  {"id":1261,"date":"2015-12-05T18:08:39","date_gmt":"2015-12-05T23:08:39","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/oyo-rooms-disrupting-the-indian-hospitality-industry\/"},"modified":"2015-12-05T18:08:39","modified_gmt":"2015-12-05T23:08:39","slug":"oyo-rooms-disrupting-the-indian-hospitality-industry","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/oyo-rooms-disrupting-the-indian-hospitality-industry\/","title":{"rendered":"OYO Rooms: Disrupting the Indian hospitality industry"},"content":{"rendered":"<p>OYO rooms is India\u2019s largest branded network of hotel rooms with 14,000 rooms across India. It\u2019s an incredible feat given that OYO was founded 2 years ago by a 21-year-old and \u00a0hasn\u2019t built a single hotel!<\/p>\n<figure id=\"attachment_1243\" aria-describedby=\"caption-attachment-1243\" style=\"width: 300px\" class=\"wp-caption alignnone\"><a href=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-05-at-5.52.24-pm.png\"><img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-1243\" src=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-05-at-5.52.24-pm-300x227.png\" alt=\"Ritesh Aggarwal, Founder of OYO rooms\" width=\"300\" height=\"227\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-05-at-5.52.24-pm-300x227.png 300w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-05-at-5.52.24-pm-600x454.png 600w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-05-at-5.52.24-pm.png 1020w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><figcaption id=\"caption-attachment-1243\" class=\"wp-caption-text\">Ritesh Aggarwal, Founder of OYO rooms<\/figcaption><\/figure>\n<p><strong>So how do they get the rooms?<\/strong><\/p>\n<figure id=\"attachment_1246\" aria-describedby=\"caption-attachment-1246\" style=\"width: 300px\" class=\"wp-caption alignright\"><a href=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-05-at-5.51.29-pm.png\"><img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-1246\" src=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-05-at-5.51.29-pm-300x132.png\" alt=\"OYO Rooms website\" width=\"300\" height=\"132\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-05-at-5.51.29-pm-300x132.png 300w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-05-at-5.51.29-pm-1024x450.png 1024w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-05-at-5.51.29-pm-600x264.png 600w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><figcaption id=\"caption-attachment-1246\" class=\"wp-caption-text\">OYO Rooms website<\/figcaption><\/figure>\n<p>OYO approaches affordable hotels and buys their unsold inventory for a minimum guarantee amount. For a hotel to sell their rooms to OYO, they have to meet OYO\u2019s standardization guidelines that include free Wi-Fi, clean white linen, flat screen TVs, included breakfast. The hotel is then branded an OYO Hotel while preserving its own hotel name as well. OYO then lists these as OYO rooms on it\u2019s own tech platform as well on other OTAs like MakeMyTrip.<\/p>\n<p><strong>Why it works especially well in India<\/strong><\/p>\n<p>The unorganized hotel sector is massive and fragmented. There are 1 million rooms and a lack of branding across hotels to signify quality. \u00a0Moreover, the quality of stay is highly variable and mostly falls short of expectations. The average Indian customer is lost when coming it comes to choosing affordable hotel options! By looping these unbranded hotels under the OYO umbrella, the company signals trust, predictability and quality to consumers.<\/p>\n<p><strong>The benefits of the operating model are:<\/strong><\/p>\n<ul>\n<li><strong><u>Low CAPEX: <\/u><\/strong>They\u2019re simply applying their brand name to hotels once the hotel hit standardized benchmarks. They don\u2019t have any expenses associated with the stay \u2013 they don\u2019t build anything; they don\u2019t provide staff or incur maintenance expenses.<\/li>\n<li><strong><u>Ensures high-quality without any associated costs<\/u><\/strong>: OYO provides the checklist of quality measures that OYO must meet but the hotel bears the cost to standardize.<\/li>\n<li><strong><u>The hotels benefit too:<\/u><\/strong> <a href=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-05-at-6.01.01-pm.png\"><img loading=\"lazy\" decoding=\"async\" class=\" wp-image-1252 alignright\" src=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-05-at-6.01.01-pm-300x224.png\" alt=\"Screen Shot 2015-12-05 at 6.01.01 pm\" width=\"181\" height=\"135\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-05-at-6.01.01-pm-300x224.png 300w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-05-at-6.01.01-pm.png 514w\" sizes=\"auto, (max-width: 181px) 100vw, 181px\" \/><\/a>OYO solves the problems of excess inventory. Once OYO buys the excess rooms from hotel, it has a commitment to pay the hotel even if OYO can\u2019t sell the room. Furthermore, for small, less-tech savvy hotels, the OYO stamp is brand accretive and the OYO website where the rooms are listed is a powerful marketing channel.\u00a0 As we\u2019ve seen in our marketing course, keeping members of the distribution channel happy is critical to long term success.<\/li>\n<li><strong><u>Multiple channels for sales:<\/u><\/strong> OYO sells the rooms on it\u2019s website and via other Online Travel Agents (OTAs). They are an OTA themselves but by positioning themselves as a brand, they can also embed themselves within competitor websites.<\/li>\n<li><strong><u>Technology-enabled convenience: <\/u><\/strong>An OYO consumer is able to check-in, check-out, order room service, file a complaint all via the OYO app. This reduces the pressure on hotels, improves the customer experience (check-in time down to 4seconds) and provides OYO with real-time data on cross-hotel experiences.<br \/>\n<a href=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-05-at-6.02.34-pm.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-1254\" src=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-05-at-6.02.34-pm-182x300.png\" alt=\"Screen Shot 2015-12-05 at 6.02.34 pm\" width=\"182\" height=\"300\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-05-at-6.02.34-pm-182x300.png 182w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-05-at-6.02.34-pm-363x600.png 363w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-05-at-6.02.34-pm.png 470w\" sizes=\"auto, (max-width: 182px) 100vw, 182px\" \/><\/a> <a href=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-05-at-6.02.02-pm.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-1253\" src=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-05-at-6.02.02-pm-168x300.png\" alt=\"Screen Shot 2015-12-05 at 6.02.02 pm\" width=\"168\" height=\"300\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-05-at-6.02.02-pm-168x300.png 168w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-05-at-6.02.02-pm-337x600.png 337w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-05-at-6.02.02-pm.png 438w\" sizes=\"auto, (max-width: 168px) 100vw, 168px\" \/><\/a><\/li>\n<li><strong><u>A method to prevent shopping around: <\/u><\/strong>When a consumer visits OYO rooms website to book a room, the name of the hotel is not shown to him till he or she actually books. Only the price and destination from core landmarks is displayed. This eliminates the risk of a consumer going directly to a partner hotel or other competitor OTAs and cutting OYO out of the equation. This is important because the hotel typically lists only part of its inventory on OYO.<\/li>\n<\/ul>\n<p>OYO continues to innovate on operating models. They are now in the process of launching OYO Caf\u00e9. They are planning to list select partner hotel restaurant menus on food delivery websites (think Seamless) and brand the food as being from \u2018OYO Caf\u00e9s\u2019. This will lead to increased utilization of labor, time and raw materials in OYO hotel kitchens.<\/p>\n<p>From 1 hotel in May 2013 to 3500+ hotels in October 2015, OYO is by far the hottest start-up in India that is disrupting the hospitality industry in India. While the prospects are fantastic, their success fundamentally lies in building a brand that is synonymous with high-quality. This is difficult in India and even more so considering the limited control OYO has over partner hotels.<\/p>\n<p>&#8212;&#8212;&#8212;&#8212;&#8211;<\/p>\n<p><strong>Sources:<\/strong><\/p>\n<p><a href=\"http:\/\/yourstory.com\/2015\/05\/oyo-rooms-review\/\">http:\/\/yourstory.com\/2015\/05\/oyo-rooms-review\/<\/a><\/p>\n<p><a href=\"http:\/\/economictimes.indiatimes.com\/industry\/services\/hotels-\/-restaurants\/oyo-rooms-ties-up-with-airtel-for-wi-fi-dth-services\/articleshow\/49831192.cms\">http:\/\/economictimes.indiatimes.com\/industry\/services\/hotels-\/-restaurants\/oyo-rooms-ties-up-with-airtel-for-wi-fi-dth-services\/articleshow\/49831192.cms<\/a><\/p>\n<p><a href=\"http:\/\/economictimes.indiatimes.com\/industry\/services\/hotels-\/-restaurants\/oyo-we-budget-hotels-marketplace-oyo-rooms-launches-exclusive-brand-for-women\/articleshow\/48963457.cms\">http:\/\/economictimes.indiatimes.com\/industry\/services\/hotels-\/-restaurants\/oyo-we-budget-hotels-marketplace-oyo-rooms-launches-exclusive-brand-for-women\/articleshow\/48963457.cms<\/a><\/p>\n<p><a href=\"http:\/\/economictimes.indiatimes.com\/opinion\/interviews\/failing-often-is-the-reality-of-starting-up-ritesh-agarwal-ceo-oyo-rooms\/articleshow\/48780526.cms\">http:\/\/economictimes.indiatimes.com\/opinion\/interviews\/failing-often-is-the-reality-of-starting-up-ritesh-agarwal-ceo-oyo-rooms\/articleshow\/48780526.cms<\/a><\/p>\n<p><a href=\"http:\/\/www.forbes.com\/sites\/saritharai\/2015\/08\/06\/why-a-21-year-old-is-building-oyo-an-uber-and-not-an-airbnb-for-hotels-in-india\/\">http:\/\/www.forbes.com\/sites\/saritharai\/2015\/08\/06\/why-a-21-year-old-is-building-oyo-an-uber-and-not-an-airbnb-for-hotels-in-india<\/a>\/<\/p>\n<p><a href=\"http:\/\/www.iamwire.com\/2015\/06\/ritesh-agarwal-oyo\/117761\">http:\/\/www.iamwire.com\/2015\/06\/ritesh-agarwal-oyo\/117761<\/a><\/p>\n<p><a href=\"http:\/\/economictimes.indiatimes.com\/small-biz\/startups\/oyo-rooms-to-woo-customers-with-new-food-technology-venture-and-housekeeping-service\/articleshow\/49795696.cms\">http:\/\/economictimes.indiatimes.com\/small-biz\/startups\/oyo-rooms-to-woo-customers-with-new-food-technology-venture-and-housekeeping-service\/articleshow\/49795696.cms<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>OYO rooms is India\u2019s largest branded network of hotel rooms with 14,000 rooms across India. It\u2019s an incredible feat given that OYO was founded 2 years ago by a 21-year-old and \u00a0hasn\u2019t built a single hotel! So how do they [&hellip;]<\/p>\n","protected":false},"author":551,"featured_media":0,"comment_status":"open","ping_status":"closed","template":"","categories":[19,270,81,7],"class_list":["post-1261","hck-submission","type-hck-submission","status-publish","hentry","category-consumer-tech","category-hotels","category-india","category-winner"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/the-tom-challenge-tom-winners-and-losers-assignment\/","yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>OYO Rooms: Disrupting the Indian hospitality industry - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/oyo-rooms-disrupting-the-indian-hospitality-industry\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"OYO Rooms: Disrupting the Indian hospitality industry - Technology and Operations Management\" \/>\n<meta property=\"og:description\" content=\"OYO rooms is India\u2019s largest branded network of hotel rooms with 14,000 rooms across India. 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