OYO – a boon for all the couples out there who were looking for some privacy to spend time together!
Started with just one hotel in Gurgaon in 2013, to 13000+ hotels, over 450,000 rooms, adding over 64,000 rooms every month, globally.
But how did such an empire happen?
Let’s dive into another case study – OYO Rooms!
About OYO Rooms
Founded in 2013 by a college dropout Ritesh Aggarwal, OYO consisted of budget hotels.
Currently, it ranks as the world’s third-largest & the fastest growing hospitality chain of leased and franchised hotels, homes & living spaces.
Since its advent in 2012, the startup expanded globally across hundreds of cities in India, Malaysia, UAE, Nepal, China, the UK, Philippines, Japan, Saudi Arabia, Sri Lanka, Indonesia, Vietnam, the United States and more.
The Journey
Ritesh was a student at the Indian School of Business & Finance in Delhi. At just the age of 17, he launched Oracle travels, a site for booking & listing budget-friendly hotels.
The goal was to create an Indian version of Airbnb.
Initially, it was backed by an investment of 30 lakhs from Venture Nursery.
After months of traveling, staying in several bed & breakfast accommodations, guest houses, etc, he changed Oracle to OYO in 2013.
The primary aim of OYO was the standardization of hotel rooms on the basis of a basic spotless clean bedroom, a clean bathroom, flat-screen TV, free wifi & free breakfast occasionally.
The Business Model
OYO follows a unique business model.
Basically, it neither buys a hotel nor does it aggregate it. Then how does it function?
OYO generally partners up with non-standardized hotels & blocks rooms by just buying them for a certain period. Now, these initial stages require a lot of cash & investments which is the reason it has investors like SoftBank Group, Greenoaks Capital, Sequoia India, Airbnb, and China Lodging Group.
For OYO, after they buy a hotel for say a month or two, they “standardize” it with their kits, setup, & then sell it to the customers under their brand name.
In a brief, OYO’s business model includes:
- Lease a part of Hotel’s inventory beforehand,
- Organize those hotel rooms under their brand name – Oyo Rooms
- Bookings were made through the Oyo Rooms website and mobile application.
- The target audience of OYO Rooms are:
- travelers who want a decent hotel room to stay
- Unmarried or married couples who want non-intrusive premises to spend time together.
OYO targets people from age 20-30 years, mostly from urban cities like Mumbai, Bangalore, Indore, Chennai.
They target customers from the lower-income or middle-income earning classes of society.
OYO targets students and working professionals who enjoy traveling and making short trips, often alone.
Swot Analysis Of Oyo
For any case study, we need to understand the SWOT analysis of the business model.
SWOT Analysis is usually done to determine the strengths, weaknesses, opportunities & competitions of any business.
It is the basis of future research & development of any given organization that helps them to identify their USP along with new business opportunities.
Let’s focus on the Strengths of OYO Rooms
- The standardization of the rooms under the OYO franchise is a guarantee of standard service in all the OYO rooms.
- The idea of OYO rooms is a highly innovative one with all the one-stop budget stays in India.
- The fresh idea of privacy for couples, which was bold & brave that time in India made it the forerunner of hotel chains in the country.
- OYO subsidized rooms for affordable stays that have successfully emerged in the line of new business chains.
- A huge network of around 8500+ properties throughout the country is a great strength for OYO Rooms.
In comparison to the strengths, OYO has quite a limited number of weaknesses.
Weakness of OYO Rooms
- The strategy of co-branding rooms without actually owning a property can be a problem.
- Although their standardization has worked on the favors at times their service quality and reliability can be questionable.
- The tight margins of providing hotels can be risky or which Oyo cannot do anything much to circumvent.
Opportunities of OYO Rooms
- Growing demand in the market for hotel aggregators where most higher budget hotels are suffering losses can increase the scope for aggregators like Oyo
- People are tending towards more budget-friendly, easy to book kind of stays now. Thus budget hotels that can provide decent boarding and lodging facilities are on a high demand today.
- Rise in the number of business travelers, live-in couples are increasing even in Tier-II cities. This is leading to more business opportunities of premium rooms, OYO life, OYO Townhouses, etc.
Threats of OYO Rooms
- With new entrepreneurs in the market like Goibibo, Trivago, Makemytrip, etc which offer a varied gamut of services similar to Oyo.
- Today many hotels face unsafe stays & harassments. Although for OYO Rooms they have a moral commitment to ensure that no such untoward incidents happen.
The marketing strategies adopted by OYO
360-degree marketing:
360-degree marketing implies that a company has a complete presence in digital as well as traditional media platforms.
OYO adopted a wide range of digital marketing strategies to promote its campaigns, including social media marketing, Google ads, & of course through its app.
One of the major campaigns of OYO is #AurKyaChahiye. This was a clever use of campaigns as on transit ad it would be a great hoarding, whereas it could be promoted on television by making effective use of TV commercials.
Search Engine Optimization or SEO
Search Engine Marketing refers to the use of particular keywords to ensure a high level of traffic & visibility on your page.
OYO used SEO to its full potential!
Some of the most popular keywords for OYO are “Oyo Rooms”, “hotels in Shimla”, “Oyo Rooms Delhi”, “hotels in Mysore”, “Hotels in Nainital” and “Hotels in Ooty”.
So basically if you go on Google and type these words, OYO’s result will the top one to appear in the zero position.
Also, OYO used brands to bid on certain search terms to ensure that when users search these particular terms on the internet, the particular brand’s page pops up as one of the first results.
For OYO some of these words include, online hotel booking, hotel booking online, hotel booking offers, book hotels, best hotel deals, book hotels online, hotel deals, hotel room, best hotels, best hotel prices and hotels nearby.
These bid words made their website much more accessible for people looking for affordable hotels.
Social media marketing
OYO segmented social media platforms in order to promote their brand.
For Facebook, the brand used location-based posts, posts that detail the progress of the organization over the years and regular promotional posts.
These three types of posts with unique content catered to each of the targeted segment the brand was going after.
The location-based posts helped potential customers to find accommodations for their destinations. The progress posts helped to generate audience engagement & the regular promotional posts helped to retain the brand awareness encouraging people to book OYO rooms instead of other brands.
Now comes Instagram.
The brand used almost a similar strategy for Instagram as it used for Facebook. But here they reposted pictures taken by travelers, happy OYO users. They encouraged users to tag OYO in their posts, increasing engagement. They also regularly post-festive posts and special discounts on their page to keep the audience updated.
With Pinterest, they did campaign-related posts along with Twitter. They posted about the various award wins and events, as well as any corporate social responsibility related work that OYO carries out.
Contests & Campaigns
Apart from the famous #AurKyaChahiye campaign which highlighted the fact that OYO provides rooms at just Rs. 999, the brand always keeps their customers engaged.
There was a contest #OYOnauts in which the social media followers submitted their story ad & if they win they would get a sponsored trip from OYO itself! This campaign was short but was a major hit instantly.
Another campaign #OneForEveryone by the brand was a video campaign that showed 8 different types of peoploe OYO catering to.
Apart from this, OYO regularly offers discounts for the customers on special weeks like Valentine’s Day & Diwali, so on.
Influencer Campaigning
OYO collaborated with influencers like Prajakta Koli (MostlySane), Mumbaiker Nikhil, and others to promote the brand.
For example, a biking influencer could show that the new OYO hotel is biker-friendly through staying there and reviewing his experience on his social media. Or someone posting about the safety of women travelers in OYO rooms.
They even produce blogs regularly to boost their content marketing. This gave a great boost to OYO as a brand.
The Results
With such aggressive digital marketing, OYO achieved a fanbase of its own.
It has a strong social media presence on Facebook with over 1.1 million fans and a Twitter following of over 57,000 followers.
The app has over 10 million-plus app downloads with a good number of active users.
Their major campaign videos on YouTube garnered over 175 million views to the brand.
Some of their recent endeavors are Salute to the heroes of the 1965 war and Oyo Explorer – Pune.
Partnerships
OYO has huge backups from brands like Airtel for wi-fi support, ZO rooms, Thomas Cook, Air Pegasus and Tourism and Hospitality Skill councils with the investors from all over the world.
In the last year 2018, OYO Hotels & Homes completed its transition to becoming a 100% leased & franchised hotel chain.
Currently, the brand operates across more than 290 cities with 320,000 exclusive rooms and 7,000-plus buildings. In India, it has over 8,700 leased and franchised buildings and over 173,000 rooms across 259 cities.
The Future
With OYO Rooms, the company is tapping into a market of growing travelers.
They are launching new conveniences like OYO Homes and Studio Stays by OYO.
With OYO Homes the company is venturing into travelers who prefer to stay in bed & breakfast rather than hotels. These stays will offer them local cuisines, homemade food.
With OYO Studios & OYO Life, the company is venturing into another growing segment of students who travel for internships, college admissions, and entrance tests; as well as first jobbers who need a decent place to stay while they look for homes to rent or buy in a new city.
Ritesh Agarwal, founder, and CEO, OYO Rooms told BusinessLine, “We are also looking to offer niche experiences to specific customer segments such as students who are on internships and working professionals moving to a new city, with Studio Stays, which are priced upwards of Rs. 7,999 per month.
“We launched this in summer and saw a flood of guests in the North-East, Bengaluru, Kochi, and Delhi.”
Recently, they launched OYO café, OYO We for Women travelerS and OYO Premium for high-end customers!
Along with expanding its business globally, OYO understands the importance of customer’s feedback & its effect on its brand image.
OYO has made a mark in the hotel chain globally.
How are you planning to expand your business globally? Thinking of using the leverage of digital marketing? Contact Skyram Technologies and let us help you to build your franchise!
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