Where Can you stay while travelling on your own ?
Did you know, OYO started from a single hotel service in India?
I mean who would believe, that same Oyo through its app-based booking facility, has now turned out as one of the world’s largest hotel network brands? It has spread out in 230 cities with over 8500 hotels.
BY NANKIE BAWA | 7 Mins Read
So, WHAT’S OYO’s SECRET SAUCE?
Is OYO an aggregator or a franchisor?
Oyo started as a hotel aggregator and used to lease a part of a hotel’s inventory
before hand, organize those hotel’s rooms under their brand name (Oyo Rooms).
These partner hotels provided standardized service to customers of those rooms as it was decided in a contract with Oyo Bookings were made through the Oyo Rooms website and mobile application. However, it changed its business model from the aggregator to the franchise model. It involved partnering with hotels, asking them to operate as a franchise, and selling their rooms to customers at competitive prices.
Now, Oyo does not own hotel properties that are listed on their website. Oyo renovates the hotels according to its checklist of standard services, and make the hotel property a part of its “standardized budget hotel chain” with Oyo’s branding.
What makes Oyo’s business model unique and different from other hospitality companies is its standardized hospitality services. It focuses more on user experience rather than only hotel’s room availability and prices.
To become Oyo’s partners, every hotel has to meet a set of guidelines for services, pricing, staff quality, features of rooms, security, etc.
1. Customer Segments of Oyo
- Adventure Travelers
- Leisure travelers
- Family travelers
- Business travelers
2. Value Propositions of Oyo
The value propositions of Oyo are its standardization of services to enrich the guest experience.
Customer experience: Oyo takes full responsibility of services of the hotels listed on its platform, unlike Airbnb that only connects travelers with local hosts.
Other value propositions are:
- Well-designed app
- Simple and easy-to-use app for booking
- Speed and reliability in finding hotels, bars, theatres
- Personalized room features
- Holiday packages & discounts
- Discount membership program
- Community and entertainment services
- Amenities
To refine its value propositions, it has launched separate banners of unique services, like Oyo Townhouse, Oyo Studio Stays, Oyo B Direct, Oyo Homes, Oyo Flagship, Oyo Silver Key, Weddingz.in, Oyo Wizard
3. Customer Relationships of Oyo
Self-Serve Platform – Self-serve website and app
Hotel accommodation Staff – Interacting hotel staff
Customer Service Support – 24/7 active customer support, and to ensure customer loyalty and increase their trust, Oyo tracks their Net Promoter Score metric thoroughly, which gives Oyo the highest customer repeat rate in the industry.
Social Media – Brilliant digital marketing and social media networking
4. Channels of Oyo
- Website and mobile application
- Blogs
- Neighborhood hotels
- Student organizations
5. Key Resources of Oyo
- Hi-tech app architecture
- 458,000 fully leased and franchised hotel properties.
- Customer Database – Large database of loyal repeat customers
- Employees with technical knowledge like programming, development, and
maintenance, and other staff for business management.
- Venture Funding – Venture funding from Sequoia Capital, SoftBank’s Vision Fund,
etc.
6. Key Activities of Oyo
Maintaining a Platform
Partnering with Hotels, Vendors, Event Planers, etc
Maintaining quality for a great Customer experience
Sales & Marketing Activities
Recruitment
Business growth Activities
Communication with all the stakeholders
7. Key Partners of Oyo
- Hotels, clubs, corporations, banquet halls, etc.
- Event organizations
- Booking confirmation, location, navigation details, and cancellation can be
managed through communication platform such as Whatsapp
- Electronic payment services such as Paytm
- Taxi service providers such as OLA
- Dinner Reservation Services such as Dineout
- GPS services with Google maps
- In-room entertainment services with Netflix
8. Cost Structure of Oyo
- Platform (website and app) development and maintenance costs
- Renovation and branding cost
- IT infrastructure cost
- Marketing and advertising costs
- Employees salary costs
- Hotel Partners’ commissions
- Legal cost
- Other operational and administrative cost
9. Revenue Stream of Oyo
- Commissions
22% of commissions is charged by Oyo every month from hotels owners. It may vary as per the services and features offered.
- Room Reservation Fee
Customers pay a room reservation fee according to their services chosen. The room fee is charged with a few percentage margins of the hotels’ prices. For example, if a room is priced at Rs. 1,000 per night, Oyo makes only 10-20% commission from it, and that is their actual revenue.
- Membership fees
Users who subscribe to Oyo Wizard memberships are charged with premium fees ranging from Rs 500 to Rs 3000.
- Advertising
Oyo also charges different companies to place their ads on Oyo’s app and website. It also generates sizable revenue for Oyo.
- Sponsors and Partnerships
Oyo also charges some amount from its sponsors and key partners by promoting their brand name through advertising on their app.
- Consulting Services
Oyo charges for its business consulting and data analysis services, it provides to its clients, including hotel, clubs, organizations, etc. It provides these services as it owns an extensive database of locations, hotels, event organizations, users, and their preferences.
Hence, Oyo has truly revolutionized the hotel industry with its efficient use of technology. It has redefined living spaces and taken the user experiences to the next level. With its quick booking facility, hassle-free rental experience, and convenient pricing, it has transformed the way people stay away from homes.
Its growth is unstoppable with its continual expansions to newer markets while it has strongly built its brand name as the most prominent hotel network with both high quality and affordability.