Capitalising on an extremely customer centric business opportunity, this 26-year-old founder has already monopolised the Indian market encompassing a staggering $10 billion valuation. Founded in 2013, OYO has exhibited aggressive market growth in terms of both size and loyalty related metrics. Coming from India’s second most undeveloped district, Ritesh Agarwal’s optimism and persistence are what allowed him to trounce his odds. Within a concise span of mere 7 years, this colossal hospitality chain presently engulfs about 1.3 million rooms and several OYO trainings institutes to groom their employees in over 80 countries. In a country where college degrees are excessively obsessed over, this observant and opportunistic college dropout has built a hospitality empire with a remarkably expanding global footprint. Since his early childhood, this ambitious hotelier’s entrepreneurial persona instilled within him, a unique perception to solve problems.
The very essence of this business idea was derived from his personal experiences with budget hotels. He observed that a major proportion of affordably priced hotels in India lack decent services and quality. Be it patchy walls, lack of hot water & WIFI, squeaking doors or dirty bedsheets, the inconvenience caused by these accommodations could be excruciating for travellers. That is when Ritesh Agarwal stumbled upon this huge business opportunity of investing in these overlooked hotels and improve their service standards. As per an article by Bloomberg (Agarwal, R cited by Rai, S 2019), Ritesh Agarwal states that in 2013, these slight improvements in partner hotels observed skyrocketing occupancy rates from 18% to 90% in the first month itself. Today, with an annual revenue just shy of one billion US dollars, OYO adds about 75 hotels to its artillery every day. The key to OYO’s volatile growth has been their evident constant priority toward expansion and increasing market penetration. In 2016, they were growing by almost 60% annually whereas their growth projections for this year are over a whopping 300%. The entire objective of this unique business plan was to provide customers with quality and last-minute accommodation on shoestring budgets. The company aspired to covert broken, unbranded assets around the globe into better quality living spaces (Rai, S. 2018).
It all started with a $100,000 fellowship from the co-founder of PayPal- Peter Thiel, followed by a sizeable pump worth $100 million VC from one of its largest stakeholders- SoftBank Group Corp. The business of the company has also substantially evolved over the last three years. Starting as a hotel & hostel aggregation and booking platform, OYO in 2013 prioritised providing quality services whilst ensuring that they offered the minimum standards of services to effectuate the responsibilities which the industry entails. From 2015 however, the company’s motto became more intensive with regard to certifying optimisation for occupancy and repeat customers. This shifted the company’s stance from leasing spaces to collaborating and partnering up with hotels across the world. The partnership terms might provide OYO the authority to renovate rooms and train staff to ensure upholding the brand stature.
By 2023, the young company aims to become world’s largest hotel chain via streamlining a major proportion of their investments towards expansion in Europe and the United States of America. Another substantial proportion of its investments will be aimed towards automation driven technologies to propound OYO a nudge over the generic tech centric models.
OYO rooms is an exquisite example of how one small idea and a customer centric approach is all one needs while sky is the limit!