How a college dropout became the owner of the Largest chain hotel of India

1. 1. Introduction
OYO Rooms is India’s fastest growing branded network of budget hotels founded
by young entrepreneur Mr. Ritesh Agarwal on 2013. Within a short span of time,
OYO Rooms currently operating in more than 100 Indian cities including Delhi,
Gurgaon, Mumbai, Bangalore, Hyderabad, Goa, Chennai, Kolkata are few to
name. Similarly, OYO has been trying to be present in major Metros, Regional
hubs, leisure destinations and pilgrimage towns.
According to a research carried out by CB Insights, a US based business analytics
firm, for The New York Times, OYO Rooms is among the companies that may be
the next start-up unicorns.1 As it provides standardized rooms at budget hotels with
features such as an air condition, complimentary breakfast and Wi-Fi with 24 hours
customer service support number of guests using OYO Rooms App for booking
hotels has been increasing exponentially. Since, the services are fully IT enabled
guests can also order beverages and request room service through the OYO Rooms
app. Hotel owners who partner with OYO Rooms are connected via world’s first
tablet based property management App and become part of the OYO brand.2
1.1 Visionand Values
Vision:
To change the way people stay away from home.
Standardized
OYO Rooms promises to provide the same amenities and the same awesome
experience across all its rooms.
1 The New York Times (2015-08-23), "50 Companies That May Be the Next Start-Up Unicorns",
Retrieved 2015-08-25.
2 Rai, Saritha (Forbes/Asia-2015-08-06), "Why A 21-Year-Old Is Building OYO As An Uber (And Not An
Airbnb) For Hotels In India", Retrieved 2015-08-25

2. Affordable
OYO offers rooms at prices that no other player in the budget segment offers
today.
Technology Driven
OYO uses technology to link all its functions and provide the customer a seamless
awesome experience.
2. Business Model
OYO Rooms is an online aggregator of budget hotels. OYO Rooms partners with
hotels with the aim of standardization on various measures in each room including
free Wi-Fi and breakfast, flat screen television spotless white bed linen of a certain
thread count, branded toiletries, 6-inch shower heads, a beverage tray and so on.
The quality standards of rooms are audited every few days so that the guests are
assured quality services of OYO Rooms. The per night costs of OYO’s budget
stays range from Rs. 999 ($16) to Rs. 4000 ($66). In order to maintain consistency
in quality services, OYO provides property owners with support such as quality
standardized supplies and service training.
Initially, OYO Rooms reaches out to prospective hotels to partner with them.
However, as time has changed due to technological advancement in general and
mobile based apps in particular, a hotel owner can also reach out to OYO through
their webpage. The OYO team then contacts the hotel and audits the hotel to
understand the changes needed to standardize the property as per OYO standards,
and shares other details of the partnership agreement.

3. 3. Evolution and Funding
The journey of OYO Rooms was started when Ritesh Agarwal dropped a college
and launched his first start‐up Oravel Stays Pvt. Ltd. in the year 2012.3 Oravel was
designed as a platform to enable listing and booking of budget accommodation.
Being an enthusiastic entrepreneur, he soon realized that the budget hospitality
sector lacked predictability. Therefore, he converted Oravel to OYO Rooms in
2013 with an aim of offering affordable and standardized accommodation. In 2013,
Ritesh was selected for the Thiel Fellowship- a two-year program started by Paypal
founder- which granted support of USD 100,000 to pursue his start-up idea.4
Ritesh Agarwal, Founder, OYO Rooms
3 Economic Times (2015-08-03),"Ritesh Agarwal's journey from being a SIM-seller to the helm of OYO
Rooms". Retrieved 2015-08-25.
4 www.ndtv.com (2015-08-06), "At 21, He's the Mind behind Multi-Million Dollar Start-Up OYO",
Retrieved 2015-08-25.

4. The company has raised multiples rounds of funding, the last one being an
impressive USD 25 Million funding from Lightspeed Ventures, Sequoia Capital,
Greenoaks Capital and DSG Consumer Partners in March 2015 and provides the
same amenities and the same experience across all its rooms at prices that no other
player offers across so many locations.
As Ritesh's story had been widely covered by the Indian media, he has won
Business World Young Entrepreneur Award and the TiE-Lumis Entrepreneurial
Excellence Award; investors like the Softbank Group, Greenoaks Capital, Sequoia
Capital and Lightspeed India have started to fund OYO Rooms.5
Table-1:Funding of OYO Rooms
Year Amount Funding Source
2012-December $ 5 million Venture Nursery
2013 $0.1 Million Thiel Fellowship
2014-Febreury NA Lightspeed Ventures
2015-March $ 25 Million Lightspeed, Sequoia and others
2015- July $100 SoftBank
Source:www.oyorooms.com
4. Growth
OYO Rooms started with one city and one hotel (OYO Rooms Huda City Centre)
in Gurgaon in May 2013 and has seen a tremendous growth. With whopping
budget hotels under its branded network across the India, OYO Rooms‘growth has
been nothing short of phenomenal, and the rapid expansion has meant that the
funded start-up now owns India’s largest branded network of hotels. The company
as of August 2015 has more than 2000 hotels with more than 20000 room capacity
spread over 100 cities of India. Moreover, the company has planned to add more
5 The Hindu (2015-08-03), "OYO Rooms raises Rs 630 cr in funding led by SoftBank", Retrieved 2015-
08-25.

5. than 50 cities by the end of 2015. Now, OYO Rooms has been named India's
largest budget hotel chain.6
Continuing with its rapid expansion drive, OYO Rooms today crossed an important
milestone as it became India’s largest budget hotel chain. Backed by the funding
from various sources and strong consumer partners, OYO Rooms also has set itself
a revised target to expand its network. Ritesh Agarwal, Founder and CEO of OYO
Rooms are quite hopeful that India’s budget hospitality market is ripe for
disruption and as the market leader; OYO is best poised to lead this change. Strong
customers’ feedback and loyalty encourages the company to redouble its growth
efforts to bring the OYO experience to as many Indian travelers in as many
different cities as possible and at the earliest.
As a leader, OYO Rooms has created a new paradigm in the hospitality sector
through an asset-light managed marketplace model. This innovation coupled with
sound execution has been recognized by several national and international
accolades including TIE Lumis Business Excellence Awards, India International
Travel Mart Award and Lufthansa ET Now Runway to Success Award. Now the
company has more than 1000 employees including 10-20 people from IIMs, more
than 200 people from IITs, HBS and Ivy.
Table-2:Detail of OYO Rooms’Properties
Year Number of Property (Hotels)
2013 January 1 Property
2013 June 3 Properties
2014 July 13 Properties
2015 August 2000+ Properties
Source:www.oyorooms.com
6
http://startupbeat.com/2015/05/27/oyo-rooms-is-now-indias-largest-budget-hotel-chain/

6. 5. OYO App
OYO Rooms had also launched its mobile app, which promised a hotel room
booking in less than 10 seconds, has now been at the heart of what the company
does, it has been able to provide its customers with a seamless experience from
booking to check-out.
The OYO Rooms mobile app is also the world’s first personal room service app
that allows guests staying at an OYO to order room service directly from their
smart phones. The app has already crossed more than 100,000 downloads within a
month of its launch. Available on Android and IOS platforms, more than 15,000
bookings have been made through the OYO Rooms mobile app within a week.
According company statement, OYO Rooms started its mobile app segment and is
ahead of other players who have recently entered this space. OYO is the pioneers
in bringing the comfort and experience of an expensive hotel at a really affordable
price and use technology to enhance customer experience. That is why most of the
branded hotels associated with OYO witness more than 80 per cent occupancy,

7. which indicates a huge success of business and customers satisfaction. It is what
that made the company confidence to continue to grow at sucha rapid pace.7
OYO Rooms tried to redefine the meaning of a budget stay and provide our guests
a truly seamless experience with the app which allows customers to book an OYO
in just a few clicks. The app has been a real hit among users, with over 3 lakh
downloads in just three months. The company gets almost half of its bookings
through the app as of today, which just goes on to show how tech-enabled utilities
are truly the way forward.
6. Future Prospect
Tech-enabled, branded hospitality network OYO Rooms, which went live with its
website oyorooms.com in April 2013, is set to become India’s largest branded
hospitality network of budget hotels in the near future. Of the 60,000 branded
hotel rooms in the country, the largest inventory is held by the The Taj Group with
9,000 –10,000 rooms. Pointing out that there are 350 million budget travelers in
the country who are looking for high quality, standardized rooms are 1.5 million
unbranded budget rooms in the country which are priced between Rs. 2500 to Rs.
4000. However, very few of them offer the budget traveler a standardized,
predictable experience with assured facilities, services and amenities.
OYO Rooms are priced between Rs. 999 and Rs. 1499 inclusive of taxes and are
equipped with comfortable beds, air-conditioning, TV, free unlimited Wi-Fi, clean
attached washrooms and complimentary breakfast service. Therefore, there are
high potentials of OYO to be the largest hotel chain of the country. Although
currently OYO’s largest market is Delhi NCR region in the next three to six
7
http://realty.economictimes.indiatimes.com/news/hospitality/meet-oyo-rooms-ritesh-agarwal-the-
dropout-who-dined-with-peter-thiel/48540805

8. months, Bengaluru will take the lead and hold that position for the next three years,
reads the company’s website.
OYO has a plan to expand its Bengaluru offering from 300 rooms in 30 hotels in
MG Road, Brigade Road, Koramangala, Whitefield and Indiranagar to 2,000
rooms in 150 hotels over the next 12 months.8 The city attracts a diverse customer
base; repeat rate of customers is very high. While hotel stays are always planned,
the capability of these customers of making an impulse decision to stay in OYO
hotels is also high. According to company source, the OYO brand will offer 50,000
rooms in 200 cities by the year-end and grow to 500,000 in the next two to three
years.
8
http://www.thehindubusinessline.com/companies/oyo-to-open-10000-rooms-in-45-
cities/article7102247.ece