Indian hotel chain Oyo targets more rooms in Southeast Asia

Travelling across India at the age of 17, Ritesh Agarwal stayed in more than 100 bed and breakfasts, guest houses and hotels, leading him to realise there was a massive dearth of affordable and good-quality hotels in the unbranded budget hotel category.

This spurred him to establish Oyo Homes & Hotels in 2013. His original business model was to aggregate and brand small budget hotels in India, offering a common reservation platform and branding with minimum quality standards. Oyo is an acronym for “On Your Own”.

In the span of six years, Agarwal managed to grow the company in India to become the world’s third-largest and fastest-growing hospitality chain of leased and franchised hotels, homes and living spaces.

And he is not resting on his laurels. Malaysia is Oyo’s first venture outside India and the company has been expanding rapidly here as well as in the Southeast Asia region.

Oyo is targeting to achieve two million rooms by 2025 in Southeast Asian market from 75,000 currently. The company has a presence in Indonesia, Vietnam, Thailand and the Philippines.

Since its foray into Malaysia in 2017, Oyo Rooms Hospitality Sdn Bhd has received one million room bookings in all its managed and franchised properties throughout Malaysia.

To date, the company has more than 16,000 franchised and leased rooms in more than 450 properties across some 50 cities throughout the country.

Oyo Rooms Hospitality country head Tan Ming Luk says the company has achieved significant growth in the last two years since its inception.

“Malaysia is a strategic growth market for Oyo in Southeast Asia. We are constantly looking at being a long-term, wide-scale, impactful and sustainable company for our customers, our asset owner partners, our stakeholders and our Oyopreneurs.

“We look forward to strengthening our footprint across the country with a diverse portfolio and relentless commitment towards delivering more choices and delighting our guests with exceptional customer experiences,” he tells FocusM.

Apart from the budget hotel, Malaysian homeowners also show strong enthusiasm towards Oyo Homes, which is the company’s new offering.

“We are witnessing a lot of interest in this category. Travellers trust our brand and we are already known for pioneering effective solutions tailored to their needs, and Oyo Homes is designed to do exactly that,” Tan adds.

Chic living spaces

Tan Ming Luk

According to Tan, the hospitality chain aims to extend the new Oyo Homes offering to the most travelled destinations in the country, such as Kuala Lumpur, Selangor, Melaka, Penang, Kedah and Johor.

Oyo Homes combines Oyo’s existing on-ground operations, hospitality technology, housekeeping skills, revenue management algorithms and distribution prowess to deliver a hassle-free solution to homeowners.

More than 1,000 homeowners in major cities in the country have been part of the Oyo chain of home management service.

Tan says the company is working towards creating quality and chic living spaces.

“What we are attempting with Oyo Homes guarantees a unique experience for our guests and higher yields for homeowners. Malaysia offers a huge market opportunity, and travellers visiting the country are keen to explore the comforts of a fully-managed holiday home.”

On the topic of collaboration and partnership, Tan notes that the company is open to working with brands that can leverage the synergies of each other, seamless experiences and customer-first approach backed by innovative technology.

Embracing technology

Technology is deeply embedded in Oyo’s DNA – the company utilises technology-based solutions on the suppliers’ side to help them manage end-to-end operations.

“Technology continues to be a key growth driver and competitive advantage for Oyo. We use innovative technology solutions end to end to facilitate standardisation of services, amenities and in-room experience, thereby helping maintain service standards.

“This is further enhanced by the diverse talent that includes people with a design background, tech experts, and more,” Tan says.

He adds that the company has an in-house stack of proprietary technology powering more than 20 applications for all its stakeholders, including customers, asset owners and employees.

Backed by more than 400 microservices and 2,100 full-stack engineers spread across multiple locations, Oyo is able to deliver a consistent high-standard experience to travellers.

“We’re using machine learning for dynamic pricing, and artificial intelligence and natural language processing for helping customer services. The Internet of Things is a big area for us where we are experimenting with smart switches and smart lighting to significantly improve guests’ overall experience,” Tan says.

Industry forecast

With Visit Malaysia 2020 only a month away, Tan says the company is optimistic that its collaboration with Tourism Malaysia to extend Oyo Malaysia’s brand will help achieve the target of 30 million tourist arrivals in Malaysia by December 2020.

“We hope that our 450 Oyo hotels or 16,000 rooms across the 50 towns and cities in Malaysia are ready to offer our guests a unique brand of Malaysian hospitality. In fact, we hope the guests will gain experience as well as better value each time they stay with us,” he says.

He adds that the company will continue to bring its successful model of combining design, hospitality and technological expertise, financial acumen and operational capabilities to real estate owners around the world.

These methods will give them the ability to get a higher return on investment, access easy financing opportunities, transform their hotels, and offer good quality customer service, thereby significantly increasing occupancy and profitability.

[box] History of Oyo

In 2012, Ritesh Agarwal launched Oravel Stays to enable listing and booking of budget accommodations. After undertaking months of research and staying in various bed and breakfast homes, guest houses and small hotels across India, he rebranded Oravel Stays to Oyo in 2013.

Oyo partners with hotels to give similar guest experience across cities. Shortly after launching Oravel Stays, Agarwal received a grant of US$100,000 as part of the Thiel Fellowship from Paypal founder Peter Thiel.

Agarwal is the first resident Asian to be accepted to the Thiel Fellowship. The fellowship is intended for students under the age of 23 and offers them a total of US$100,000 over two years, as well as guidance and other resources, to drop out of school and pursue other work such as scientific research, creating a startup or working on a social movement.

Except for three properties that it owns through partnership funds, Oyo does not own any of the hotels it manages around the world, including Malaysia. The business is purely management franchising.

In 2018, Oyo acquired two assets – a Chennai-based service apartment operator Novascotia Boutique Homes and Weddingz.in, a Mumbai-based online marketplace for wedding venues and vendors. In May this year, Oyo acquired Amsterdam-based @Leisure Group, Europe’s largest vacation rental company.

Over a span of six years, the startup expanded globally with thousands of hotels and vacation homes, and millions of rooms in India, Malaysia, the United Arab Emirates, Nepal, China, the UK, the Philippines, Japan, Saudi Arabia, Sri Lanka, Indonesia, Vietnam and the US, among others.

The company’s investors include SoftBank Group Corp, Greenoaks Capital Partners, Sequoia Capital India, Lightspeed India Partners, Hero Enterprise, Airbnb Inc and China Lodging Group Ltd.

Oyo currently has over 17,000 employees globally, of which approximately 8,000 are in India and South Asia. Oyo Hotels & Homes is now identified as a full-fledged hotel chain that leases and franchises assets.[/box]

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