool of Blue Ocean Strategy used to create value

innovation.

Strategy Canvas is one of the simplest, yet most powerful tools of Blue
Ocean Strategy to visually identify the factors that any given industry is
competing on. It helps to strategize how differentiation can be carved out
as against competition. Each factor in the graph that unlocks value to
customers is rated in the 10 point scale and compared against competition
or industry strategic groups. Oyo is a evident case of Blue Ocean because
in comparison to either the existing star hotels or non-star hotels, Oyo has
chosen to differentiate themselves by Eliminating some existing features,
Reducing some features, Raising some and simultaneously Creating few
new features. Traditionally companies focus on outserving the competition
but Blue Ocean advocates differentiation through Elimination, Reduction,
Raising and Creating.We should credit Oyo not only for their excellence in
execution, but also in striving to find innovative ways to keep the financials
intact. For example, Ginger Hotels unsuccessfully tried to target the same
segment despite having own/leased properties. On the other hand, Oyo
Rooms has positioned itself as an aggregator brand rather than a
traditional hotel chain. This has helped them to stay fit on capital and
operational costs, and more importantly, ramp up in no time. In order to
create Blue Ocean in your own industry, consider the steps involved in
creating Blue Ocean are illustrated in the below image:

Oyo Rooms is already facing the heat of competition of me-too brands. In

order to sustain position, Oyo will have to constantly refine its offering to
unlock value for customers. For example, none of the Oyo Rooms has
overnight laundry or iron box on the house. Super imposing the Blue Ocean
Strategy and its framework is only an attempt to learn how innovations can
become predictable rather than a chance of luck or brilliance of genius.
SWOT analysis of Oyo Rooms
Strengths in the SWOT analysis of Oyo Rooms :
Strengths are defined as what each business does best in its gamut
of operationswhich can give it an upper hand over its competitors. The
following are the strengths of Oyo Rooms:

 Standardisation: The Oyo rooms are mostly owned by various

providers but have just been standardized under the Oyo franchise and
thus people are guaranteed of standardized service in all Oyo rooms
wherever they may be located.
 Ever growing network: What started off as a one room one hotel thing
in Gurgaon now has around 8500 properties to its credit and an
additional inventory of 4000 motels and homestays? This is a clear
strength.
 Spirit of Innovation: The root idea or need from which Oyo rooms were
conceptualized is a highly innovative one of a one-stop shop for a budget
stay in India. The company continues to maintain its strong spirit of
innovation as is evident from the policy to standardize rooms amongst many
others.
 Subsidising Hotel Stays: Oyo subsidizes rooms to make them
affordable for customers and similar to Ola and Uber have emerged
successfully in their line of business.
 Young and highly spirited leader: The founder of Oyo Ritesh
Agarwal is a youngster who has won a lot of accolades and besides
entrepreneurship caters to a wide range of interests. This is reflective
of every strategy that Oyo adopts since there is a freshness to the
approach taken which is one strong reason for its instant success.

Weaknesses in the SWOT analysis of Oyo Rooms :

Weaknesses are used to refer to areas where the business or
the brand needsimprovement. Some of the key weaknesses of Oyo rooms
are:

 A strategy of co-branding: Oyo does not own any of the rooms that it
lets out. But it is more like a hotel aggregation platform where the buyer
and seller are allowed to transact with each other through a common
window provided by Oyo. Thus they just cobrand with various budget
hotels but do not own the rooms.
 Poor service quality: Though Oyo has tried to standardize amenities
for each room based on the prices they charge, they have not been
able to do the same with services. This has made the service quality
and reliability highly questionable.
 Tight margins: Hotels that are on a tie-up with Oyo can also loop in
other agents for which Oyo cannot do anything much to circumvent. In
this context, the model thrives solely on how well the margins they
provide for their hotels are which can be risky in the long run.

Opportunities in the SWOT analysis of Oyo Rooms :

Opportunities refer to those avenues in the environment that surrounds the
business on which it can capitalize to increase its returns. Some of the
opportunities include:

 Growing demand for aggregators: As the world reels from the

aftermath fo repeated recessionary trends, pay cuts, and job losses,
most higher end hotels are struggling to balance supply and demand.
This increases the scope for aggregators like Oyo since most hotels
would prefer to take external support for sourcing new business.
 Focus on budget accommodation: Earlier the trend was more biased
towards luxury and boutique hotels but not anymore. People are trying
to minimise spending and focus on saving and thus budget hotels that
can provide decent boarding and lodging facilities are on a high
demand today.
 A surge in the number of business travelers in emerging
economies: The number of people who travel on business from both
genders has grown profusely in emerging economies. This has resulted
in a demand for budget stays.
Threats in the SWOT analysis of Oyo Rooms :
Threats are those factors in the environment which can be detrimental to
the growth of the business. Some of the threats include:

 Competition: With lowered barriers to entry, every new entrepreneur is

looking at aggregating services. There are a lot of online portals like
ibibo, trivago, makemytrip etc which offer a varied gamut of services
similar to Oyo.
 Growing concerns about safety: Today there is negative imagery of
unsafe stays and the number of cases of harassment is on an increase.
Though Oyo does not guarantee safety at any point in time for its
hotels they have a moral commitment to ensure that no such untoward
incidents happen

Oyo Rooms Marketing Mix (4Ps)

Strategy
Marketing Mix of Oyo Rooms analyses the brand/company which covers 4Ps
(Product, Price, Place, Promotion) and explains the Oyo Rooms marketing
strategy.
Product:
Oyo Rooms is one of the most popular hotel booking online brands in India. Oyo
works on a different scale in comparison to other online room booking sites or
online travel agents. Oyo Rooms work methodology is simple that they pitch the
hotels available in different location to the customers and on booking they take a
commission fee as their income. Many times they also do one thing that they book
a few rooms of a hotel every month according to consumer request and then they
even rent these rooms to consumers at a lower rate at which they themselves has
taken from the hotel. This deal attracts consumers and make their trip way more
comfortable at a low cost. It takes only 5-6 days for Oyo to make up a deal with a
hotel after analyzing all of their services. As a comfortable service is one of their
prime motto so Oyo Rooms have also made up a special team which keep on
visiting hotels in a fixed duration to make sure that all the services are available as
stated. This gives an insight in the product & service offering in its marketing mix.
Price:
Oyo Room’s strategy is to attract customers with a lower room price in comparison
to the base price of the hotel. The main goal is to offer at an unmatched price and
which matches with the budget of user. Their room price varies from Rs. 999 to
Rs. 4000 depending on the location and luxury of hotel. Due to this discount
strategy many a times Oyo turns out to be at a major loss which is then backed by
different investors like Softbank group. Overall Oyo rooms are following a very
sensible strategy which aims to provide rooms at a moderate rate with awesome
services and generate loyalty from customers.

Place:
Oyo rooms started from a single hotel in Gurgaon and now has extended its empire
in all the parts of country along with going beyond the seas in Malaysia and Nepal.
Oyo rooms works totally online, either with an app or through online sites you can
go through the available hotels with their estimated price. You can book it online
with a confirmation and then you can avail the services on reaching the booked
hotel on specific date. So Oyo’s total delivery system is online whether it is
booking, complaint or feedback and its online system is totally user friendly.

Promotion:
Oyo prefers to promote completely through different social media sites like
Facebook, Twitter etc. Oyo uses digital platform to attract new customers with its
unique services and lower prices. Also retain loyal customers by coming up with
new discount policies further on the low prices. Oyo has also conducted various
online campaigns like #Aurkyachaiye which we can see on different other social
media sites. Many of these campaigns also included Bollywood artist to make them
appear more attractive. One of the most recent campaign is “One for everyone”
which comprises of short 8 movies where customers are showing their own
satisfaction with Oyo services.

Since this is a service marketing brand, here are the other three Ps to make it the
7Ps marketing mix of Oyo Rooms.

People:
Oyo team comprises of young and energetic people who wants to deliver
maximum both for the company and individual growth. With the dynamic team
Oyo also provides a very friendly working environment which helps in the
employees work according to their convenience, come up with new innovations
and work beyond their strengths. Even the leaders of Oyo are two youngsters who
were driven by the need to create a change in the hospitability industry of India.

Process:
Oyo helps the users to search the hotels according to the location and price. It acts
as an intermediate between the hotels and the users and on booking collect their
commission fees as their income. The services provided by the hotel is not in the
hands of Oyo but they help users in picking hotels according to their convenience.

Physical Evidence:
Oyo provides a confirmation mail to the users registered email id on booking any
room and also send them a confirmation message on their mobile number which
ensures their payment and booking of hotel. This message or email is used to show
your room confirmation while check in the respective hotel. Hence, this completes
the marketing mix of Oyo Rooms.

About Oyo Rooms:

Oyo rooms are the innovation of need and has totally changed the way hotel rooms
were booked. It is not only working in India but has also extended its empire
beyond India i.e. in Nepal and Malaysia. In India it covers over 200 towns with
more than 7000 hotels all across India. Oyo helps the hotels which does not have
fame or recognizable in hospitability industry. They make an agreement with the
hotels and offer to showcase or do branding of their hotel under the brand name of
Oyo. The main focus of this plan is to provide quality services to the guests. So
they showcase all the fundamental services along with premium services of the
hotel on their website or app to the consumers. It fulfills the objective of providing
a neat and clean place to all the guests along with fundamental facilities.

Accomplishments…!
 Awarded the TiE-Lumis Entrepreneurial Excellence Award (2014)
 The first resident Asian to win ’20 Under 20’ Thiel Fellowship (2013)
 Named one of the Top 50 Entrepreneurs by TATA First Dot Awards (2013)
 Finalist of Global Student Entrepreneurship Awards-India
 Named one of the ‘8 Hottest Teenage Start Up Founders in the World’ by Business
Insider (2013)
 World’s Youngest CEO at 17(recognized at 16)
 OYO’s traction and market coverage has swiftly increased because of being listed
with travel aggregators like Make MyTrip, Clear trip and com.
 Launch of OYO café, OYO We for Women travelerS and OYO Premium for high-
end customers
 Tie-ups with major brands such as Airtel for wi-fi support, ZO rooms, Thomas
Cook, Air Pegasus and Tourism and Hospitality Skill councils

Learnings:
Along with expanding its business and numbers, OYO needs to really pay attention
to Customer feedback and reviews as it’s the service offering industry. Also it
needs to bring in more stringent offline quality control mechanisms on-board to
manage customer experience and keep the brand growing.

REFERENCES:
 Wikipedia
 Youtube
 Marketing91
 Various news articles
Economic crisis, mass protests
2016 February - President Maduro announces measures aimed at fighting economic
crisis, including currency devaluation and first petrol price rise in 20 years.
2016 September - Hundreds of thousands of people take part in a protest in Caracas
calling for the removal of President Maduro, accusing him of responsibility for the
economic crisis.
2017 April-June - Several people die in clashes with security forces during mass protests
demanding early presidential elections and the revoking of a planned constituent
assembly to replace the National Assembly.

Image copyrightAFPImage captionSome Venezuelans' dissatisfaction with the Maduro government

spilled over into protests in 2014
2017 July - The opposition holds an unofficial referendum in which a reported seven
million people reject President Maduro's proposal to convene a new constituent
assembly.

The election of the controversial constituent assembly takes place in the face of an
opposition boycott and international condemnation.
2017 August - Chief prosecutor Luisa Ortega goes into exile, saying she was sacked
because the government wanted to stop her investigations into alleged corruption and
human rights abuses.
2018 May - President Maduro wins another term in an election.
2018 August - Venezuelan officials say two explosive-laden drones were detonated near
to President Maduro during a live, televised speech. Mr Maduro accuses Colombia and
elements within the US of a "right-wing plot" to kill him, but provides no evidence for the
claim.
2018 August - Venezuela slashes five zeros from its old currency, renaming it the
Sovereign Bolivar and tying it to a state-backed cryptocurrency in a bid to tackle
rampant hyperinflation.

The UN warns of a migration "crisis", estimating that economic woes and food and
medical shortages have caused more than two million Venezuelans to leave their
country since 2014. Most are settling in nearby Peru, Ecuador, Colombia and Brazil,
leading to tensions in the region.

How Venezuela's crisis developed and drove out millions of people

Venezuela's economy is in freefall. Hyperinflation, power cuts, and food and medicine shortages are driving millions of
Venezuelans out of the country. Many are blaming President Nicolás Maduro and his government for the dire state the
nation is in. Here, BBC News takes a closer look at how Venezuela's economy descended into its current crisis.

What's wrong with Venezuela?

Arguably the biggest problem facing Venezuelans in their day-to-day lives is hyperinflation. The annual inflation rate reached
83,000% in July, according to a recent study by the opposition-controlled National Assembly.
 Prices have been doubling every 26 days on average. This has resulted in many Venezuelans struggling to afford basic items such
as food and toiletries.

With small items like a cup of coffee costing a whopping 2.5m bolivars until recently, it also became increasingly difficult to pay
for goods in cash.

Until the currency's redenomination on 20 August, Venezuelans needed 25 of their highest denomination notes - the 100,000
bolivar bill - to pay for their caffeine fix.

Image copyrightREUTERSImage captionThe pile of bolivars needed to buy a roll of toilet paper is taller than the roll itself

 See more photos of how many bolivars are needed to buy everyday items

To avoid going shopping with rucksacks full of cash, Venezuelans increasingly started using electronic transfers for even the
smallest transactions.

As the BBC's South American correspondent found in Caracas, waiters handed customers their bank details trusting that the latter
would transfer them the tip electronically.

Media captionHow to get by in Venezuela, when money is in short supply

How did hyperinflation come about?
On the most basic level, there are more people wanting to purchase goods than the number of goods available.

Venezuela is rich in oil, and has the largest proven reserves in the world. But arguably it's this exact wealth that underpins many
of its economic problems.

Because it has so much oil, Venezuela has never bothered to produce much else. It sells oil to other countries, and with the
dollars it earns, imports the goods Venezuelans want and need from abroad.

Its oil revenues account for about 95% of its export earnings. But when the oil price plummeted in 2014, Venezuela was faced
with a shortfall of foreign currency.

This in turn made it difficult to import goods at the same level as before, and imported items became scarcer.

The result: businesses increased prices and inflation rose.

 Add to that the government's willingness to print extra money and regularly hike the minimum wage in an effort to regain
popularity with Venezuela's poor, and you get money which loses its worth rapidly.

The government is also increasingly struggling to get credit after it defaulted on some of its government bonds.

With creditors less likely to take the risk of investing in Venezuela, the government has again taken to printing more money,
further undermining its value and stoking inflation.

What's the government doing about it?

The government lopped five zeros off the old "strong bolivar" currency on 20 August and gave it a new name - the "sovereign
bolivar".

It also began circulating eight new banknotes worth 2, 5, 10, 20, 50, 100, 200 and 500 sovereign bolivars and two new coins.

The new currency is part of an "economic package" of measures which the government says is the "magic formula" to help
Venezuela's battered economy recover.

Among the measures are:

 Raising the minimum wage to 34 times its previous level from 1 September
 Anchoring the sovereign bolivar to the petro, a virtual currency the government says is linked to Venezuela's oil reserves
 Curbing Venezuela's generous fuel subsidies for those not in possession of a "Fatherland ID"

 Raising VAT by 4% to 16%

How are people reacting?

Many people have been voting with their feet and leaving Venezuela. According to United Nations figures, 2.3 million
Venezuelans have left the country since 2014 when the economic crisis started to bite.
The majority have crossed into neighbouring Colombia, from where some move on to Ecuador, Peru and Chile. Others have gone
south to Brazil.

Venezuela has also seen more than 200,000 of its citizens emigrate to Spain. Many of them are the children of Spaniards who
came to Venezuela in the 1950s and 60s, when it was seen as a place of opportunity.

The mass migration is one of the largest forced displacement in the western hemisphere.
Read: Bridge of desperation - Exodus from Venezuela

What faces those staying in Venezuela?

 While the new currency is likely to make cash transactions easier for a while, its introduction caused confusion. Some
Venezuelans managed to get hold of the new bills, but others reported long queues when banks opened.

Some economists have also warned that the new currency could soon face the same problems as the old one unless the root
causes of hyperinflation are tackled.

They say that within months its worth could be decimated by rising prices.

Employers have also said that they do not know how they will pay for the 34-fold rise in the minimum wage.

Meanwhile, shoppers still face empty shelves in supermarkets, and in some cities there have been water shortages and power cuts
caused by a lack of investment in Venezuela's crumbling infrastructure.

But while the power cuts and lack of running water are a problem for households and businesses, they have proven deadly in
Venezuela's already run-down public hospitals.

Many of those fleeing the country say they are doing so because they cannot get the operations and medical care they need.

Media captionVenezuela doctor on how hospitals are at breaking point

Pregnant women are crossing the border to give birth and mothers go to health centres in Colombia to get their babies vaccinated.
 'My baby would have died if I had stayed in Venezuela'

Those who cannot leave often spend days and weeks searching for the medication they need. With food increasingly scarce, child
malnutrition levels are at a record high.

Who do people blame?

Some of the problems go back a long time, but since the socialist government has been in power since 1999, first under President
Hugo Chávez and more recently fronted by President Nicolás Maduro, many Venezuelans blame these two men for what is
happening.

Venezuela’s economy collapses: All

your questions answered
Venezuela crisis: Hyperinflation, mass migration, food shortage, increasing number of
crimes and grinding poverty has spiralled Venezuela into a deep turmoil.

X
Many in Venezuela blame President Nicolas Maduro for the country’s spiralling economy.(AP Photo/Ariana Cubillos,
File)

Venezuela, once a rich oil reserve country, is now battering an unprecedented economic crisis. Hyperinflation, mass
migration, food shortage, increasing number of crimes and grinding poverty has pushed the nation into a deep
turmoil. Many in Venezuela blame President Nicolas Maduro for the country’s current condition. Here is a look at
the crisis unfolding in Venezuela and how it is affecting its people
What is the Venezuela crisis?
Hyperinflation is the biggest problem faced by Venezuela. The inflation rate there is expected to reach a stunning
one million per cent this year, putting it on par with the crises of Zimbabwe in the 2000s and Germany in the 1920s,
according to the International Monetary Fund. The government claims that the country is the victim of an “economic
war” and that the major issues are due to opposition “plots” and American sanctions.
Hyperinflation in Venezuela
The plummeting oil prices since 2014 is one of the main reasons why Venezuela’s currency has weakened sharply.
The country, which has rich oil reserves largely depended on it for its revenue. But when the oil price dropped
drastically in 2014, Venezuela which received 96 per cent of its revenue from the oil exports, suffered a shortage of
foreign currency. This made import of basic essentials like food and medicines difficult.
A survey earlier this year reported that more than 60% surveyed said that they had woken up hungry because they
did not have enough money to buy food (Reuters)

Food and medicine shortage in Venezuela

Venezuela’s imports are down 50% from a year ago, according to Ecoanalitica, a national research firm, CNN
reported. Venezuela’s minimum wage is now about the equivalent of $1 a month, making basics unaffordable for
many. With a shortage of the import goods, the black market has got a free hand in the country. Prices have been
doubling every 26 days on average, according to a report in BBC. According to an Al Jazeera report, many
Venezuelans sift through the rubbish and bins in search for food.
A survey from February this year found that almost 90% of Venezuelans live in poverty and more than 60%
surveyed said that they had woken up hungry because they did not have enough money to buy food, reported
Reuters. Apart from food, the country is also facing medicine shortage. The economic crisis has also hit the public
health system, making medicine and equipment inaccessible to its people.
New currency of Venezuela
Amid the growing crisis, the government issued new currency — with new clour notes and denomination — to keep
up with the projected inflation. While earlier, Maduro had decided to remove three zeros from the bolivar currency,
he later dropped off five zeros. The new currency will be released next month and overhaul would tie the bolivar to
the recently launched state-backed cryptocurrency called the petro, Maduro said in a televised broadcast. The new
“Bolivar Soberano” currency is worth 100,000 “old” Bolivares.
Cryptocurrency experts have said the petro suffers from a lack of credibility because of a lack of confidence in
Maduro’s government and the mismanagement of the country’s existing national currency.
A Peruvian immigration officer checks the passports of Venezuelan migrants near Tumbes, Peru (AP)

Mass Migration
Angered by the economic crisis in the country, many Venezuelans have started leaving the country. Of the 2.3
million Venezuelans living abroad, more than 1.6 million have fled the country since the crisis began in 2015,
according to the UN. The pace of departures has accelerated in recent days, sparking a warning from the UN. The
majority have crossed into neighbouring Colombia and then to Ecuador, Peru and Chile. Others have gone south to
Brazil.
The mass influx of people from Venezuela has triggered a strong response from Ecuador and Peru. According to
news agency AFP, Colombia had criticised its two southern neighbours for implementing travel restrictions,
warning it wouldn’t stop migration. Ecuador — where close to half a million people have fled this year alone —
then lifted its week-long requirement for Venezuelans to produce a passport, all the while helping those migrants
reach Peru. Peru’s citizens largely supported the move, though, worried about the impact that the 400,000
Venezuelans already in the country would have. In Brazil, rioters this month drove hundreds back over the border,
reported Reuters.

A man gets off the bridge as people queue to try to cross the Venezuela-Colombia border through Simon Bolivar
international bridge in San Antonio del Tachira, Venezuela (Reuters)

Colombia says it has already given temporary residence to 870,000 Venezuelans but it can barely cope. In Peru,
record 5,100 people entered the country in a single day earlier this month. Colombia has pleaded with its southern
neighbours to agree to a combined migration strategy, while Ecuador has called a meeting of 13 Latin American
countries next month to discuss the crisis. UN Secretary-General Antonio Guterres will set up a special UN team to
ensure a coordinated regional response.
Increasing crime rate in Venezuela
As the country slips into poverty, many are turning towards crime to make money. There were almost 27,000 violent
deaths in the country last year, with Venezuela having the second highest murder rate in the world after El Salvador,
according to the Venezuelan Observatory of Violence, a local crime monitoring group. Many Caracas residents
refuse to go out at night due to security fears, and wealthier Venezuelans often travel in bullet-proof cars with
bodyguards. A recent Gallup study placed Venezuela at the bottom of its 2018 Law and Order index, with 42 per
cent of surveyed Venezuelans reporting they had been robbed the previous year and one-quarter saying they had
been assaulted, reported Reuters

They say that while the socialist policies of President Chávez may have been aimed at helping the poor - Venezuela was a
country of huge inequality when he came to power in 1999 - they backfired.

Take price controls, for example. They were introduced by President Chávez to make basic goods more affordable to the poor by
capping the price of flour, cooking oil and toiletries.

But this meant that the few Venezuelan businesses producing these items soon no longer found it profitable to make them.

Critics also blame the foreign currency controls brought in by President Chávez in 2003 for a flourishing black market in dollars.

Since then, Venezuelans wanting to exchange bolivars for dollars have had to apply to a government-run currency agency. Only
those deemed to have valid reasons to buy dollars, for example to import goods, have been allowed to change their bolivars at a
fixed rate set by the government.

With many Venezuelans unable to freely buy dollars, they turned to the black market. At one point, the dollar was trading for
6.5m bolivars.

But there is still a loyal core of people who support the government and who say that Venezuela's problems are caused not by
President Maduro or his predecessor, but by a hostile and coup-mongering opposition inside the country, and "imperialist forces"
like the US and neighbouring Colombia outside it.
- Venezuelans reported losing on average 11 kilograms (24 lbs) in body
weight last year and almost 90 percent now live in poverty, according to a
new university study on the impact of a devastating economic crisis and food
shortages.

People wait in a queue to buy food, on a sidewalk outside a supermarket in Caracas, Venezuela January 6, 2018.
REUTERS/Marco Bello

The annual survey, published on Wednesday by three universities, is one of

the most closely-followed assessments of Venezuelans’ well being amid a
government information vacuum and shows a steady rise in poverty and
hunger in recent years.

Over 60 percent of Venezuelans surveyed said that during the previous three
months they had woken up hungry because they did not have enough money
to buy food. About a quarter of the population was eating two or less meals a
day, the study showed.

Last year, the three universities found that Venezuelans said they had lost an
average of 8 kilograms during 2016. This time, the study’s dozen
investigators surveyed 6,168 Venezuelans between the ages of 20 and 65
across the country of 30 million people.
 After winning the presidency in 1999, leftist President Hugo Chavez was
proud of improving Venezuela’s social indicators due to oil-fueled welfare
policies. But his successor President Nicolas Maduro’s rule since 2013 has
coincided with a deep recession, due to failed state-led economic policies and
the plunge in global oil prices.

Wednesday’s study flagged Venezuelans’ deteriorating diets, which are

deficient in vitamins and protein, as currency controls restrict food imports,
hyperinflation eats into salaries, and people line up for hours to buy basics
like flour.

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“Income is being pulverized,” Maria Ponce, one of the study’s investigators,

told a news conference at the Andres Bello Catholic University on Caracas’s
outskirts.

“This disparity between the rise in prices and the population’s salaries is so
generalized that there is practically not a single Venezuelan who is not poor,”
she said.

The study calculated the poverty rate from 13 different indicators such as
income and access to services. If the average of these indicators was above 25
percent, investigators defined a person as poor.

Prices in Venezuela rose 4,068 percent in the 12 months to the end of

January, according to estimates by the country’s opposition-led National
Assembly, broadly in line with independent economists’ figures.

The study showed that 87 percent of people in Venezuela, one of Latin

America’s wealthiest nations back in the 1970s, were living in poverty last
year, rising from 82 percent in 2016 and 48 percent in 2014.

The Venezuelan government has not released data on poverty since the first
half of 2015 when the national statistics institute reported a poverty rate of 33
percent.

The government did not respond to a request for comments on the study, but
its supporters often accuse academics of exaggerating data and being in
league with the opposition.
 Maduro blames the country’s problems on an economic war waged by the
opposition and business leaders, with help from Washington.

Additonal reporting and writing by Angus Berwick; Editing by Andrew Cawthorne and Alistair Bell
Our Standards:The Thomson Reuters Trust Principles.

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There's an endless list of things going wrong in Venezuela today, from eight-hour-long food
queues and widespread grave robbing, to the fact that 28,479 people were murdered there
last year. Such is the rationing of electricity, that neurosurgeons are said to finish their
operations by the light of their smartphones. The currency is so worthless people use
banknotes as napkins.
On 19 April 2017, the "mother of all protests", as it was called by organizers,[51] occurred.

In April 2017, tens of thousands of people took to the streets in Venezuela to protest against the government-controlled
Supreme Court’s attempt to usurp the powers of the country’s legislative branch. Demonstrations quickly spread
throughout the country and continued for months, fueled by widespread discontent with the authoritarian practices of
President Nicolás Maduro and the humanitarian crisis that has devastated the country under his watch. The government
responded with widespread violence and brutality against anti-government protesters and detainees, and has denied
detainees’ due process rights. While it was not the first crackdown on dissent under Maduro, the scope and severity of
the repression in 2017 reached levels unseen in Venezuela in recent memory.

The last vote held in Venezuela, the parliamentary election of 2015, gave the opposition a
majority.

Then, on March 29, the Venezuelan Supreme Court dissolved the parliament, transferring all
legislative powers to itself. By doing away with the opposition-controlled legislative branch, the
move effectively meant the remaining two branches of Venezuelan government were controlled
by Maduro's ruling United Socialist Party. The opposition was outraged and called the move a
coup. The decision was reversed three days later, but protests had already erupted.

In short, Maduro has created a dictatorship. The government has repeatedly blocked any
attempts to oust Maduro from power by a referendum vote. It has also delayed local and
state elections.