Ritesh Agarwal Curated
Founder and CEO, OYO Rooms
CURATED BY : +44 others
How you are planning to use $100 million which you have raised recently?
We are already using internal proceeds. We are investing in new cities. So, we don't need further capital for that. We will use this for one large customer initiative for making sure we can deliver the great guest experience. So, partnering the right folks for that. Which means, we have to build great technologies and hire great people and build a brand which consumers can trust and believe. Our focus area would be recruiting people along with building great technology as well as building a great brand.
What are your expansion targets for this year?
We have 25,000 rooms across 104 cities. We are in every important business and leisure destination. We are available in every metro, every leisure destination as well as pilgrim destinations. We are the country's largest brand network of pilgrim destinations. We are in Rameshwaram, where there is no brand hotel to Varanasi to Tirupati to Nashik to Shirdi to Vrindavan. At end of this year, we aspire to end with 150 cities and 50,000 rooms as part of branded network. We always focus on high occupancy. Every hotel that is more than 2 months on OYO's platform does more than 80-90% of occupancy. On that scale, if we have 50,000 rooms, that would be a huge part of India's travellers set that would be staying here.
So, what are the spends like?
Every month on an offline marketing, we spend less than Rs 50 lakh. By spending this amount, if we are able to create momentum nationally, it will be unbelievably huge. Online, we don't share the number, but it will not be much higher than this. Our customer acquisition cost is lowest in the industry and repeat rates of customers are possibly the highest in the industry.
What about your marketing campaigns and strategies?
We have done a film with Raveena Tandon and Manoj Bajpai. Our belief is to make a lot of things that touch people's everyday life from our referral programs, social communities, etc. Today, we have the most amount of 'likes' as a hospitality brand on Facebook, the most number of followers, the highest amount of engagement and comments, etc. Social media is so upfront, but the hospitality industry never used it. Because we have 25,000 rooms, making a film and putting it as a TV commercial was what everybody expected out of us. But because we made such a compelling movie, we have no cost of distribution at all. We put it online and people shared it so much, we had more than 400,000 shares and 500,000 views. Our business grew up by 25% overnight after that video went out, and the scale at which we operate, 25% business growth is unbelievably huge. This is literally so inexpensive. We felt that we should say our story and remain honest with our guests and in that, people adopted us very beautifully. As a brand, we will also do mass marketing as well but our focus would be to do things which will touch people's lives emotionally. We will also make sure we can do it on a more inexpensive platform. We want to be a daily brand but not a once-in-a-while brand. In Mumbai, we have not done a single hoarding of OYO or bought banners of OYO. What we have done is put a board outside our hotels. In Bangalore, we have done branding of all Vayu buses, which now sport an OYO brand and we have been doing it for 8 months. We want to be in the right places where our customers can see us and make a decision. We want to do an inexpensive way of branding which is very specific. We will do mass marketing but only for a specific duration so that OYO Rooms gets established.
So, what is the target six years from now?
In the long term, we will take our hospitality experience on a significantly new level. We have, at various levels, invented how hospitality experiences would look like. At lot of levels, we have transformed how the hospitality experience would be by processes and technology. Now, we are looking at next-gen model as how can we have keyless checks in, how we can make sure that people can reserve hotels for reasons which are innumerable. At lot of levels, we are seeing new age scenario of usage of OYO and hence, we are building experience to a new level. We are all working towards delivering that in the next few years and that's a top focus area for us. I think part of that is also creating a team that will work together to deliver the OYO experience. And hence, there are three important areas such as technology, new age marketing which is inexpensive but communicates what you want to tell your guests, and a great team, which is extremely important as you build you company. We build OYO with basis of building a team which is not just great for our segment, but we possibly have the best team any start-up can possibly have. That is what we would like to build going forward as we grow.
OYO Rooms is one of the most talked start-up brands in the hospitality segment. There are a lot of players in the sector who imitated your product. How are you looking at this competition?
I'm delighted that our model is getting copied. Imitation is the best form of flattery. We've been able to innovate and create something that is generating employment for people, not just for our employees or indirect employees with hotels, but also potentially for other people to come in this space. So, the good news is we have created this space and led this from the forefront for a long while. We continue to have significant market share, much more than 85-90%. We have 25,000 rooms as part of our branded network, while our closest competitor's number would be around 3,000-4,000 rooms. We do close to 500,000 room nights per month and the closest number to that would be 15,000-18,000 room nights a month. The scale on which we are operating is significantly different from the scale on which anyone else is operating. We like more people coming in this space as everybody else is trying to do something new and it is a learning for us as well. But we are way ahead. Of course, we are keeping an eye on what people are doing but we are looking more at what OYO needs to become six years from now, and we are working towards that – of becoming something of a global aspirational brand so that people know us as what they can learn from and imitate.
What are your growth projections for this year?
We have been opening one hotel a day in the U.S. for the last few months. At this point in time, I think that's enough, especially because of the focus on consumer service and partner experience. Our view is, that incremental one additional hotel is not as valuable as making sure that our consumer services are very well-organized.
Can you talk a little more about your performance in the U.S. so far?
In less than a year after launching here, we manage over 300 hotels. Our revenue run rate at the end of December 2019 came out at roughly $178 million. For a company that had just started in the middle of the year, to grow to that scale in a matter of months is definitely a sizable impact. We have been able to also bring in asset partners who have multiple assets with us. And most importantly, the quality of management we have recruited both in the U.S. as well as globally has been truly beneficial for us.
Let's discuss your investments in data science and analytics. How do you use them in your operating model?
One example is, in the U.S., we figured out there are 60 clusters across 35 states where if you operate, we get significantly more gross margins than other markets. Which is why we are highly invested in making sure that our teams are in those markets going and scouting more assets and bringing them together. It ranges from site selection, asset management, operations to serving customers. I went to an Oyo hotel this morning, and if they get the elevators fixed, because they are so slow, they'll get a 7 percent jump in RevPAR. Our systems can constantly read all the feedback that is coming in, predict the cost of [fixing] it, what the potential jump in RevPAR could be. And if you invest that cost, what's the marginal jump in net operating income that you can generate in your property? We also see opportunity in being able to manage consumer distribution—that is, how do you get more B2B customers versus B2C customers?
The coronavirus obviously is impacting your Chinese business. What do you want to say about this?
It's very early for us to predict how long the impact would be. At Oyo, we've provided free cancellations for all our customers. We have, as management, taken pay cuts. I have taken a 100 percent salary cut, and we are trying to [provide] N95 masks and all the other support that we can. One of our Oyo hotels is near the hospital [in Wuhan] which got built in 10 days and we are providing rooms either free or at least one-fifth of the prices of any other hotel in the neighborhood for the doctors who are coming to that hospital.
What might the percentage breakdown look like, for India, China, the U.S., the rest of the world?
That's a little before-time now because the markets are in different phases. Today, our biggest sources of revenue across the world are Asia, Europe, and the Americas. The Americas are our fastest-growing part of our business because they're also the youngest, but the results that we have seen in the Americas are very satisfying.
Where do you see the business in the next five years?
Our longer-term aspiration remains the same. That is, we want to serve our customers to get better spaces at the right price point. Last year we served 180 million customers. Our belief is these consumers are constantly looking for better service, the right price point, the right locations, and our focus is making sure that we serve them for those specific services.
In India, you started out by signing a lot of independent hotels. In the U.S., independent hotels dropped from two-thirds of the market in 1990 to less than 40 percent today. How are you finding your hotels to sign into the network in the U.S.? Are they mostly independent? Hotels leaving chains? A combination?
It's everything. But the way we find them is really by references. Our asset owners end up giving us multiple hotels of their own and they call other people and tell them to sign up with Oyo. References are our single biggest way of growth in the U.S.
Do you have a designated corporate sales team?
Yes. [The company later confirmed it has an eight-member team that it plans to grow.]
What are your plans for the U.S. market when it comes to business travelers for 2020 and 2021? How do you plan to grow that share?
The business travel market is something we are very focused on. The reason is, we are finding good quality space right from Times Square in New York to Killeen, Texas. That spread is very hard among hotel chains. On top of that, finding an experience that is consistent and is always 10 percent to 15 percent better priced than other competitors, while being convenient to reserve and use is a proposition that is hard to beat. We're quite enthused about the opportunity in B2B sales with corporates, small and medium businesses, and trucking companies and airlines. We see all four as very significant opportunities for growth.
What percentage of the B2B and enterprise segment is your U.S. business?
We will give you an exact answer. [About 20 percent, Oyo confirmed in a follow-up email.] But I believe that in the U.S., 20 percent to 30 percent of revenues are enterprise opportunity because the one additional thing that I did not talk about that we are seeing in the U.S. is also the airline business. That is also quite attractive.
Speaking of your business segment, data from last year show that about 30 percent of your bookings in India are for business travel. What opinion do you have on this?
Yes. It's important to note that this 30 percent is B2B business rather than business, because there may be a lot of customers in the rest of the 70 percent who may be still reserving the Oyo hotel from the mobile ad but for business. That roughly 30 percent is from customers reserving us through the enterprise tools, or the agents are reserving us using the agent tools. We recently announced we saw an 80 percent jump on the calendar year between 2018 and 2019 in our corporate enterprise business. We see enterprise as a very attractive business, not just in India but across the world. Here in the U.S., we see a significant amount of demand from large corporations having a large amount of employees traveling. We see small and medium businesses which are young, or old, but family run. And Oyo operates in urban destinations like New York and Las Vegas, but we also operate in a large number of small towns in the U.S. We see, for instance, a large amount of trucking companies who would sign annual contracts with us for staying at Oyo hotels on the freeways. We have a specific product called Oyo for Business where you have the ability to set budgets for your employees, you can have approval systems, centralized invoicing, requests for proposals, and so on. That has enabled us to attract a lot of partners to join us.
Is it a program where you have to attain certain levels in order to be invited into the club?
Yes. It's collaborative partners with a [Net Promoter Score] of 85-plus. They get some additional benefits, from their ability to get better margin structures from us to additional rewards, to more consumer demand, to getting preferential B2B customers, because B2B customers have a better RevPAR and a better repeat rate, so we prioritize them across various places.
Then regarding partner relations, I read that in November 2019 you introduced Oyo Club Red, which is a rewards program for property partners. Is that mostly for India or is it a global program?
Oyo Club Red is in India, but we intend to roll it out across the world. We realized we have a program where we penalize partners for not delivering good customer service, and we realized that the partners that were doing a good job were not getting appreciated. [And] we and our broader network should be learning from them while at same time they should get appreciated.
You had a blog post on Feb. 17 that mentioned the need to improve guest satisfaction and partner relationships. What are you doing to improve customer satisfaction?
Our CFO wrote this blog where we've clearly laid out our charter for customer service and partners. There are a few important steps we are taking to improve on our consumer service. The first is making sure that we continue to become more and more transparent. We are actively providing consumers more details like ratings, a lot more reviews, context and comparison with other Oyo hotels in the neighborhood; what's good and what could be potentially improved on. The second is, we are enabling capital either directly or through third-party banks and financial institutions for the asset owners to improve their underlying infrastructure. And the third is that we are providing service-based training by means of our centralized service training program for our asset team members to make sure we can provide better services for them. Our aspiration is to make sure no Oyo hotel across the world should have less than a seven out of 10 rating. We believe that there's a big opportunity there.
What did you learn from the vast expansion and then the subsequent need to scale back?
This is something that well-run companies need to constantly do: be introspective and look at the previous year and say, what did they do well that they should double down on, and what did they do that they could learn from? You never know when you launch in 100 cities whether all 100 are going to work. Or you can make sure that out of 500 [cities], you can eliminate 400 with a lot of data and learning, but among the final 100, you will still get 10 percent or 20 percent of the cities wrong. And we did the same. At the same time, we feel quite pained that the outcome has led us to say goodbye to a lot of our fellow colleagues. We're doing the best we can to make sure that all of them get severances and they get 24/7 outplacement services. There are over 300 companies who we are connected with, to be able to potentially reach out for employment. So we are trying to do our best, but at the same time, there are three important parts of our 2020 strategy that we have laid out. The first is accretive growth. Any additional properties we bring on should drive some kind of gross-margin addition. Second is a deeper relationship with the consumers as well as our partners. And the third is stronger governance along with better training systems within our company.
It's no secret that you recently cut back on staff. Can you confirm the numbers for India, China and the United States?
Oyo still has over 25,000 direct employees and over 200,000 indirect employees [who] work in our hotels, but the 25,000 people are on our payroll. That's a significant workforce still working for the company. India is the only country which has given out their numbers. We had a total of about 12,000 employees and roughly 15 to 20 percent were impacted, which is about 2,400. [The company did not confirm numbers for China or the U.S., but Bloomberg reported about 600 people were let go in China, and Skift reported that 360 were let go in the U.S., representing more than one-third of the U.S. staff.]
But during the year you removed a fair amount of inventory in India, correct?
Oyo Hotels did let go of some inventory, but that was a very small number, and primarily owing to customer service improvement. The intent was, we run every quarter checks of our customer service, and there are some assets that we feel [do not meet our expectations]. We request them to leave and come back with improved experiences. This is primarily India-focused. We do not do that in the U.S., because in the U.S., we provide capital improvement for improvement of the underlying asset experience. The infrastructure is not the reason why we would ever let go of assets, but there may be other reasons. [The company later confirmed it cut approximately 18,000 rooms in India, adding that more than 100 hotels had returned in January after improving their customer experience, and that Oyo is working to bring back more.]
In India, what steps did you take to get the loss percentage reduced from 24 to 14, and will you be doing the same in China and elsewhere around the world?
I think what happened is the phases changed. India went from being a presence-based market in fiscal 2017 and in fiscal 2018, and in fiscal 2019 we saw the gross margin increase. Our gross margin went from 10 percent to 14.1 percent [during] fiscal 2019. Within that, we also saw that Oyo's operating efficiencies started kicking in because the cost structure remained the same, but the revenue grew much quicker. So as we grow to other markets, the same two things will apply, which is with scale, gross margins will improve, and along with gross margins, operating efficiencies will improve.
Your losses were $335 million, or 35 percent of revenue. What was the root cause of the increased losses?
Our losses actually increased at a global consolidated business [level], but our losses actually went down at an India level. India's losses went from negative 24 percent to negative 14 percent [year over year]. So, that is close to half a reduction in losses. But our losses widened primarily owing to our new launch in China. We had launched China around November , and the fiscal year ends in March. The way you should think about Oyo's business is that there are three different phases we have. The first phase is what we call the growth and presence. During that, we're investing in bringing the people together to bring assets, and partner with the first version of properties. The second phase is, you have enough density to start charging a reasonable gross margin. And then the third is, once you have a good gross margin for your effort, you start growing so quickly that you get operating efficiencies leading to directional EBITDA improvement. India is in phase three, and China was in phase one, which is why we got the initial loss increases. We do anticipate that in the coming fiscals, China will also improve as we think about the underlying net loss margins.
What was your average revenue per available room?
Generally, the average room rates held, which means that you would not see a significant jump or reduction in ARRs, but because occupancy [rose a little] through your RevPARs you would have seen some kind of an increase. [The company said it does not yet report RevPAR figures.]
What was your average occupancy in fiscal 2019?
What we saw was, on a year-on-year basis, especially in our non-seasonal markets, we were able to see a few points of occupancy rise, which is where the same-store revenue growth is attributable from. [After the interview, in an email, Oyo wrote that global occupancy has been about 60 percent for fiscal 2019.]
You've had an eventful 2019, with expansion in China and entering the United States mid-year, then growing revenues four-and-a-half times from the fiscal year 2018. To what do you attribute that increase?
The three times plus growth was primarily India-focused. Global growth is roughly 4.5 times, but what we attribute the growth to is a combination of three factors. We saw, of course, new unit addition, so the new hotels drive the additional revenue. We also saw increased same-store revenue, because we saw a large number of consumers who are repeat customers for Oyo. Ninety percent of our revenue in India comes from either repeat customers or word-of-mouth customers. The third thing that we saw was the asset utilization, specifically with weddings, [which] was a big additional revenue for us in India. … We hosted 50,000 weddings last year.
When do you see yourself becoming profitable?
At building levels, we have been able to make margins, and those margins will improve as operating efficiency increases and lead to profitability. But do we have guidance by when we will be profitable? We don’t really. But as a company, we believe, to the extent we are able to bring in assets, provide good quality service and make sure there is occupancy, we will eventually be profitable.
SoftBank has been your biggest backer till date putting in close to $1.4 billion. Critics say that the manner in which Oyo is growing, your biggest advantage is capital.
It is a common misperception. Companies that raise capital do it on the basis of past performance and unique competencies of the business. We cannot raise capital if we are not creating sustained value. The credit of Oyo’s impact should be given to the 20,000 Oyopreneurs on the ground. We have been through many phases, but we got our house in order, improved our performance, and in the last three years we have been growing fast. Our core competency is three-fold: We are able to decide on acquiring real estate in real time—much quicker than others, share an offer with asset owners quickly; we renovate our assets quickly using data science, for example, we know what interior design gives us best increase in revenue; and we operate our assets efficiently, leveraging 14 Oyo institutes in India—90% of our revenue is repeat business or through word of mouth.
Do you share a deep relationship with Masayoshi Son?
Masayoshi Son is one of the most innovative and impactful thinkers and problem-solvers of our generation. I am truly inspired by him, right from the time we raised funds for the first time. He has backed some amazing companies in our generation. I feel he spends time with all the portfolio companies each quarter, and he spends time with Oyo as a part of that. The inputs we receive from him will be transformative for our business in the years to come. I will share one example. During a meeting with Son, I mentioned I will launch in China, many years later once we have enough resources out of India. Son agreed that the plan made sense, and asked how much capital we have on our balance sheet. At that time, we already had $150-200 million. So he said, “You have this capital on balance sheet and you want to launch in China—you could take $50 million out of this and try to see if you could make a difference in China." We came back, discussed and decided to follow Son’s advice, it turned out to be a great piece of foresight. The ability to take calculated risk is something SoftBank is special in. Through this experience we have learned to weigh risk versus regret in our decisions because opportunity comes once in a lifetime.
Your attempt to consolidate your ownership through buyback of shares from some private equities is unprecedented in the Indian startup ecosystem. How did this idea originate, and how did investors react?
We believe that as long as companies are investing to build a business that is sustainable, and investing in long-term future with a clear path of operating efficiency, value is there to be created. On a year-on-year basis, we are operating each of our buildings profitably, and our Ebitda (earnings before interest, taxes, depreciation and amortization) is improving by 50%. Even though we are a private firm, we issue annual reports online. For the last three years, we have been cutting our losses by 50%. I started Oyo right out of my high school, with limited resources. I raised my first round of capital divesting double-digit ownership, while raising $40,000. Ever since, I have been thinking whether there is a way to double down on my belief in a company which is such an important part of my life. So, with that perspective, in the last few months I have been thinking about the transaction seriously. We have signed the binding documents. The first time I brought this up with investors, people thought I am not serious. I explained to them the rationale, and that it will help me feel more comfortable about the conviction I am demonstrating in the company. Although investors wanted to stay on board for longer, both Lightspeed and Sequoia showed faith and willingness to support my decision.
Who has inspired you?
Bill Gates. He knew when was the right time to leave and share his wealth with real people in the world and impact their lives. I find Bhavish Aggarwal inspirational. His entire team is very helpful to us.
A news report suggests that you weren’t transparent in your dealing with former co-founder Manish Sinha. Please comment.
You will hear more about this in the coming quarter. There were many factual inaccuracies in that story and I am hurt. It doesn’t impact the company though. I am doing the right thing by reaching out to the right people without going out and screaming about it or writing a blog.
Do you think formal education is important in the long run? Don’t you miss college?
Education is important. But it’s the current education system which is not right. I was in Stanford for a month during the Thiel scholarship, where I had a great time. I attended a bunch of frat parties. And I was the cool guy in these parties because when people heard I was a dropout and a Peter Thiel fellow, they treated me like the next Mark (Zuckerberg). I was like, "Ho gaya college ek mahine me. Aur kya chahiye? " (I experienced college for one month. What else do I want?)
How many dropouts do you have in your company?
Only one. We have 10-20 people from IIMs, more than 200 people from IITs, HBS and Ivy leagues. It’s funny, in India, I haven’t come across any dropouts who are smart and high quality. Hopefully, in the next few years, we will have more high-quality dropouts. When I go to colleges for talks, I encourage the students to drop out.
Tell us about your early experiences of handling customers.
Initially, when we were running just one hotel in Gurgaon, I used to handle housekeeping, sales, CEO duties, etc. I would literally wear the OYO Rooms uniform for housekeeping and would show the room to customers. Sometimes, couples would tell me, "Abe nikal ja room se, hume kuch karna hai (Get out! We want to do something). I would be like, ‘Okay sir, sorry about that’. I was usually nice to people, so yes, I got tips too. One time, a family asked me to babysit their cranky kid. And thankfully, the child was quiet with me. The family was so happy that they gave me Rs 50. I have also been offered by people to work at their homes (laughs).
When did your parents know about the fellowship and you dropping out?
When the newspapers started reporting it. My dad came to Delhi and was perplexed to see the office. It took me a day to convince him. My mom was very unhappy because she felt who would take me for a groom? You needed to be at least a graduate (laughing).
What were the key takeaways from your interaction with Thiel?
Think huge. I am never concerned about these big hotel chains because I can give it in writing, these guys will never catch up with us. What I am afraid of is a 16-17-year-old will have nothing to lose and disrupt the space, like we did. Building culture as part of your team is extremely important. You should never compromise on culture even if your company becomes huge. Hire extremely smart people.
What about the learning throughout the journey?
What are the essential items for anything to scale rapidly? What is the definition of BCA for you?
How was the position of the company when it started?
What advice do you want to give to all young, aspiring entrepreneurs?
Which book do you want to recommend to others?
Which one mistake you don't want to repeat in your entire life ever?
Why did you expand your business into multiple domains?
How would you like to elaborate on the reason behind dismissing some employees?
How do you tackle the problem of pictures getting shown in the application get differed in reality in some cases?
What do you want to say about service quality provided and customer satisfaction post-usage?
How do you tackle with owners as a part of customer satisfaction?
Any regrets about not finishing college?
I have no regrets about not completing my college education. My partners in the leadership team complement and supplement my capabilities. I am inspired and guided by what Mark Twain said: “Never let college interfere with your education.”
What are the three most important skills for a founder?
Patience, perseverance, and conviction. An ability to stay the course, collaborate and steer diverse stakeholders towards a common goal. You must have a long-term mission and be willing to work really really hard to get there.
What in your view is an “entrepreneurial mindset”?
For me, it is about having a passion for solving a big problem and leaving a huge impact. Once you have that, everything else falls into place. You take ownership, build conviction, and build capabilities to transfer that belief to investors, employees, and customers. You must be willing to stretch out of your comfort zone, take risks, and be emotional (in a good way) about your venture and the stakeholders involved.
What are the most crucial attributes for a founder in the early stages of a startup. What about as the company matures?
A founder should be willing to be hands-on during the execution, especially in the early days of a startup. It’s important to know how things work, ground up. I used to multitask as the call center executive, housekeeper, and ops auditor amongst other roles. As the startup scales, the founder should be able to do a skills assessment and identify and partner with the right leaders to support him and take over specific responsibilities. His role then is to have clarity about where he is headed and the direction the company needs to take for the long term. As OYO grew, I knew I had to partner with strong leaders to head operations, growth, and finance. They act as sounding boards and able partners to execute the mission. Their insights on finance and operations are especially valuable in supporting my role as the founder and CEO.
What determines the success of a new venture?
The leadership team is the backbone of a startup. Having the right leaders and partners makes all the difference because how an idea is executed matters more than the idea itself. Having a core group that the founder can rely on, be confident of, and shape a vision with is the single most important determinant for success.
Ambitious targets or achievable targets—which are more effective?
Early in 2015, just before our expansion phase, around 50 of us were gathered in a room. We decided to initiate a project in New Delhi to set the expansion playbook and tone across the country. I went around asking my colleagues what they thought would be an ideal number of properties that we should partner with each month and bring under our OYO brand. The answers that came back were 5, 10, and 15, based on our previous achievements. We finally set an ambitious target of 100 properties and overachieved with 110 properties in the first month. Now I always tell my team to set ambitious targets. We wouldn’t be here if we hadn’t.
What made you put so much faith in what you set out to do?
It was a combination of insights from my own travel experiences and a deep desire to do something meaningful. The hotel industry in India, especially in the budget segment, was weak and I identified an opportunity to do something to fulfil that market need. When I first set out to realize my dream, I was trying to create an Indianised version of a listings site—an Airbnb for budget hotels and bed-and-breakfasts that didn’t have access to strong marketing channels. The objective was to make these properties discoverable and give customers access to budget-friendly, clean accommodations. The business model has pivoted since then, and we have moved on from being just a listing platform to the largest hospitality company in the country, bringing good quality and affordable living spaces and experiences to over a billion people.
Tell us about the journey of OYO.
I launched Oravel—a listings platform for hotels in the budget segment—in 2012 after strategizing for about 6 months. In 2013, this became OYO, offering standardized accommodation. OYO created and prescribed standards, ensured property transformation to meet those standards, and then marketed the accommodations to customers under a unified brand umbrella. I still remember how skeptical the first few hotel partners in New Delhi/NCR were when I pitched the model to them. The nascency of the concept worried them. Once we had established the proof of concept in Gurgaon they warmed up to it and we expanded to other major cities in 2015. And today we are in more than 200 cities in India, Nepal, and Malaysia.
10. Hypothetically speaking, if there’s one area that you want to make a massive difference – from a CSR standpoint.
I am happy to share that we have recently launched OYO Reach which is our CSR programme for promoting sustainable tourism. The programme has commenced from Shimla where 83% of OYO hotels in the hill station have been equipped with rainwater harvesting systems. Implementation of this technique will lead to enormous savings of 81,000 litres of water approx. in the hill station. We have also recently donated essential supplies as a company to those affected by Cyclone Fani in Odisha. Through OYO Reach – our CSR assistance program, we are aiming to provide necessary technical and financial assistance to OYO partners and stakeholders across the nation, in a wide variety of projects and activities. We will also be focusing on skill development, economic opportunity creation along with sustainable tourism.
9. Your leadership mantra and big bets for the future.
I learn something new from my teams every day, and their conviction, hard work, and innovative thinking help me in enhancing my own skills and achieving the business goals. Every day we are tirelessly working towards changing the way people stay away from home by creating beautiful living spaces. Each one of us at OYO profoundly understands the value of hard work and that there’s no shortcut or substitute to it. We are believers in the power of passion, perseverance, and conviction. For me success is elusive, and it’s crucial to keep setting benchmarks in whatever you are doing. It is not the end of the road once you achieve your goal. I like to keep challenging myself. Once the goal is achieved, the next step isn’t to stop but to aim higher. In the line of hospitality, looking at the positive feedback from customers as well as the happiness of the employees and asset owners is what gives me the most satisfaction. Also, I aim to keep innovating for my customers. Learning to unlearn and learn again is my mantra of success. Looking back over the last 5+ years, I believe our passion, perseverance, and grit helped us pivot to where we are today. We have now emerged as South Asia’s largest, China’s second largest, world’s sixth largest and fastest-growing hotel chain with over 20,000 properties having 700,000 rooms across 24 countries, and there is a lot more to achieve. I am confident that we’ll be the largest hotel chain in the world by 2023.
8. You are an inspiration to millions of people – who has been your inspiration and why?
The Thiel Fellowship is a school of learning like no other. I was the first resident Asian to be selected and graduate from the Theil Fellowship and was mentored by Peter Theil himself along with other visionaries. I learnt so much from spending time with a number of US-based start-ups, famed Silicon Valley entrepreneurs, investors, thinkers and visionaries. The mentorship I received and the quality of ideas I was exposed to were easily at par with the best business schools. I got to learn everything while actually pursuing my dream. Learning by doing, that’s what Peter Thiel wanted each of us to focus on. Building and scaling a disruptive start-up, while simultaneously pursuing the fellowship program, were two intertwined journeys that were also life-defining experiences for me. Some of my biggest learnings were – ● Start small, nail it and then make it big ● Be humble, be focused and have grit ● Focus on your organisation’s culture, recruit only the best ● Look for details and keep the big picture in sight ● Stay agile, but always remember your mission ● Set processes early on, challenge the status quo ● Work with investors you respect ● Gun for a great product, everything else will follow The most important learning however was understanding how to think big and scale a business, and the importance of believing in my ability to create an impact. As entrepreneurs, we are wired to take risks, we are eternal optimists and I learned how to channelise this in the right direction.
7. What’s passion? Can it be developed or is it an in-born quality? How do young entrepreneurs manage to remain in a constant state of energetic living 24/7/365? Is there anything at all called a work-life balance?
Having a passionate team and being surrounded by individuals who embrace your passion as theirs is extremely important when it comes to building a company that sustains itself for years to come. I believe it is essential to develop and sustain a mission-driven organization where the passion and interest of employees stay intact as the company grows and diversifies. I am an ardent believer that the culture of an organization is the foundation for the success of the company. It is crucial that you create an ecosystem where the employee’s passion, innovation, and perseverance find a home and take them ahead on the career trajectory. It’s sacrosanct that both the employees and company grow at the same pace and touch greater heights. At OYO, what I have observed is that our employees who we call OYOpreneurs therefore, predominantly millennials, don’t just want to work for two square meals a day, but wish to be self-starters and trendsetters. They want the freedom to execute and seek the trust of the organization in their judgment.
6. Compliance & Regulatory – your views. What kind of a regulatory environment would you want for Digital India – please can you share your specific thoughts.
What we are currently witnessing in terms of the startup ecosystem in India is phenomenal. The country is right at the cusp of a seismic offline to online shift, especially in tier two and three markets. There is a tremendous young demographic with a potential to impact and transform these opportunities. We have young people who are looking to build their own products and companies than just aiming for job-security. India is a great place for budding entrepreneurs. The market size is enormous; significant problems waiting to be solved. The start-up environment here is exciting and transformational. Our Government is committed to supporting the start-up ecosystem through funding, regulatory and logistical assistance. There are incubators, venture capital firms, and even mentors who dedicate their time and resources to help aspiring entrepreneurs reach their goals. At the same time, we should further aim to build a concrete foundation for the youth by making them self-sufficient. Schools should look at providing students with opportunities to identify real-life problems, provide them with vocational training to expand their horizons. Encouraging them to think out-of-the-box, supporting innovative ideas and solutions through formal funding or recognition platforms are just a few ways to create an entrepreneurial culture from an early stage in education. Being fearless opens unexplored horizons, and that’s what students should learn at a first stage.
5. Managing phenomenal growth. Your success has now acquired legendary status but behind all this glamour there must be a definitive strategy which works perfectly. As organizations grow in size, how do you manage scale and yet retain its soul?
The biggest differentiating attribute is OYO’s technology driven approach to building efficiency in the hospitality space with its full-stack fulfilment led model. We are investing heavily on strengthening our capabilities both in the form of technology, talent and network, while creating an ecosystem of efficiency through which we are able to deliver higher yields for our asset owners. We have invested thousands of crores in capex, appointed hundreds of GMs to oversee operations and customer experience, created job opportunities for over 100,000 people in India alone and set up 26+ OYO Skill institutes for hospitality enthusiasts. On an average, over 75% of hotel owners associated with OYO Hotels has seen an increase of 20-30% in occupancy, a 2.5X jump in RevPar and significant jump in profit, for every asset operating as an OYO branded building. Also, currently 1 out of 6 asset owners has more than 1 asset with OYO – this is a testimony to the confidence of our asset owner community on the brand. The churn rate we see is less than 1% on an average annually which is by far the highest retention rate in the hospitality industry. In the last five years, we have seen a 4.3X Y-O-Y growth with realised value run-rate of $ 1.8 billion (annualised). We have made this possible by investing in four key competencies in the last five years:
4. Funding – your advice to young entrepreneurs. Especially on seeking Patient Capital.
While you are in the process of coming up with a truly innovative solution, it is essential to keep an open mind. One should accept failure, and be willing to learn, unlearn and relearn again. I have always believed that an overnight success story is backed by at least five years of dedicated hard work and perseverance. Often, it is not the most complex solution, but the most creative one that can help solve a problem. The importance of innovation cannot be overstated. For any business and start-ups, in particular, it is vital to inculcate the spirit of curiosity and lateral thinking to succeed in the long run. At times, we tend to get carried away by what we think are good ideas, but in reality, they may not serve the customer’s purpose in any way. It is crucial that we understand the customers’ requirements and direct our efforts towards providing the best possible solution to their requirements.
3. Data tells a certain story. At times it may go against the common wisdom. How do you galvanize resources and act? Especially, if there’s resistance.
At OYO Hotels, I call myself the chief clarity officer. Which means that my job is to share what to do and advise on what not to do. More important is, what not to do than what to do. So setting out the principles which enable everybody to decide how they can run their jobs. I always keep myself in the customer’s shoes and ask if it will add value to their experience. That makes it very easy for people to focus, and that focus has the means of creating value for customers and asset owners alike. At the core of it, we have to be solving a problem in a sustainable and scalable manner.
We’d like you to please share your thoughts on the lifecycle of data. Data – collection, filtering, processing, maintaining quality, drawing insights, privacy etc. What kind of best practices do you have?
The way we look at it is that business and data privacy must go hand in hand. It’s not about choosing one over the other. Companies in India have realized the growing importance of data privacy and the evolving regulatory environment around it. Things can only get better as greater clarity emerges on the regulatory front. Incidentally, I am also the Chairman of the CII National Committee on e-commerce and the committee comprising 70+ members from across the spectrum shared some important suggestions wrt data privacy, localisation, etc with a view towards ensuring we are able to encourage innovation and industry while establishing the necessary safeguards when it comes to all things technology. From a customer standpoint, data science and analytics help us improve the guest experience at every step. Through AI and machine learning, we look at multiple metrics from time of the day, weather, location to local events in order to be able to learn more about what kind of a room a customer prefers, and what are the search results the customer is most likely to appreciate. Data science and machine learning help us understand guest behaviour – both preferences and implicit behaviour, how they interact with our search results and app and the interactions they carry out while staying at our hotels. For eg, if you prefer a certain kind of hotel and amenities, relevant hotels matching previous preferences will appear on top of the search results.
1. The whole idea of a tech startup disrupting the hospitality sector – how did it come about? Were there any early signs that there is a great business model which strengthened your resolve?
While I was travelling across India on a shoestring budget and had to lodge in some of the not so great guest houses, I realized that I was looking at the wrong end of the rope. The problem wasn’t the lack of availability of budget hospitality options; it was that the majority of unbranded hotels lacked the minimum baseline standards of quality and service delivery. This meant that the solution wasn’t merely aggregating hotels on a website; it was to consolidate and upgrade the fragmented segment and ensure the delivery of predictable, standardized and affordable stay experiences for travellers across price points. I wanted to fix this problem by using technology and talent. That’s how OYO was launched in 2013, with the promise of delivering predictable, affordable, anytime-available stay experiences for travelers – a 100% ‘Made-in-India’ business model and the first-of-its-kind worldwide. Unlike a booking platform or a hotel room aggregator or an online travel aggregator, OYO Hotels & Homes is a chain of leased and franchised hotels just like all the other hotel chains world over including the Taj, Oberoi, Marriott etc. Today, OYO Hotels & Homes is South Asia’s largest, China’s second largest, world’s sixth largest and fastest-growing hotel chain of leased and franchised hotels, homes & living spaces. I would like to state that OYO is not a room aggregatorOYO is not an online travel agency. OYO is not a certification company. OYO is not a marketplace. OYO is a hotel chain. OYO’s mission is to upgrade all forms of real estate and thereby provide quality living spaces to travelers around the world. OYO today host guests from around the world in over 20,000 franchised and leased hotels and over 700,000 rooms, and more than 45,000-holiday homes, adding over 70,000 rooms every month, globally. With the @Leisure Group joining the chain, OYO today has footprints in more than 800 cities across 85 countries including UK, US, India, China, Malaysia, Nepal, the UK, UAE, Indonesia, Saudi Arabia, the Philippines and more recently Japan. Every night almost 450,000 heads rest on a pillow in an OYO, a testament to the impact we are creating globally.
Do you think you have got everything right at OYO so far? Did you ever compromise on growth for anything?
Nobody or no company in this world can say they have got everything right and it has been a perfect journey. In 2015, there was a time when we had a lot of complaints regarding our customer service. We took the hard decision of stopping growth for four months, no matter what our shareholders said. And I feel it was one of the best things we did. We focused on identifying key problem areas and finding solutions that are scalable. Today, as we scale across 800 cities and 80 countries worldwide, we adopt a problem-solving approach, identify the opportunity in the middle of every potential difficulty and cultivate cross-functional synergies to surmount obstacles.
Culturally, the business has to be flexible according to every new market it enters. How do you ensure that at OYO?
Our teams across the international geographies have observed local nuances with respect to the hotel industry in each of the countries we are present in. These observations help us in highly localizing and personalizing the experience for our guests. For instance, in the Philippines, most hotel rooms also keep a copy of the Bible in the drawer/on the table in the rooms for guests. In Indonesia, most hotel rooms have the Qibla sign also known as Arah Kiblat in the local language Bahasa. As Malaysia hosts a lot of Indian tourists, the hotels provide information on the nearest Indian/South Indian restaurants.
So how do you look at addressing these problems?
At OYO, we often refer to this as an occupational hazard, that one has to work with keeping in mind the larger picture – 18,000+ hotel owners in India alone choosing OYO and growing with OYO. This year alone, we have had over 642 hotel owners, with hotel sales over Rs 1 crore each, a stark increase from their earnings before becoming a part of OYO. So my personal thought process is to treat the issues based on their merit. The OYO Partner Engagement Network (OPEN) is a great example of us spending our energies on identifying ways and initiatives that can add value to an OYO hotel owner’s experience. I don’t let needless speculation deter me or my team from pursuing our mission.
As an individual, what thought process you go through during testing times such as hotel partners agitation, associations questioning the company’s intent, police case etc.?
That’s a very interesting question. When you scale up your business there will invariably be small groups of vested interests unwilling to see the new ground reality. If you see the history of entrepreneurship in India and elsewhere globally, there are many examples of entrepreneurs navigating their way through these challenges. We will not bow down to the unreasonable demands of vested interest groups, a majority of which are owners running competing properties, instigating and intimidating independent hotel owners associated with OYO, and creating false public uproar or arguing against transparent pricing and quality standards introduced by OYO that can fundamentally improve customer experience.
Do you think, because of the growth so far and vision ahead, your business model is invincible now, much like what companies like Nokia or Kodak or Yahoo perhaps also thought?
From my perspective, as an entrepreneur, one is wired to take risks. You, of course, need to be smart and take calculated risks, and then do all you can to make it worth the risk. At OYO, we certainly don’t rest on our laurels. For us, it is still Day 0 and we have a long way to go. There is always room for improvement in experience and it can be achieved if one listens to the customers carefully. We place our bets on technology and innovation. While we are the first hotel chain to develop in-house technology platform and operating systems, including a suite of over 20 apps for managing all aspects of operations, we are always on the look-out for identifying and adapting to the next big thing. Case in point – IoT switches or evaluating greater use of AI as well as VR or AR for audits and hotel transformation.
Businesses say we can turn profitable whenever we want but scale comes first. I am sure this is the case with OYO as well. How does OYO’s profitability path look like?
Profitability is something that is very much on our radar. We are profitable at a building-level. We have been investing in technology, talent and hotel infrastructure upgradation. On a Y-o-Y basis, we have seen that not just our buildings are operating profitably at the building level but our EBITDA has also improved by 50 per cent (on a Y-o-Y basis). We are thinking long term and are operating with a clear path of operating efficiency. The losses as a percentage of Net Realised Value have been on a steady and significant declining curve. This year, the company has seen a 4.4x Y-o-Y growth in revenue in June 2019 (versus June 2018), with 1 million rooms under management across hotels and homes; with over 200,000 rooms in India.
Do you have pressure from SoftBank to become a profitable organisation?
Oyo is a management-driven company. The management drives the company with board oversight. Oyo had submitted the business plan to the board of directors some time back. Our board’s opinion is that we consistently deliver and that we shouldn’t get distracted. There is no change that our company has seen in the last few months, depending on what has happened.
There are allegations that there is fake inventory on Oyo. What are you doing about that?
We are subject to significant amounts of audit as an organisation. Oyo continuously audits, not just specific operation metrics, but also financial metrics, by world class organisations. Customer experience is very important for Oyo. 99.5 percent of our customers have a seamless experience with Oyo. But, 0.5 percent is a very bad statistics, and we are working upon that. We will build check-in as a delight, and that will be communicated to hotels on our Oyo app. We are experimenting with that feature with a smaller group of customers right now.
Is Oyo here to stay?
We have created a lot of value. In India, if you wanted to stay in a good quality hotel in Mumbai for less than Rs 2,000, it was almost impossible to do before Oyo came. If you wanted to stay at a place, which is of good quality, at the right price point in South East Asia, if you wanted a room in Europe for 100 EUR a night, these are all services that consumers really appreciate. Oyo served 40 million families last year, and that’s growing as we speak.
Oyo has been written off multiple times, and now it is being compared to WeWork.
Our company has grown with a great amount of attention around itself. Every time this has happened, we have only become better with it. It is very easy to say, “he says, she says” and claim that these allegations are true or untrue. We make sure we over communicate, like we are doing here. But, instead of getting bogged down, we take the learnings from those and try to improve. Because no company is perfect. Oyo is not perfect, no company is. We want to make sure we make Oyo a better company every day.
How important is governance for you? This is a question that is being raised on all SoftBank companies, including Oyo.
For me and my team, governance is an absolute must. There are three important parts to it. The first one is, and we have always taken market leadership in that, in bringing in independent directors. Second: ensuring that the founder doesn’t sell shares. I have never sold a single share of mine in the company. I have rather invested more capital in the company. Third: making sure that a large amount of decisions are board driven in the company. It is important to have a management, which is broad-based. If you see Oyo beyond Ritesh, there is a strong team of leaders who know their organisations and can drive the results.
But reports suggest that Aditya doesn’t come to office.
Oyo has six offices in Gurgaon. Aditya comes to one of the offices, so the ex-employee who commented must be talking about their office.
Speaking of the board, is Aditya Ghosh moving on, as some news reports suggest?
Aditya is a fantastic leader, and we have worked together for a full year. He has been extremely valuable to the organisation at various levels, which involves his consistent presumption of safety and security, his ability to bring new age revenue management systems, and various other efforts. Due to this, we believe that Aditya’s value to Oyo can be further expanded from India to becoming a global organisation support. Aditya is not supporting Oyo passively, but he is supporting Oyo actively. He joined our board meeting just a couple of weeks ago
How do you manage better governance at Oyo?
Oyo brought in an independent director on board, Betsy Atkins. Betsy has been an investor in Yahoo, Ebay, and has been on the boards of some of the most successful American companies, like Volvo, Nasdaq, and Baja Corporation. Gerry Lopez joins us on the board as well. Gerry was the CEO of ‘Extended Stay America’, an extended stay hotel brand in the US.
Will it be better than last year?
Markets where we are in our first year of launch are our cost markets because you have to hire the team and properties, and from the second year onwards the EBITDA keeps improving. On a year-on-year basis the mature markets will continue to improve.
What about gross margins?
We are seeing an increase in gross margins, because of better site selection, and are making sure that our contracts are very seamless with our partners, so that we can make our fare share. Our gross margins have trended between 15–25 percent. We will announce our financials shortly, where you will see our revenue and EBITDA.
How do you plan to stabilise the organisation? There are so many aspects to consider: cultural, governance, unit economics and more.
On the culture side, Oyo has gotten here because of its team members. I have personally visited clusters and done townhalls, and explained our plans. On the supply side, we have brought in 100 hotels in the month of January that had either left us or were asked to leave for various reasons. In China, we have ensured that we have brought in 8,500 rooms in that context. We are able to bring back our partners. In the US, in the fourth week of January we signed more rooms than we have ever signed. We are able to see that people are understanding this. But, a good company is not built on a month or two months of success. This has to be a consistent effort.
So, will you do more hiring, and in which areas?
The new hiring will be more focussed on engineering, design, software and data science, in the future. But, in the new future we would like to stabilise the organisation, and get to the outcome and plan of 2020.
Why was this restructuring required? Why were those employees hired in the first place, and why do they need to go now?
We have always acquired high-quality talent. This is the first time a major restructuring is happening at Oyo. We had two-three important learnings. The first one is sustainable growth. For the first time we realised that there are specific suburban clusters we should invest more in, and there are clusters we need to invest less in. The restructuring was a result of that realisation. Second, how do we build stronger customer trust? There were teams focusing on servicing and our partners were field based. We are centralising our teams. Third, as Oyo has grown in multiple parts of the world, we believe that now we have sufficient technology and infrastructure to centralise roles to build shared services. Three of these have two perspectives in common. The first one: the organisation grew as a large global company. And with scale, we learnt about some of these potential areas where we had gotten a little ahead of ourselves, and had to restructure.
What went wrong with Oyo? There have been job losses, allegations that Aditya Ghosh is on his way out and about fake inventory, among other things.
I want to address each of these issues separately. Specific to restructuring, we have operated with a fairly straightforward perspective. We build business with a long term view, reflect upon what went right, and what did not go right. Whenever we do something right, we keep doubling down. Whenever there is something, which can be improved, we reflect and ensure we make improvements. As a part of this process, Oyo did see that as we had grown rapidly in 2019, we had presence in over 80 countries, revenue grew multi-fold, margins improved. This is good news, but it was time to reflect upon what could be improved. In a few specific organisations (inside Oyo) it was important to resize the organisation to continue to grow rapidly. Organisations tend to delay change, or do the same thing repeatedly over a long period of time. We believe that it is good for Oyo and its team members for this to happen one time. This is a one-time exercise and most of it has been completed, and the remaining will happen over the next couple of weeks.
Who does Ritesh Agarwal look up to?
Among the few people I look up to is Elon Musk. He’s really been one of those entrepreneurs who has put all his capital behind the business and has built such an incredible company. Bill Gates is someone I am personally very inspired by given how he has built that business and also given back to society. In India, someone like Uday Kotak, who has built a fantastic business in such a short period, and has made Kotak a powerhouse of Indian banking and economy.
Are you over-leveraging the OYO brand?
I think the one thing that should be aptly clear here is that our core business is hotels and homes. These are the two areas where we continue deploying a significant amount of our time, capital and resources. So this is the first important clarification. Now, how does OYO fundamentally think about any business it should be in? We think about it as a combination of things — does it fundamentally follow the four capabilities that are unique to OYO? First is the ability to use technology effectively. To be able to predict at what location and at what price we should be able to get into assets. That is supply acquisition. The second is a renovation, or the ability to renovate assets ‘quick and good’. The third is operating those assets with the highest efficiency while earning the appreciation of customers. And the fourth is distribution/yield management. That is how you bring enough consumers into the asset. Now that being said, at this point in time, there is a massive opportunity just in our hotels and homes business. So we are going to be very focused on these two areas.
And what message do you have for other entrepreneurs?
Speaking of a message ... it is just that fundamentally, I don’t expect it to be the case with every entrepreneur. I understand and appreciate that this is unique, but at the same time what I do share is that every entrepreneur thinks about their business in a very long-term scenario. This just feels like something that is very straightforward.
You took on a huge debt and you bought back your shares. Tell us a little bit about that.
I have always believed in playing a really long game. So I was provided multiple opportunities to do a potential secondary transaction over the last few years saying, ‘Ritesh, why don’t you sell some shares of yours?’ I have never sold a single share of mine at OYO no matter what, primarily because my focus has been to do the right thing and be a partner and an investor in my company for a very long time. This was the time when I had the opportunity and I could gather the resources to be able to get the capital to be able to invest in OYO for a very long term and my view is that I am so committed and excited about the upside and the opportunity for OYO
And how does that fit into the overall plan of OYO Hotels and Rooms?
The primary intention for OYO in these assets is economic. If we look at the total fees OYO will earn as the business and revenue partner in these assets for the next 20 years, it will be so much more than the capital investment.
You’re a product of the Internet-led consumer economy — entrepreneurial, asset-light and experience-heavy. Why did you buy hotel assets in Vegas?
OYO manages roughly 46,000 properties worldwide. So these are one or two in scale. OYO continues to remain 100 per cent asset-light — meaning even in these assets, OYO’s contribution to the dollar share in the final acquisition is probably less than five per cent. The primary investments came from third-party partners. For example, in the Vegas asset, we had a couple of shareholders, a couple of debt providers and so on, who brought the asset to OYO in the process. We are very small capital providers.
How important is the China market for you?
Clearly, India and China are our biggest markets across the world. Of course, Europe and the United States are our fastest-growing markets. China is one of the most important markets for OYO. I think we are one of the leading hotel chains in China, hosting hundreds of thousands of customers every day. We believe that the middle-income Chinese customer has an aspiration of a better lifestyle, better experiences, but without hurting their pockets. And this is what we’ve been bringing to our Chinese customers, which will continue this year too
I know that you’ve set a 2023 target for OYO becoming the largest hospitality chain. But tell us what we should expect from OYO in 2020?
The year 2019 was very important for our company. We started in 2019 by being primarily an India-based company with over 95 per cent of our revenues coming from this part of the world, and with close to 2,00,000 rooms under our belt. We start 2020 with million-plus rooms under our management. Now we are one of the largest hotel companies in the world, hosting hundreds of thousands of customers every day at OYO Hotels and Homes in more than 80 countries across the world. So when I look back at 2019, I feel very thankful that I was able to create this big impact, create the opportunity to serve so many customers, asset owners and to ensure that more than 90 per cent of our revenues in our mature market still comes from repeat customers and via word of mouth publicity, rather than from only new customers. I will break down my answer into parts. The first is for our customers, then for our asset partners and then our team and then, society at large. Customers are at the heart of every decision. We genuinely feel that our customers need three things — better services, better locations and better prices. If we get these three things consistently right, we will create value for our customers. The second is for our asset partners. We are actively working with our OYO open programme to ensure that we can bring back the trust of that small percentage of asset partners who’ve had problems in the past. We want to ensure that all our asset partners continue to appreciate, love and believe in the OYO mission.
Are there any expectations you have from the Budget as an entrepreneur and as a key player in the hospitality sector?
I’m sure the government is looking into it. This is one of the most important Budgets, especially since we are at such a critical juncture before the big dream and aspiration of getting to be a $5=trillion economy that our country aspires to be. I think there are a couple of things I would like to talk about. The first one is, as you can see, in our country the domain of startups is one of the places where there are more and more foreign direct investments (FDI). There are more and more infrastructure investments that companies like OYO and other companies have done. Secondly, as our country grows, infrastructure investments will be the single biggest factor for long-term success. These are things that people don’t appreciate in a natural manner.
What is Ritesh Agarwal’s leadership style? How do you create Oyopreneurs? How do you work with a bunch of talented people and leaders?
More often than not, when you start your business, there are two kinds of people that you end up recruiting. Either the ones that you have worked with earlier or the ones that you went to university with. Unfortunately, I had never worked in a professional organisation before and I did not go to a university. So the only friends I could have invited were my high school friends, who were not as excited about this opportunity. So I had no choice but to bring high quality, top-notch professionals. I call myself the Chief Clarity Officer (CCO). So my job is to say what is the direction and what are the things we are not going to do. After that, I’m not the best technology guy. I’m not the best finance guy. I’m not the best sales guy, so on and so forth. What I’m good at is telling people what not to do and then bringing the best people to do the job. So in the last six years, I have brought in probably 16 key leaders who have directly reported to me. Now 15 are with the company. The 16th person is also with the company, but has now become my boss. So he’s on the board now. Till now all 16 are with the company. All of these are highly trained professionals coming from very successful backgrounds.
Since you started, what are the three things about India that have changed positively? Tell us something about India that needs to change, but hasn’t?
Among the three things that I feel have changed very positively is the hunger of young Indians. That has changed disproportionately. A few years back a lot of young Indians used to say they need this job or I need to do this better. Recently, I was at one of our call centres and I was speaking to our young Oyopreneurs. I asked, ‘What do you aspire to do in the next ten years?’ One of them said, ‘Ritesh, the company that you’ve built — I want to build a company a little bit bigger than that!’ So, the aspirations and hunger of young Indians are world-class and they aspire to be number one in the world. The second thing that I feel is very good, specifically about young India, is that they understand the western world, but at the same time, are genuinely proud of being Indians and of their Indian heritage. There is an Indian dream that young India has, which is not the same as the dream a young American would have. And, the third thing which is very fascinating to me is how technology and the Internet has really changed our lives. I feel India has done really well on these three fronts. The one thing that I would like to change further is fundamentally the ability to continue to question the system of education and the way it has been run for many years. When I dropped out of university I was asked questions. But in the Thiel fellowship, one of the things we sign in the contract is that we would never let the university interfere with education. Education is important, but it may come from anywhere, rather than the formal education system. I feel that the formal education system is great but it should provide avenues and formats to learn in a manner which is not just unidirectional.
You seem to be on an international expansion spree. Which other countries are you looking to enter further in the near future? Any plans to raise further funds to propel your foreign foray?
Currently, we have over 23,000 hotels and 125,000 vacation homes across 800 cities in 80 countries globally. There are many countries which are still on the drawing board and we are evaluating the business potential. At the moment, we are continuing to grow our footprints in SEA, ME, Europe and the USA. We have a healthy and strong balance sheet and are committed to continue making forward-looking investments. We have nothing further to announce at the moment.
You bought back shares worth $2 billion from Lightspeed and Sequoia? What led you to this move? How much has your stake in OYO increased to post this buyback?
The company’s strong growth, improved margins, superior improvements in customer experience gave me the confidence to take this decision. The $2-billion primary and secondary management investment round is spearheaded by me with support from financial partners, subject to regulatory and shareholder approval. The capital will be utilised to maintain our strong market position in India and China, strengthen our footprint in southeast Asia, Middle East, growing our business in Europe and the US while creating a niche for our vacation homes business globally.
How much cash are you burning now? Which are the most cash-heavy markets in your kitty?
I would like to clarify that unlike e-commerce businesses, we do not spend a lot on customer acquisition. Our investments are mainly in three areas — capex, talent acquisition and technology.
Could you shed some light on your overseas IPO plans?
We are focused on our mission of making #LivingTheGoodLife a reality for over 3.2 billion middle-income people around the world. That is our focus in the foreseeable future. We don’t have any further comments.
By when are you eyeing profitability?
We are not profitable at a group level as we have been investing in technology, talent and hotel infrastructure improvements in our buildings. The losses as a percentage of NRV (net realised value) have been on a steady and significant declining curve.
How has FY19 been in terms of numbers? Were you able to notch revenues (India) of over Rs 1,400 crore as estimated? What is your revenue target for FY20?
Our financial results for FY2018-19 are yet to be filed with the Registrar of Companies. However, CY2019 has been promising. We are happy to share the company has seen a 4.4 times year-on-year growth in revenue in June 2019 (vs June 2018), with over 1 million rooms under management across hotels and homes globally and over 270,000 rooms in India alone. We also had a stellar 2018 in India with more than 1,72,000 fully controlled and leased keys as at December 2018 with realised value run-rate of $1.2 billion.
It has been a while since the OYO-Airbnb deal has been announced. How has the collaboration shaped up? What opportunities did it create for OYO?
We are happy to have Airbnb as an investor and our partner. Airbnb’s strong global footprints and access to local communities open up new opportunities for OYO Hotels & Homes to strengthen and grow. Thousands of OYO’s vacation homes across the globe can now be listed on Airbnb.
Describe the setting where you do most of your work.
You can find me working out of the OYO offices in India (Gurgaon), Shanghai, Beijing and the U.S. In the middle of the office, working with my passionate and mission-driven OYOpreneurs towards making a difference. I sincerely enjoy working together with all my colleagues as a part of a single-directional plan. We are ardent believers in putting our heads down and executing.
What’s the most interesting thing about you that we wouldn’t learn from your resume alone?
I like learning new languages as it helps me understand the local nuances of geography. Currently, I can communicate in English, Chinese, Hindi, Telugu, Haryanvi and Marwari (the local language of the community I belong to). With OYO’s global expansion, I am truly looking forward to expanding my horizon with respect to learning new languages.
What's your morning routine?
I prefer starting my day early and going through the emails and WhatsApp messages received from different teams from across geographies - India, the U.S., China, Europe. This helps me in keeping up with the teams and assisting them with strategic decision making and effective time management throughout the day. I regularly do yoga early in the morning for physical wellnes
What is your proudest professional achievement?
Success is always measured based on the impact that we have created. Since the inception of OYO Hotels and Homes, our focus has always been on creating affordable, high-quality living spaces for travelers and a conducive business environment with sustainable returns for our asset owners. During this journey, we have created over 300,000 direct and indirect jobs across India, the U.S., South Asia and China while training young hospitality enthusiasts. We see a huge opportunity in front of us of building a global brand that is truly from India. Our foray into international geographies is a testament to the hard work and perseverance, every leader and OYOpreneur (employee) has put into building OYO Hotels and Homes as the world’s fastest-growing chain of hotels that is currently present across 800-plus cities in 80 countries.
How do you want to be remembered as a leader in your company?
As a leader, you have the most important job to do, lead the vision, drive the business, motivate your team and sustain. Your business is your brainchild. You have to nurture it. That’s why I call myself the chief clarity offer at OYO and want to be remembered in the same way.
Who is the person you most admire within the industry?
Peter Thiel is someone that I look up to. The mentorship I received from the Thiel Fellowship and the quality of ideas I was exposed to were on par with the best business schools, but the icing on the cake was that I got a chance to learn everything while actually pursuing my dream. Another individual who inspires me is Bill Gates - what he achieved with Microsoft is incredible, but what I admire the most is that he knew the right time to leave and share his wealth with real people in the world and impact their lives.
What was your childhood aspiration?
I always wanted to do something new and interesting, something different from the norm. I started with selling SIM cards while exploring unique areas and opportunities like being a pilot. I ended up being an entrepreneur and absolutely cannot complain about it.
What do you do to alleviate stress?
Speaking to customers about their OYO experience makes me feel great about the kind of impact we are creating across the globe. Hearing the feedback from them - the positives and the areas where we can improve - is a significant part of our learning process and excites me the most. I truly believe that work is life and life is work. It is symbiotic.
What book do you recommend to others and why?
Zero to One by Peter Thiel - Peter Thiel is someone I look up to. The book has played an important role in shaping my approach towards life, both from a business and personal perspective. It successfully encapsulates the strategy behind running and sustaining a business, which is the most important thing to learn for an entrepreneur. It’s an inspiring and thought-provoking read that teaches you how to think like a leader. Chocolates on the Pillow Aren’t Enough: Reinventing the Customer Experience by Jonathan Tisch - this book by Jonathan Tisch, the chairman and CEO of Loews Hotels & Co. and one of the most respected leaders in travel and hospitality in the U.S., is a quintessential read for anyone working at a consumer-facing business. Elon Musk: How the Billionaire CEO of SpaceX and Tesla is Shaping our Future by Ashlee Vance - I admire Elon Musk’s risk-taking and innovative mindset a lot. One key takeaway for me was how critical risk-taking is when it comes to building a transformative enterprise that is ahead of its time. His passion to ensure a bright future for humanity is tremendously inspiring.
You travel around India and to China and the U.S. each month. Does that leave time for a personal life?
The only constant in my life besides OYO is Lisa, my dog. She’s a Lhasa apso. The only reason I shop is to buy accessories for Lisa. My parents still don’t understand what I do. They can spot two OYO hotels from the balcony of their house, so they don’t worry so much. They now think I have a reasonable job because they send me pocket money, and I don’t ask for more.
How did you become an entrepreneur?
grew up in Rayagada in Orissa state in eastern India. Few people have even heard of it. Roughly 70% of the people there live below the poverty line. When I was 13, I started reselling SIM cards because big companies didn’t want to sell in that small town. My father ran a grocery store. We were four siblings. I’m the youngest. The older three are engineers, and two have MBAs. I’m a college dropout. My parents thought they had three respectable children, and I was the black sheep. They rued, “Isko ghas katnewala kam milega” [“He will get a grass cutter’s job”].
What’s the business model?
Everything is optimized for occupancy and repeat customers. Generally, occupancy goes from 30% to 40% before OYO to 60% to 80% after. We have a 99% owner-retention rate. In India we spend roughly $500 to renovate a room. In China’s smaller cities, it’s $500; in the bigger cities, it’s $750. In the U.S., it’s $1,000. We recoup our money in approximately six months on average, globally. Before we design interiors, we predict what kind of design, for the lowest capital expenditure, will give us the best returns. For instance, we found that portraits of Marilyn Monroe increased revPAR [revenue per available room] of a property by 10% to 11% on average. Consumers classify hotels like this as “boutique.” It began when one of our hotels in Wichita Falls, Texas, saw revPAR improve by 25% after we put Marilyn Monroe portraits on the walls. Then we started copy-pasting this. In India over 50% of our hotels are full service—that means you can order room service. Imagine doing that at a price point of $25 per night. Outside India we don’t have full-service hotels for that price. When a guest checks in to a full-service hotel, the lobby staff knows that the guest ordered pizza to the room on a previous visit and will proactively ask if the guest wants a pizza. If a receptionist sells additional services, he earns an incentive. Our OYO training institutes groom employees. We’ve created 300,000 jobs in housekeeping, front desk, maintenance, and so on.
How did you grow so quickly?
Less than a year ago, we were mainly in India and starting to make a mark in China. We were the fourth- or fifth-largest hotel operator in the world. Almost every day we add 70 to 80 hotels. We will open close to 100,000 rooms in the next 30 days. At the end of June, we had 50 properties in 35 U.S. cities. Now we are close to 200 properties. We were building the business in India, but we were creating a product that we could transport. We redo interiors much faster and more intelligently than other companies. We operate more efficiently through measures like a housekeeping app that incentivizes cleaning a room quickly and getting a high customer rating. We change our prices worldwide about 60 million times daily, maximizing revenue per room based on demand. Three years back we were growing at 60%. This year it will be 300% or more. In Tier 2, 3, and 4 cities in China, you can’t miss the OYO hotel sign. When you drive around Jakarta or London—and, increasingly, Dallas, Houston, or Las Vegas—it’s hard to miss the sign.
You bought back some of the shares. Why did you do so?
Some of your readers might have known about my story, majority not. I grew up in the southern half of Odisha on the Odisha-Andhra Pradesh border and right from the very early days my belief or aspirations were very limited. My family wanted me to go work at an engineering company. Oyo gave me the first opportunity of working for a company which is going to become a big impact, let alone the ownership. As I am so excited about it, because I want to serve and be a part of this mission for the next many years, what a lot of people perceive is a big risk, I actually feel it is fairly straight forward. That is if I am so confident about the value of the company, I should not try to make minor adjustments. Either we create big value or on the other hand I should be confident to get to those results. That is what inspired me to consider speaking to people. I am happy that we received support of some financial institutions to be able to make the financing and recently the Competition Commission also in-principle approved my investment in the company along with some secondary purchases.
Another important subject that people are talking about today is IPO. Everybody is talking about doing an IPO in the next 2-3 years at least that is what people talk about. Do you have IPO on your mind?
No, that is the simple answer. We have a very good balance sheet, close to $2 billion. On top of that the business as you imagine is not very expensive to be able to build. So, with that combination our primary focus is to focus on fundamentals. As I always say, our business is little bit like milking the cow. Come to your job every day, do the same thing we did yesterday - sign hotels, renovate hotels to look good, provide good quality service at the right price point, get the occupancy and hence get the margin and do the same thing every day but little bit better than yesterday. I feel once we are able to do it for reasonable amount of time we will consider what is the right time for a potential offering. However, at this point of time our focus is just on the ground execution. This is not just me, if you speak to any of our management they would say the same thing.
What are your thoughts on the backlash you are facing from hotel owners in India?
In the last few years, on an annual basis, Oyo has had 99 percent annual asset retention which means 99 percent of asset owners who join our family stay with the family one year later. And one percent of them leave themselves or we ask them to leave because we have a 3C programme. Under the 3C programme, we decide whether an asset is good enough or not. So, first, this is a matter of credibility; our organisation is built with our underlying asset owners by data rather than just verbal perspectives. Oyo has constantly pre-empted how we can continuously get better for our asset owners. A few months back, we launched the Oyo Open programme by means of which we respond and listen to the feedback of asset owners and understand what needs to be improved. There are lots of very interesting videos, blogs, etc. that the asset owners have written about how they believe Oyo is increasingly becoming a stronger value proposition for them. We have enabled to disburse over Rs 100 crore in capex as well as interior design amounts for these assets to get better revenue pie. Majority of the people who are communicating about the situations are folks who are not Oyo Hotel owners. some of them are actually asset owners who belong to some other brands and their intent is to try and create a price-fixing at a neighbourhood level, saying that at a neighbourhood level let Oyo also increase the price. Oyo was built with a principle of lowest prices and the ideal rating of the product we want to bring for our customers. So, we will never agree to price-fixing and let the 25 percent price increase that some of them would like from us. We would like to deliver best prices at the right quality.
How did you acquired your early customers?
How can young entrepreneur reach to you?
Do you support new entrepreneurs?
How did you collaborate with the locals in different countries?
What did you learned after entering the market ?
What's fun at the OYO workplace?
What's fun at the OYO workplace?
What are your views on Japan as a marketplace?
How difficult was it to build the company in china?
What are your views on the current education system?
What are your views on your small town roots?
How much OYO is dependent on tech?
How the company made profit on the balance sheet?
Considering you being so young, what is the average age of an employee at OYO?
What are your views on your biggest competitors in India ?
How's current political condition is helping OYO?
What are your views on the Indian Budget ?
Whats your advice for the entrepreneurs to be like you?
How important is it for you to outreach or to have a narrative to the world?
How do you deal with media?
What is working under you like?
Where would we be in the next 5 years according to you?
What change you wish to have in India ?
What change had come in India in the recent years?
What are your views on Masayoshi son and his vision fund?
What do you think the big venture capitalists see in Ritesh Agarwal?
Do you have a separate PMS in China?
What are your views on Accord as a competition ?
What are your views on Britain as a marketplace ?
How do you compete with the locals?
How the OYO's model has changed over the years?
What is OYOs business model?
What are your views on OTAs ?
How are ensuring that you don't over stretch the supply in the long run?
How are you able to work so hard for this company?
What are your views on SoftBank vision fund?
Will the core belief of OYO which is making rooms economical will remain the same?
Why Airbnb is considered as an investor instead of competitor or semi-competitor?
How is US as a marketplace for OYO?
How many employees OYO has right now in China?
How are you able to conquer China as most companies struggle to do so?
How is OYO growing at this fast pace?
How is OYO growing at this fast pace?
How OYO is expanding its coverage?
What is your focus for now?
What is your focus for now?
What is the target shareholding you're looking ,for yourself?
What are your views on the recent buybacks and IPO?
How location plays a major part in the functioning?
How do you maintain the quality that OYO is known for?
How are you maintaining the connection with consumers ?
Do you think there are lot of brands in the OYO portfolio?
What is your vision for the company?
What is your vision for the company?
How India is different from other countries?
How much did OYO grow in a such a short span?
What did you learned today by building this company?
How did you maintained the standards of an OYO room?
How did you build the first OYO hotel?
How did Theil fellowship helped you build the company?
How did Theil fellowship helped you build the company?
How did you approached the next step after Oravle?
How did you come up with the idea of building a company like OYO?
How was your childhood like?
What measures you took for maintaining the consumers?
What measures you took while scaling up the company?
What was a big part of your individual learning?
What was OYO's early hiring philosophy?
How did you overcome the tough times at OYO?
What basics OYO believes in ?
What did you learn while being with Peter Thiel?
How was the initial period of getting the company started?
What is OYO now and what are the future plans?
What is OYO's social mission ?
What piece of advice would you like to give to the current engineers?
What were your parents side of your success story?
How companies like SoftBank affects OYO's overall decision making?
What are your views on the current pandemic?
How is OYO affected in China due to this pandemic?
How OYO is guaranteeing its growth for this year ?
What was OYO's strategy behind cutting down one-third of its workforce?
What are your marriage plans since you are probably among the most eligible bachelors of India Inc.?
My mom is surely worried that the fact that I don’t have a college degree will impact my chances of finding a bride.
Having scaled significantly both as a business and an entrepreneur, any thoughts on giving back to society?
There are causes that are dear to me personally including encouraging entrepreneurship, improving livelihoods as well as helping humanitarian rescue and relief efforts. I am only 25 now and have a long way to go personally but I am considering a few ideas that will help me make a meaningful contribution. You will soon hear about this. From an organisational perspective, we formalised a concrete CSR program called OYO Reach that assists in several causes including installing rainwater-harvesting systems in water-deficient cities, harnessing technology and resources towards cultivating a culture of sustainability, focus on skill development, and economic opportunity creation in the cities where we operate and help to boost the local tourism.
How have you deployed technology both on the supply and demand side?
Technology has always been a key differentiator for OYO. As an intersection of real estate, hospitality and technology, OYO has over 20 technological products that power various business verticals. At present, OYO offers multiple app-based solutions both for its customers, employees and asset partners including our Property Manager app for managing all daily functions of the property and Owner App for asset owners to have complete visibility of his business. Then there is OYO AGMs (key contacts for guests and hoteliers in a certain geographical area) that use Krypton for auditing OYO hotels. Our AI-based algorithms help the chain in predicting the most suited properties at the best location at the correct price for its customers. Also, our integration with AI-based bots has enabled property owners to assist customers.
Talking of innovation, when you say you will be the world’s largest hotel company, how does the innovation look to you from the top?
While one is in the process of coming up with a truly innovative solution, it is essential to keep an open mind. One should accept failure, and be willing to learn, unlearn and relearn again. We have always believed that an overnight success story is backed by at least five years of dedicated hard work and perseverance. At OYO, we have been able to instil innovation throughout the company by inculcating the ability to make sure that the company and mission come first. This is not just true for the management but also for all OYOpreneurs.
While India and China remain your biggest markets but how do you see the graph moving ahead particularly with respect to your US foray?
You are right. India and China are two of our biggest and home markets. In fact, China is bigger than India for us in terms of room count. We have over 500,000 rooms in China and more than 270,000 rooms in India. In addition to these two markets, the US is our third home market and it is the fastest scale-up for us in any market globally, with over 100 hotels in a short span of time. The US has the potential to be a large market in the future. Indonesia had a stagnant growth but has taken off in a big way. We have over 21,000 keys in Indonesia. I think as we go forward, China, India, the US and Indonesia will continue to be our biggest markets. The focus in Europe continues to be on vacation homes while we are catering to the growing demand for quality, affordable accommodations in the Middle East.
एक महत्वाकांक्षी उद्यमी को विफलता को कैसे संभालना चाहिए?
नियुक्ति के लिए आप क्या रणनीति उपयोग करते है?
क्या कोई उद्यमशीलता के लिए अपने जुनून का पीछा करना चाहिए यदि संभावित रूप से कोई आय की प्रवाह नहीं है?
9 से 5 की नौकरी के विपरीत, एक उद्यमी का दैनिक जीवन कैसे चलता है?
जब आप एक उद्यमी बनने के लिए कॉलेज छोड़ना चाहते थे तो आपके माता-पिता की क्या प्रतिक्रिया थी?
जब आपने अपना व्यवसाय शुरू किया, तो आप केवल 18 वर्ष के थे। आपने उन लोगों को कैसे काम पर रखा जो आपसे बड़े थे?
ओयो रूम्स ने शुरू होने पर किन समस्याओं का समाधान करना चाहा?
OYO to buy back Rs 50 crore worth shares from existing, past employees in January
OYO Rooms has said Friday that it would buy ESOPs from 250 of current and former employees worth nearly Rs 50 crore (in the first round) in January 2019. The buy back program would be carried out through a secondary acquisition programme led by one of the company’s existing investors, OYO said in a statement. The ESOP liquidity programme is expected to be worth nearly $150 – $200 million over the coming few years, company said. Earlier this month, company’s founder Ritesh Agarwal said that he is aiming to turn the hotel chain into the world’s largest by 2023 as it expands into newer countries in the Middle East, South East Asia and Europe.
What advice would you give to the young and budding entrepreneurs out there?
There is no right age or time for you to start your own enterprise or to chase your dreams – the best time is now! If you have an idea that you genuinely believe in, and if you think you will find as many takers for your idea as you need to build a business, my advice is to go for it. Do not let thoughts like “I am too young” or “I don’t have any experience” come in your way. I have always believed the right time is when you are under the shower & you can’t stop thinking of an idea. Also, do not fear failures – they are a stepping stone to success. Lastly, if you don’t risk something, you don’t deserve a reward.
What is the USP of OYO Rooms, what makes it stand out?
OYO Rooms offers standardized high-quality rooms from Rs. 999 onwards, and all of our rooms are equipped with the basic amenities that one expects in a good hotel such as a clean and comfortable bed, air-conditioning, clean attached bathroom, TV, WiFi, and complimentary breakfast. We are completely redefining the meaning of a budget hotel by offering a fantastic stay experience at down to earth prices.
How did OYO Rooms come into being?
As a student I travelled extensively across the country on a shoestring budget. That’s when I realized that there is a serious dearth of budget but high quality hotels in India. As a traveller, I am spending hard-earned money but I don’t even know whether I will get something as basic as a clean bed and linen, or hot water in the bathroom. Things like Wi-Fi were completely out of question if I was making a budget trip. This was a huge contrast from the experience that expensive hotels provide – where guests always know that the basic amenities will be of a certain standard that they can rely on. My personal experiences led to the idea that if the same standardized experience can be offered at a pocket-friendly price, travellers will never hesitate to book and stay in a budget room. This idea led to the birth of OYO Rooms in 2013.
OYO expands international presence, enters Sri Lanka
Hospitality firm OYO has entered Sri Lanka as part of its expansion plan in South Asian market, sources said Thursday. Currently, the company has presence in seven countries including India, China, Indonesia, Malaysia, Nepal, the UK and UAE. “The company launched operations in Colombo, Sri Lanka, earlier last month with over 10 properties,” sources aware of the development said.
What are three things that you have learned as an entrepreneur?
What is Thiel Fellowship all about?
What was the turning point of your life as a struggler?
Which entrepreneurs were your inspiration?
Did you always dream of making it big one day?
What are the most consistent features of hotel industry?
In our industry, new age technologies are going to keep disrupting what the current norm looks like. But there are three things that will not change—customers will still expect good locations, good price, and good quality. We think if we can get these three basics consistently better than anyone else, we will do a decent job. There will, of course, be many small journeys in this one mid-term journey, but all of them are worth it.
How do you monitor the distribution of Oyo properties?
Every asset goes from an average of 20-25 percent occupancy to 70-80 percent occupancy within 45 to 90 days of joining the chain. This is where we have invested all our capital in the last four years. We have not invested so much on discounting or owner subsidies and so on. We did that when we had to compete in 2015 but since 2015-end, we only focussed on competency investments.
Can you talk about one experience which has proved to be insightful for you?
In 2016, for 5-6 months, we just said that it’s okay to not add assets, to not grow revenues... until we get our consumer experience benchmarked to the highest level, that’s the wrong long-term investment to make. Those were big learnings—your biggest investor, decision maker and designer is the customer. Even today, we are not at our best. But every year our promise is we are going to continue to learn and be the best in comparison to anything else.
How challenging is it to get a “Theil Fellowship”, wherein you decided to drop out of college to build your business?
Why are you not looking at hotel owners yourself and investing in properties for long term benefits?
Are you just burning cash through this extensive engineering of standardising hotels or is there profitability to this business model?
What kind of resistance did you have to face while trying to change this industry?
What was your turning point? From being nothing to initially to even launch and execute a business is big deal. Tell us about it.
How did you come across the problem, which triggered to the idea of Oyo Rooms?
What should a consumer expect from Oyo Rooms?
Does Oyo only cater to budget travel or your intent is to expand and cater every pocket size?
What does Oyo stand for?
Being an entrepreneur, is it fun or too much of pressure that might break you down sometimes?
Should one pursue their passion for entrepreneurship if there is potentially no great revenue inflow?
Unlike at 9 to 5 job, how does a daily life of an entrepreneur run?
What is your recruitment strategy?
How should an aspiring entrepreneur handle failure?
Do you think in this tech-savy era any small and large business has an opportunity to thrive?
What advice do you want to give to aspiring entrepreneurs?
You are not an intermediary between a customer and a hotelier but a partner. Can you please explain?
What has been your battery down moment?
What problems did Oyo Rooms want to address when it started?
You were 18 when you started. How did you hire people older to you?
How did your parents react when you wanted to quit college to become an entrepreneur?
What were some of the challenges that you faced during your early years? What learnings did you have from it as an entrepreneur?
As an entrepreneur, what according to you helps in scaling up your business?
Did you have any discrepancies about your career choices and how did you deal with it, to become an entrepreneur?
How does the Oyo Rooms' success look like today?
You call yourselves as “Urban Innovators”. What do you mean by it?