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Oyo Business Model

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The Business Model of OYO ROOMS. The conventional way of business occurring in the hospitality industry, problems faced by the consumers. The type of business model used by OYO ROOMS and their REVENUE MODEL.

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Oyo Business Model

  1. 1. OYO ROOMS BUSINESS MODEL Oyo rooms is the largest branded network of hotels currently operating in India and Malaysia. Oyo Rooms Business Model is a hotel aggregator model. CONVENTIONAL WAY OF DOING BUSINESS In most cases, 0 to 2-star hotel owners have other primary businesses and the hotels are simply used as a tool to show losses. Many of them don’t bother to see regularly if their hotel is doing any business at all, let’s forget about profitability. So, they are not interested in any marketing or customer service themselves as much as it is generally required from a hospitality business. PROBLEMS FACED BY TRAVELLERS In India, the problem of finding affordable accommodations is massive. Travelers are all too familiar with nightmarish encounters in standalone hotels in India. Contrary to promises, guests arrive to ramshackle buildings, missing signage, leaky washrooms, torn mattresses, unclean floors, sputtering air-conditioning, non-acceptance of credit cards and so on. AGGREGATOR BUSINESS MODEL Oyo Rooms Business Model is a hotel aggregator model. This Aggregator business model has certain characteristics.  The firm organizes the unorganized businesses operating under the same domain.  Make them work as their partners by signing of a contract, and sell their products under its own brand. OYO ROOMS BUSINESS MODEL  Books a part of Hotel’s inventory beforehand.  Organize those hotel rooms under their brand name – Oyo Rooms.  These partner hotels provide standardized service to customers of those rooms as decided in a contract with Oyo.  Bookings are made through the Oyo Rooms website and mobile application. The main focus, is on quality of the service provided. Hence, to maintain the name, they make the partners provide services at predetermined standards while they make them more visible to their user-base. REVENUE MODEL The revenue model of Oyo Rooms is simple.  Oyo Rooms books a part of the hotels’ inventory (EXPENSE)  These rooms are put to match the standardized quality like free Wi-Fi, clean toilets, etc. (EXPENSE)  These Rooms are offered to the customers at Oyo Rooms Website/Application  Users buy these from Oyo Rooms at a predetermined price. (REVENUE) Oyo is currently in its introduction stage in many cities (and in growth stage in others) and it has to provide (and has being providing) heavy discounts to the customers. These discounts often result in prices which are even less than the cost price of these hotel rooms and hence result in losses to Oyo rooms. The expenses also include the heavy expenses on promotional activities to increase the brand equity among the users as well as the remuneration of the employees. To be precise, the business is at loss.

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