Great Lakes Institute of Management,

Chennai
Class 3 Group 8

FT214008 - Aman Sarawgi

FT214050 - Pratyuosh Srivastav
FT214058 - Renjith Varma
FT214067 - Sanjay Nadadhur Ramesh
FT214076 - Soumyadip Sen
FT214085 - Tanisha Batra
FT214094 - Yatharth Dixit
 Case Study: Oyo Rooms
Background:

 Oyo (On Your Own Rooms) is hospitality chain of leased and franchised hotels,
homes and living spaces.
 It is India’s third largest start up and was founded in 2013 by Ritesh Agarwal.
 The Softbank-backed start up is expanding globally with thousands of hotels,
vacation homes and millions of rooms across India, South-East Asia, China and US.
Revenue Model:

 Identifies underutilised hotels, houses and corporate spaces in the unorganised

space.
 Equips those properties with standardised amenities.
 Regularly audits those spaces to maintain hospitality standards.
 Prices properties dynamically using in-house analytics in real time.
 Sources of revenue:
a. Where Oyo provides a platform to property owners to market their rooms
under Oyo’s brand: Receives booking-based commission
b. Where Oyo acquires inventory (few rooms/the entire property) on lease in
various hotels and operates the same: Room rental from customers less lease
payment and operating expense
Business environment analysis:
Political:

 No significant factors.
Economic:

 Increased disposable income of middle class in India

 Availability of low cost airlines boosts travel and tourism industry, which directly
corresponds to increase in demand for hotels
Socio - Economic:

 People view hotels to be unreliable and hence, prefer to stay at relatives’ place
 Customers have become more hygiene conscious and prefer basic facilities like clean
washrooms and proper linens
 Cultural shift - Millennials and families prefer to use hotels to host parties and
wedding events
Technology:

 People are opting to book hotel rooms through apps with the advent of digitalisation
 A larger chunk of population is using internet on mobile phones
 Managing operations is becoming easier with prevalence of data analytics tools and
software
Environmental: No significant factors.
Legal:

 With expansion into other geographies, the company is liable to follow the laws and
regulations prevalent in those countries
Competition analysis:

 Industry Rivalry: Treebo (focus on budget hotels and own app/website for booking),
fab hotels, Players in the organised sector like ITC introduced mid-scale hotels
(Fortune Park), Taj introduced budget hotels (Ginger) and mid-scale (Gateway).
Hence threat of Industry rivalry is very high.
 Threat of substitution: Homestay networks like AirBnb and MMT that allow home
owners to rent extra space as an alternative to hotel rooms
o Airbnb also offers business ready homes for working professionals.

Hence threat of substitution is high.

 Threat of new entrants: The progress of OYO has drawn interest from other OTA’s
like MMT, Ixigo, Booking.com, Goibibo, Yatra into hotel services. However,
benchmark set by OYO makes it difficult for them to compete on this scale. Thus,
threat of new entrants is low.
 Bargaining power of buyers: OYO has only 1.5% share in India’s budget room
market, which leaves the buyers with multiple options to choose from. Hence threat
of bargaining power of buyers is high.

 Bargaining power of suppliers: The deflation of room prices reduced the margin of
property owners. They in turn formed union to demand increase in prices and even
refused the bookings made through OYO. Thus, their bargaining power is high.
Value Proposition offered by Oyo for different offerings:
Standard Offerings:
 Focus on providing budget rooms with clean washrooms, spotless linen, air-
conditioned rooms with a television having D2H Connection, free breakfast and free
Wi-Fi.
  Improving staff training and using technology to manage operations for providing
better customer experience.
 OYO app is easy to access and provide better user experience in terms of booking the
room and doing payments. Customer can review the pictures/photos of rooms
before booking and can select the room accordingly.
 Enhancing the customer experience through OYO Captain facility makes it easier for
customer to contact in case of any issues.

Brands Features Availability Customer base

OYO Rooms Same as standard Presence In Mainly middle
offerings multiple location class families and
making it easily young adults.
accessible.
OYO Flagship Premium Presence in Tier 2 Mostly business
infrastructure cities and above. travellers with
including Wooden or slightly higher
vitrified-tile flooring, price than
mini-bars, tea and
average.
coffee station, king-
sized bed
OYO Townhouse Apart from the It is found in Mainly for
facilities provided middle of metro millennial
by OYO flagship, cities. population who do
Netflix account in not want
every room, restrictions while
business services, staying.
global café, retail
store, high quality
exteriors, 24-hour
security, highly-
trained staff is also
provided.

Issues:
1. Discontentment among customers when they are given a Non- OYO Authorised
rooms instead of OYO specified rooms.
2. Oyo were scaling up too quickly and they started shifting from being technology
partner to a hotel brand itself they were risking to compromising with quality.
3. The new brands of OYO demanded heavy investment which could have helped them
in expanding in budget hotel section.
4. Dissatisfaction among hotel owners due to deflated prices of hotel rooms.
5. Hotel owners were self-booking the rooms to increase the prices.
Possible Solutions:
1. Monitor the bookings of room more efficiently to avoid any hassle at the time of
customer arrival to the hotel.
2. Concentrate more on the budget rooms segments to expand the market share in the
same field.
3. Address the concerns of hotel owners regarding the pricing to come up with some
nominal price which can satisfy both the customer and the hotel owners.