The hospitality industry once operated on a highly localized scale, limiting itself to specific regions. Travellers typically discovered accommodations only after reaching their destinations or relied on agents for lodging arrangements. This unbranded, fragmented nature of the industry created uncertainties for travellers.
However, the internet and technological boom reshaped the landscape. This transformative period witnessed the rise of several industry disruptors, including Airbnb, FabHotels, and OYO. Among them, OYO rapidly emerged as a standout, driving significant change and restructuring the hospitality sector in India.
OYO’s meteoric rise and widespread popularity not only helped brand the once-unstructured industry but also transformed it on a global scale. As of June 2019, OYO had evolved into the world’s third-largest hotel chain.
In this article, we explore OYO’s remarkable success story, its visionary founder, innovative business model, key funding milestones, competitors, and much more.
About OYO
OYO – Industry
According to a report by Statista, the hotel industry is poised for significant growth, with projected revenue expected to reach US $9.13 billion by 2024. This indicates a strong upward trajectory for the industry.
The report also forecasts a compound annual growth rate (CAGR) of 5.41% from 2024 to 2028, signalling continued expansion. If current trends persist, the market volume is anticipated to rise even further, reaching an estimated value of US $11.27 billion by 2028.
These insights from Statista underscore the promising outlook for the hotel industry, driven by evolving consumer behavior and sustained growth patterns.
OYO – Founders and Team
Ritesh Agarwal is the co-founder and Group CEO of OYO.
The Journey of Ritesh Agarwal
Ritesh Agarwal was born in Rayagada, Orissa, and attended Sacred Heart School. From an early age, he showed a strong interest in computers, software, and coding.
In 2009, Ritesh moved to Kota to secure admission to a top IIT college. However, he soon realized that Kota wasn’t the best place to pursue his passion for coding. With extra time on his hands, he wrote a book titled Indian Engineering Colleges: A Complete Encyclopaedia of Top 100 Engineering Colleges, which became a hit.
At just 16, Ritesh was one of 240 students selected for the prestigious Asian Science Camp held at the Tata Institute of Fundamental Research (TIFR) in Mumbai.
Later, he became one of 20 students under the age of 20 to receive the Thiel Fellowship, which provided him with $100,000 over two years, along with resources and guidance to drop out of college and pursue his entrepreneurial ambitions.
During his frequent travels, Ritesh often stayed in various hotels, where he experienced poor hospitality. This inspired him to create a system that would offer quality rooms, food, staff, and services, all within a budget. In 2011, he launched Oravel Stays, an aggregator of bed and breakfast accommodations, inspired by Airbnb’s model.
OYO – Startup Story
OYO – Mission and Vision
Mission: The OYO mission on the company website is mentioned as “OYO is a global platform that empowers entrepreneurs and small businesses with hotels and homes by providing full-stack technology that increases earnings and eases operations. Bringing affordable and trusted accommodation that guests can book instantly.”
Vision: OYO’s vision is to empower entrepreneurs and small businesses with homes and hotels to increase earnings and simplify their operations.
OYO – Business Model
OYO’s unique business model represents the first hotel chain to be integrated with OTA-like distribution capabilities. In contrast to conventional approaches, OYO tackles practical issues in the actual world, with brand development coming naturally rather than as the main goal.
It functions as a redesigned hybrid, skillfully fusing technology and hospitality to maximize client satisfaction, efficient use of available space, and general corporate success.
The dedication to customer pleasure that is at the heart of OYO’s ideals is demonstrated by the company’s initial acceptance requirements and its upfront investment in modernizing each hotel before it joins the OYO network.
OYO’s core advantage is its ability to consistently prioritize the needs of its customers. The company has shaped its business model to optimize the customer experience, effectively utilizing technology and hospitality to improve space utilization and overall business performance.
OYO – Revenue Model
OYO employs a diverse revenue model to sustain its business, featuring several key streams:
Commissions:
OYO has a commission-based business model, taking a cut of about 22% from its hotel partners for each reservation made via its website. Depending on variables like property kind, location, and other considerations, the proportion might change.
Franchise Charge:
OYO has a franchise model whereby it charges its partners fees for the use of its technology, brand, and operational assistance. One-time or ongoing payments are included in this income stream, which makes up a sizable portion of OYO’s earnings.
Room rate margins:
By selling rooms to visitors at a higher price than it originally negotiated with partner properties, OYO makes money by keeping the difference between the selling and reduced rates.
Membership in OYO Wizard:
Wizard Blue, Wizard Silver, and Wizard Gold, OYO’s premium memberships, are a profitable revenue stream.
Promotions, Collaborations, and Sponsorships:
Through sponsorships, brand promotions, and advertisements on its website and app, OYO makes money off of its platform. To increase overall revenue, businesses pay OYO fees for the display of their advertisements.
Income from Supplementary Services:
By charging more for upscale offline services and facilities, OYO diversifies its revenue sources. Breakfast, transportation, laundry, and other extras bring in money and give consumers something extra, all while strengthening OYO’s bottom line.
How does OYO scale its business?
After Oyo got spread all over India, it started expanding rapidly in China with about 500,000 rooms across more than 10,000 hotels, the Middle East, Europe and also 85 hotels in the United Kingdom.
After this, it helped the company to easily enter its roots in the United States this year. As of June 2021, the company already had 68 hotels in more than 40 American cities.
Ritesh Agarwal estimates that Oyo is opening a hotel per day in the United States. Now the company has a growing presence on the American landscape. Therefore, Oyo plans to invest $300 million for development in the U.S. for the upcoming years.
OYO has scaled its business through a combination of strategic partnerships, technology-driven solutions, and aggressive marketing and expansion efforts. Some of the key factors that have contributed to OYO’s rapid growth include:
- Franchise model: By partnering with independent hotel owners and providing them with technology, branding, and operational support, OYO has been able to quickly expand its operations and enter new markets.
- Technology solutions: OYO’s technology-driven approach has enabled it to streamline its operations, reduce costs, and improve the customer experience. The company’s hotel management app, central reservation system, and integrated payment gateway have been critical to its success.
- Strategic partnerships: OYO has formed partnerships with several companies and organizations, such as MakeMyTrip, Airbnb, and Flipkart, which has helped it reach a wider audience and expand its customer base.
- Marketing and brand building: OYO has invested heavily in marketing and brand building, which has helped it establish a strong brand image and increase brand recognition among travellers.
- Continuous innovation: OYO has continued to innovate and expand its offerings, such as OYO Life and OYO Workspaces, which has helped it diversify its revenue streams and tap into new markets.
OYO – Challenges Faced
OYO faced various difficulties in the past that are typical of many startups. The business struggled with massive layoffs, conflict with hotel partners, and lawsuits related to disagreements in contracts. Although the aggressive pricing strategy was successful in drawing in customers, it also caused worries about profitability and sparked legal attention, especially because of claims of predatory pricing.
Due to complaints of dormant or nonexistent listings, the legitimacy of OYO’s platform was also called into question. The COVID-19 pandemic dealt a further blow to these difficulties, forcing OYO to traverse a challenging environment and deal with governance concerns in order to ensure a stable future. These obstacles are similar to those that startups in the cutthroat hotel sector frequently encounter.
OYO Funding and Investors
OYO went through 21 funding rounds as of 2024 out of which it has raised $3.5 billion. Their latest funding was raised on Aug 11, 2024 from a Series G round of $175 million by Incred Wealth.
Below are some of the recent funding rounds of OYO:
| Date | Round | Amount | Investors |
| August 11, 2024 | Series G | $175 million | Incred Wealth, Patient Capital, J&A Partners, Mankind Pharma promoters and ASK Financial Holdings |
| July 3, 2024 | Series G | $50 million | Incred Wealth |
| January 13, 2022 | Secondary Market | $29.72 million | Qatar Insurance Company |
| July 29, 2021 | Series F | $5 million | Microsoft |
| July 1, 2021 | Secondary Market | $8 million | – |
| March 11, 2021 | Debt Financing | $200 million | SoftBank Vision Fund |
| January 6, 2021 | Series F | Rs 54 crore | Hindustan Media Venture |
| December 10, 2019 | Series F | $1.5 billion | Ritesh Agarwal and SoftBank |
| November 30, 2019 | Debt Financing | $6.73 million | MyPreffered Transformation |
| April 1, 2019 | Series E | $75 million | Airbnb |
| February 14, 2019 | Series E | $100 million | Didi |
| December 7, 2018 | Series E | $100 million | Grab |
| September 25, 2018 | Series E | $800 million | SoftBank Vision Fund |
OYO – Investments
OYO has invested in OYO LIFE, signalling a strategic move to diversify its portfolio beyond conventional hospitality services as of October 30, 2018.
OYO – Acquisitions
OYO has acquired 9 companies around the world so far.
The following are the 9 companies that have been brought under the management of OYO:
| Date | Company | Amount |
| August 10, 2022 | Bornholmske Feriehuse | – |
| May 9, 2022 | Direct Booker | – |
| September 2, 2019 | Danamica | $10 million |
| May 1, 2019 | Leisure Group | $415 million |
| March 26, 2019 | Qianyu Islands | – |
| March 15, 2019 | Innov8 Coworking | $30 million |
| August 13, 2018 | Weddingz | – |
| July 10, 2018 | AblePlus Solutions Pvt Ltd. | – |
| March 18, 2018 | Novascotia Boutique Homes | – |
OYO Growth
OYO’s journey began modestly, evolving from a small platform supporting local customers and businesses into the world’s third-largest multinational hotel chain as of June 2019. Starting in 2012, OYO debuted with sponsorship support and unveiled its website in its first year of operation. The firm reached 100 cities with 10,000 rooms by 2015, and in 2016, it went outside of India and then later went on to expand into the UK, China, the US, Indonesia, Europe, and other regions
OYO launched several services throughout its expansion phase, including OYO Townhouse, OYO Workspaces, OYO Wizard, and OYO Life. Even with sporadic controversies like the one with the relationship mode’ feature the business became well-known. OYO’s strategic expansion and ongoing introduction of new features helped to cement the company’s reputation throughout the world.
Some of the growth highlights of OYO are:
- OYO Corporate Business Solution has 4,000+ exclusive hotels, as mentioned on their website as of January 2024.
- OYO Corporate Business Solution has a presence in 230+ cities and towns as of January 2024, spanning across 4 countries.
- OYO has over 174,000 hotels and homes around the nation as of January 2024.
- It is present in over 35 countries as of January 2024.
- OYO reached the milestone of 100 million downloads in 2021.
- The estimated company valuation is $2.7 billion as of August 2024.
Financials
OYO Financials
| OYO Financials | FY23 | FY24 |
| Operating Revenue | INR 5464 crore | INR 5389 crore |
| Total Expenses | INR 6800 crore | INR 5726 crore |
| Profit/Loss | Loss of INR 1286 crore | Loss of INR 230 crore |
EBITDA
| OYO FY23-FY24 | FY23 | FY24 |
| EBITDA Margin | -4.23% | 15.52% |
| Expense/₹ of Op Revenue | ₹1.24 | ₹1.06 |
| ROCE | -8.60% | 13.40% |
OYO – Programs and Feature launch
Super OYO program
The Super OYO program was introduced by OYO in December 2022. Through this initiative, customers were able to identify hotels that provided the most reliable and superior customer service.
OYO Accelerator Program
In March 2023, OYO announced the launch of the Accelerator Program, with plans to add more than 200 properties in key Indian cities to its portfolio as part of the accelerator project.
OYO Spotless Stay Program
In July 2023, OYO introduced the Spotless Stay Program, as part of their planned initiatives. The program was designed to implement new cleaning and hygiene requirements, simultaneously enhancing hotel and room decor.
Stay Now, Pay Later Feature
OYO has introduced the Stay Now, Pay Later Feature in June 2023. This feature follows the rise in popularity of buy now, pay later (BNPL) plans for buying consumer electronics from retail stores and e-commerce websites.
OYO New Brand Palette
In cities including Jaipur, Hyderabad, Digha, Mumbai, Chennai, Manesar, and Bengaluru, OYO said it has opened 10 Palette resorts as a pilot program. By Q2 FY24, it plans to increase that number to 40 as per various news reports said in July 2023.
OYO – Partnerships
Some of the prominent partnerships of OYO are:
Lemon Tree
In March 2023, OYO had established a partnership with Lemon Tree. The collaboration aimed to enhance the occupancy of Lemon Tree Hotels’ banquets and event spaces in over 40 locations nationwide, including Delhi NCR, Jaipur, Kolkata, Lucknow, Bhubaneswar, Mumbai, and Pune, among others.
SoftBank
In September 2023, the parent company of OYO, Oravel, had formed a partnership with SoftBank. Through this collaboration, they introduced the premium hotel chain Sunday in India, establishing a relationship with SoftBank Japan.
OYO – Advertisements and Social Media Campaigns
OYO Campaign
OYO launched a multi-film brand campaign that featured renowned actors such as Gul Panag, Kalki Koechlin, Chitrangada Singh, and Kunal Kapoor. The campaign aimed to highlight the everyday experiences of tourists by utilizing television, social media, and over-the-top platforms.
In response to the changing tastes of travellers during the pandemic, OYO placed a strong emphasis on customization and flexibility in their brand campaign. The first movie emphasized the advantages of OYO’s “Nearby” feature, which allows customers to easily book lodging with a tap on the smartphone and takes advantage of OYO’s widespread presence in over 35 countries globally.
OYO – Awards
OYO has won various awards. Some of the prominent ones are:
- In the hospitality sector, the Ministry of Skill Development and Entrepreneurship presented the 2017 National Entrepreneurship Award to OYO.
- OYO won the 2019 ASEAN-India Excellence & Achievement Award.
- OYO won the 2018 ET Startup Awards, the biggest startup competition in India.
OYO – Competitors
The following are some of the top competitors of OYO:
Airbnb
Airbnb is one of the popular and well-known competitors of the company. It was established in 2007 and is considered to be a predecessor and a luminary for OYO. Airbnb serves to be a trusted brand globally due to its affordable prices and availability of excellent accommodations.
Treebo Hotels
Treebo is a growing hotel chain in India that has established its operation in over 113 cities in the country. This company operates in the category of the premium budget segment. Treebo Hotels is based in Bangalore, Karnataka, India.
FabHotels
FabHotels was founded in 2014 by two alumni of “The Wharton School of the University of Pennsylvania.” It rents out 3-star rated hotels at a budgeted price under its brand. FabHotels operates in more than 66 cities, with over 900 hotels in India as of November 2022.
OYO Future Plans
OYO had originally planned to go public in 2022, but due to worries about the worldwide market slump and how it may affect the firm’s valuation, the company decided to strategically delay its IPO to an unspecified future date. This delay was caused by the worry of a reduced worth.
According to a news report from January 2024, the Indian hotel booking company, supported by SoftBank Group Corp., is allegedly in talks with Khazanah to lead a $400 million fundraising to pursue expansion and debt reduction. It’s crucial to remember that this information has not yet been verified.
Furthermore, according to a different news report from January 16, 2024, OYO intends to expand its portfolio by 400 new hotels with an emphasis on religious tourism.
