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Saju. B., Harikrishan K., and Joseph Jeya Anand S. wrote this case solely to provide material for class discussion. The authors do not
intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names
and other identifying information to protect confidentiality.

This publication may not be transmitted, photocopied, digitized or otherwise reproduced in any form or by any means without the

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permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights
organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western
University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) cases@ivey.ca; www.iveycases.com.

Copyright © 2016, Richard Ivey School of Business Foundation Version: 2016-09-20

OYO Rooms (OYO), a technology-enabled start-up from India, had been growing exponentially since its
op
inception and was set to become the country’s largest budget hotel chain. OYO had registered 1 million
check-ins by January 18, 2016.2 The venture’s unique business model helped it to tap into the challenges
faced by customers seeking budget hotel accommodation in India, and its potential for rapid growth made
it a candidate for even greater expansion in the global arena. However, the onus was on OYO to prove its
ability to sustain growth in the Indian market. Moreover, the company’s success and the increasing
awareness of a huge untapped market led to a flurry of competition. In light of these developments, OYO’s
entrepreneurial founder needed to address a few imminent issues. Would he be able to sustain his
tC

company’s early momentum in the wake of increased competition? What would be the best strategy to
achieve growth and monetize its operations? Should OYO diversify into allied services or apply a more
focused strategy? The founder needed to answer these questions to retain the company’s dominant position.
No

OYO was founded in May 2013, by Ritesh Agarwal, a 19-year-old entrepreneur who had remodelled his
first venture, Oravel Stays Private Limited (Oravel Stays), to create the new firm.3 Launched in 2011,
Oravel Stays was an accommodation discovery marketplace based on the Airbnb, Inc. model. Agarwal had
dropped out of university to pursue his dream of building an enterprise. He was one the first two Indians to
win the prestigious Thiel Fellowship, and subsequently received an opportunity to hone his entrepreneurial
skills under legendary entrepreneurs and venture capital investors such as Peter Thiel, Elon Musk, and Sean
Parker.4 During his early days with Oravel Stays, Agarwal had stayed in approximately 100 bed and
breakfast inns, where he had frequently encountered the challenges many customers experienced when
staying in a typical budget hotel in the unorganized category.5 He successfully leveraged his exposure and
Do

fellowship funds to innovate Oravel Stays’s business model, and converted the company into a managed
marketplace for predictable and standardized hospitality experiences. The new venture was named OYO
Rooms, a first-of-its-kind, technology-enabled budget hotel chain.

Agarwal’s new company was borne out of careful contemplation of the real issues that plagued many
unorganized budget hotels in India. He had realized that the primary problem that customers encountered

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 t
with unorganized hotels was a lack of predictability.6 Although customers could book hotels through

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official websites or online travel agencies (OTAs), the experience that was delivered often differed from
what had been promised online. Booking websites often showed flattering (to the point of being dishonest)
pictures of the rooms, and descriptions of extensive services; yet many customers reported nightmarish
discoveries on arrival, as they were met by dilapidated buildings, untidy rooms, non-functional fittings, and
tardy service. Accordingly, OYO’s model tried to provide a lasting solution to this problem of the

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unpredictability of the customer experience, and to address the large gaps between promised and delivered
service, which almost every budget traveller in India had faced at some point.

OYO’s business model stood out from the existing marketplace model of companies such as Airbnb, Inc.
in that the start-up was not only trying to connect customers and service providers but was also building a
chain of branded or co-branded budget hotels under the OYO brand, using an asset-light model. By
leveraging its unique technology, OYO brought unorganized hotels onto its platform and made them easily
discoverable. However, this act was preceded by the company’s conscious effort to ensure standardization
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in critical features and services, which was instrumental to delivering a positive customer experience.
Hence, before a property could be listed on OYO platform, it needed to provide evidence of standardized
elements such as hygienic rooms, free Wi-Fi, spotless linens, complimentary breakfast, online booking and
payment facilities, flat-screen televisions, and branded toiletries.

OYO also provided basic training to hotel staff in all aspects of customer interactions to enhance the overall
quality of service delivered. The company acquired and transformed a target hotel using minimal
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investment, and without owning any real estate or property. On the OYO website and mobile application,
any listed property was discoverable only under the OYO brand name. Thus, the main customer proposition
that OYO offered was a smooth, predictable hospitality experience across its co-branded partners.

The Thiel Foundation remained instrumental to Agarwal’s success in the new venture, as he noted:
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The Thiel Foundation remained involved in every step and reviewed us and gave us feedback. The
opportunity to be part of the Thiel [Foundation] and the kind of experience I had was totally
unimaginable. . . . During the fellowship, we were not only [taught] about technology or
entrepreneurship but also how our lifestyle should be . . . [including important] habits . . . for our
overall growth.7
No

Starting with a single property in Gurgaon, a city 30 kilometres southwest of New Delhi, OYO expanded
very quickly, as Agarwal explained:

I realized that discoverability of hotels was not a problem, but predictability and trust were. I
decided to take a single hotel in Gurgaon, standardize it, and manage it end-to-end. I was a coder,
housekeeping [employee] and sales person for that hotel for a month. Interestingly, this hotel had
95 per cent occupancy with massive repeat rates in six and a half months.8
Do

OYO had the organizational tools to facilitate and handle its rapid growth within a short span of time.
OYO’s rate of expansion, even in its early years, was a testament to this ability. In August 2014, to fulfill
an order requirement, it acquired three properties and transformed 50 rooms into OYO hotel rooms in 24
hours.9 From a total of 300 rooms in August 2014, OYO grew exponentially to include 65 hotels and 1,200
rooms under its brand by December 2014.10

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 t
By August 2015, OYO could be found across 73 cities (up from just four cities in December 2014).11 The

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stunning speed at which OYO expanded its network helped to attract capital infusion. The first round of
funding was in March 2014; investors such as Sequoia Capital and Light Speed India offered US$25
million,12 which helped significantly in establishing the business.13 In August 2015, SoftBank Group
invested 6.3 billion,14 which further fuelled OYO’s exponential growth strategy.

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In addition to the leisure travellers that OYO attracted, business and corporate travellers also started
preferring budget hotels for short stays. The company joined with Thomas Cook India to access this market,
with an eye on international tourists. OYO also forged partnerships with other aggregators who operated in
complementary businesses in order to build a strong ecosystem. Thus, Ola Cabs, India’s largest cab
aggregator brand, which was owned by ANI Technologies Private Limited, was chosen for travel services;
Zomato, a restaurant finder and food delivery app owned by Zomato Media Private Limited, contributed
services related to food; and MobiKwik, the mobile/online payment systems app owned by One MobiKwik
Systems Private Limited, was used for easy online payments.15
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OYO had more than 4,000 budget hotels under its brand by December 2015, which gave it access to more
than 40,000 rooms across 165 cities.16 Further, the company showed its ambition to pursue international
expansion with three newly acquired properties in Malaysia, marking its first forays outside India. The
venture that had started with 20 engineers boasted approximately 2,300 employees by the end of 2015. The
average age of these employees was just 25.17
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In December 2015, OYO became the largest branded hotel network in India by taking over Indian Hotels,
previously owned by the multinational conglomerate Tata Group, which had 9,000 rooms across multiple
brands catering to the upper end of the market.18
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With a lodging market worth $7.2 billion, India had approximately two hotel rooms per 10,000 people,
which was nowhere near the market in China or the United States, which had 40 and 200 rooms per 1,000
people, respectively.19 India’s organized hotel market could be divided into three broad segments: luxury,
mid-market, and budget. The independent budget hotels in the unorganized category accounted for
approximately 60 per cent of the total lodging market.
No

The Indian market also had huge growth potential, as predicted by various industry research reports (see
Exhibit 1). A 2012 report by PricewaterhouseCoopers pointed out that the Indian hospitality sector was
expected to witness high growth over the long term, thanks to the surging demand for domestic travel.20 This
growth would be facilitated by factors such as increased disposable income among the rising Indian middle
class, the advent of new locations assisted by better access and infrastructure, and the ubiquitous growth of
affordable budget hotels. The report also indicated that the budget hotel category would witness more
investments in the short term; however, the costs of property management and operations would be key
challenges for the industry. Another study conducted by global hospitality consulting firm HVS predicted that
the total inventory of rooms owned by hotel chains in India would rise by 30 per cent by 2020.21
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Rating agency ICRA Limited estimated India’s online hotel booking industry at $800 million, and projected
that it would grow to $1.8 billion by the end of 2016.22 The agency further estimated that 8.4 million Indians
would book hotels online in 2016. However, according to industry reports, online booking accounted for

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 t
only 16 per cent of total hotel bookings in India, which was lower than expected, considering that 40 to 50

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per cent of air and rail travel was booked through online channels.23

On the other hand, online bookings accounted for approximately 70 per cent of all hotel rooms booked in
Europe, and 45 per cent in the United States.24 Moreover, the number of Internet users in India was expected
to exceed 500 million by 2018; and the country had witnessed an unprecedented growth in the number of

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smartphone users, which was predicted to reach 382 million by 2016 (see Exhibits 2 and 3). The number
of Internet users had grown from a modest 21 million to 171 million by the end of 2015, with a compound
annual growth rate of 90.5 per cent. In terms of number of Internet users, India was the third-largest market
after China and the United States.25

Hotels typically used four online platforms to attract customers: (a) the hotel website, (b) OTAs, (c)
aggregators that provided online accommodation and reservation services, and (d) meta-search services.

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Compared with hotel websites, online hotel bookings were far more effective in terms of their marketing
capability and customer acquisition (see Exhibit 4). OTAs added customer value by providing more options
across brands, as well as price comparisons, ease of booking, and transactional safety. However, OTAs
typically charged a 15 to 25 per cent margin on hotel bookings. 26

A study by Google India had shown that budget hotels were the most preferred segment for the majority of
Indian customers, and that customers could be segmented into three major categories based on their
behaviour: (1) customers who researched and booked online, (2) customers who researched online but
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booked offline, and (3) customers who were comfortable doing both their research and booking offline.27
The report also indicated that Google searches from smartphones for hotels had grown 147 per cent in 2014
over 2013, and that approximately 29 per cent of customers who had searched for hotel information online
had booked their accommodation online.
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OYO’s mission was encapsulated by a bold statement on its corporate website: “Our goal is to change the
way people stay away from home.”28 OYO’s asset-light business model relied on the three pillars of
standardization, affordability, and technology-driven experience. The ownership and management of
OYO’s partner hotels remained with those hotels’ promoters, while OYO added exponential value through
standardizing the facilities, training staff for efficient operations, improving the customer experience, and
No

above all, its excellent marketing of the listed properties under the OYO brand.29 Certain key activities
made up the company’s business model.

OYO mostly acquired inventory from small, unbranded hotels. The company entered into a contract with
target hotels after negotiations on the number of rooms to be acquired, as well as pricing and revenue
stipulations.30 Through these contracts, OYO pre-purchased the rooms, which were subsequently branded
Do

as “OYO rooms” and sold on the OYO platform. This arrangement mandated that OYO was responsible
for ensuring room occupancy.

According to Agarwal, most target hotel owners in the unorganized sector had three major concerns regarding
their businesses, and convincing them on these fronts was critical to OYO’s acquisition strategy.31 The first
consideration was low occupancy rates, which resulted from low-key marketing and the inability to reach out

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 t
to more customers. OYO brought in scale economies and marketing power, and also used an effective

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online/mobile platform to reach out to a large segment of consumers. The second critical factor was the
customer experience, which OYO’s target hotels struggled with due to a lack of essential features. OYO
addressed this problem by providing easy online booking and check-in/checkout facilities to facilitate a hassle-
free customer experience. The standardization that OYO implemented in terms of basic facilities (e.g., clean
rooms and linens, free Wi-Fi, and other amenities) helped to close the gap between expectation and delivery.

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OYO also offered 24/7 customer support, the convenience of room-booking services through a mobile app,
and apps for searching nearby restaurants and booking cabs.32 The third factor was a concern regarding
pilferage of hotel property by certain undesirable customers. This issue was greatly improved by OYO, as
customers with proper online authentication and credentials were much less likely to steal hotel items.

Using a compatibility playbook developed by OYO engineers, the company could check for information
about the hotel being considered for acquisition. Some of the parameters used were infrastructure, location,
facilities, tariffs, owner details, management style, and promoter background.33 The software would check

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whether the hotel’s credentials matched the requirements that OYO had set for its target hotels; if so, OYO
would start negotiating an acquisition.

According to Agarwal, it was critical for any aggregator to have a large supply of inventory on the platform
py
in order to generate more customer demand. Further, OYO had realized that to make the business model
sustainable with a low churn rate, it should contribute approximately 80 per cent of the acquired hotels’
total revenue through the new platform.34 Hence, OYO was insistent on acquiring a significant number of
rooms in each property it chose for acquisition.
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After acquiring a property, the OYO team would transform it into an “OYO room” by instilling
standardization, which involved maintaining consistent service quality through standard technology,
operations, infrastructure, and customer experience across the hotels on OYO’s platform. The
transformation process also involved creating exhaustive checklists, negotiating with amenities vendors,
and hands-on management of the transition.35

Every acquired property underwent renovations to meet OYO’s standards, which provided physical
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evidence of service quality. Transformed properties featured approximately 30 standardized items,

No

including spotless bed linen of a particular thread count, 32-inch flat-screen televisions, 15-centimetre (six-
inch) shower heads, beverage trays, and so on.36 Customer check-ins and checkouts were completed using
tablets enabled with specific apps, and during check-in, guests were given an OYO bag containing branded
toiletries and other consumables.37

Transforming properties required significant financial investments and expertise from the hotel owners.
Each room required a minimum investment of 10,000 to 20,000. OYO helped hotel owners with these
transformations by providing the services of trusted vendors and by connecting lenders with target hotels
to arrange loans, but the hotel owners invested the required funds.38 Furthermore, OYO also provided
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housekeeping and services training for the staff at acquired hotels to help them deliver a better customer
experience. After all these steps had been completed, the property was deemed ready to be branded and
advertised as an OYO room.39

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 t
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Technology and analytics gave OYO operational excellence, which it offered, in turn, to its hotel owners and
customers. The company’s operational software was built on highly sophisticated algorithms designed to
handle huge amounts of transactional data. This software provided an excellent interface between customers,
hotel managers/owners, and OYO. Moreover, OYO had developed backend capabilities and software to

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integrate customer information, hotel operations, and pricing, as well as many apps for managing operations
(including apps for customers, hotel owners, hotel managers, and OYO staff). The front end of OYO’s
technological platform for customers was the mobile app and the company website. Alternatively, less tech-
savvy customers could book hotel rooms via a telephone call, or through partner OTAs.40

The OYO mobile app, launched in April 2015, was downloaded more than 1.5 million times in its first seven
months alone.41 The extremely user-friendly design enabled easy sign-up, and users could book a hotel with
just three taps—and cancel the booking with just one tap. The customer had a choice of making an upfront

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payment through the app, or paying later at the hotel. Further, the app offered numerous features, including
city-, location-, and landmark-based searches; options to filter and sort search findings based on many
parameters; and geotagging with directions to the booked hotel. The app also supported ordering and
managing a host of services after checking in, such as booking cabs, ordering room service, and finding nearby
restaurants. In addition, the homepage of the app featured many deals and special packages for customers.

For hotel owners, OYO had a specially designed portal to help them manage their operations. More
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importantly, the owners were equipped with a tablet loaded with a property manager app to track and
manage real-time business transactions. OYO had yet another hotel manager app to track real-time
transactions, including customer check-in/checkout times, payments, customers’ orders, and whether
orders/services were delivered on time.42 These powerful tools helped OYO and its partner hotels to keep
all transactions running smoothly. The apps, which had been integrated with OYO’s backend systems, used
analytics to provide end-of-the-month detailed reconciliation on some 600 variables, and thus, offered hotel
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owners significant insight regarding their business.

Hotel owners were given payments every week based on the number of bookings. The software systems
and analytics helped the company with allocation and pricing, resulting in better management of demand
and supply.43 In short, superior technology helped establish an easy interface and hassle-free stays for
customers, and enhanced the operational efficiency of partner hotels. Moreover, these technologies
benefited the suppliers: their occupancy rates typically soared to 70–80 per cent after listing with OYO—
much higher than the industry average of about 57 per cent occupancy for budget hotels.44
No

For every 600 rooms, OYO had one auditor, who would then audit each room every three days.45 On
average, an OYO “cluster manager” would audit 30 hotels per day with the help of the company’s cluster
manager app. This process ensured that each hotel was audited every week. Audits involved a detailed
checking of rooms and equipment (e.g., air conditioners, water heaters, and bathroom fittings), and review
Do

of service delivery by hotel employees.46 OYO had more than 100 dedicated staff for evaluating the quality
of the properties and rooms. Using about 160 checklist items on their company tablets, these employees
ensured that all hotels maintained sufficient quality standards to allow them to continue on OYO’s listing.47

OYO also audited its partner hotels by monitoring customers’ feedback/ratings provided at the time of
checkout. This feedback was integrated with OYO’s customer support systems. Hotels were required to
upload information (including images) through the app, which had geotagging, and OYO compared the results

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 t
with the customer feedback to highlight any shortcomings. The audit information was shared with hotel

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owners, staff, OYO’s hospitality management team, and the property management team. Owners were often
advised to improve material or service quality based on the inspection results.48 However, if in spite of these
efforts, a hotel consistently received ratings below three stars, OYO would remove it from the network.

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OYO earned approximately 65 per cent of its revenue from the budget segment, and the remaining 35 per
cent from the mid-market segment.49 The company was determined to give customers the best deals while
maintaining high occupancy rates for hotel owners. Customers could choose from affordable stays at hotels
listed on the OYO platform, in the range of 999 to 4,999 per night.50 OYO’s margin on rooms was not
standardized; rather, it relied on such factors as the location and occupancy rate. For instance, OYO received
a margin of approximately 25 per cent from hotels in low-traffic locations, whereas the margin rose to as
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high as 40 per cent from hotels in high-traffic locations.51

In effect, the acquisition of rooms led to a pre-purchase of the inventory, and OYO ensured that the hotel
owners would receive a certain amount of revenue on the pre-purchased rooms. Suppliers were happy
because their average occupancy rates would likely have been less than 50 per cent had it not been for the
OYO platform. Moreover, in line with the conventional aggregator strategy, OYO offered substantial
discounts to drive traffic and to compensate owners on any unsold inventory.52
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OYO needed to achieve a certain critical volume growth to reach break-even. With this crucial objective in
mind, OYO acquired as many properties as possible in order to allow it to offer a huge supply of inventory,
and to increase the bookings per night. The company also wanted to be accountable for more than 80 per cent
of the total revenue from its listed hotels. At the same time, OYO was ready to experiment to generate new
revenue streams; for instance, some fast-moving consumer goods companies test-marketed their products by
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placing them in the toiletries bags that OYO gave to customers.53 Although this approach offered only a small
stream of revenue, it demonstrated OYO’s innovative way of looking for revenue growth.

Although OYO targeted the typical travellers and tourists seeking affordable stays that still offered a good
experience, the model had many unexpected takers. In small towns that were plagued with problems such
No

as an erratic power supply, customers started checking into OYO rooms to escape from the extreme heat
and enjoy the hotel’s air conditioning. In addition, many younger people who lived with their parents
sometimes preferred to stay in an affordable hotel after an evening of partying. According to Agarwal,
OYO’s customer acquisition cost was the lowest in the industry, and repeat customer rates were very high.54

The company managed demand generation and customer acquisition for partner hotels through 30 online and
offline channels.55 As of August 2015, more than half of OYO’s customers used the company’s mobile app to
book rooms, and this number was expected to increase in the near future.56 Thus, OYO demonstrated that it was
Do

able to retain and convert first-time users to repeat users, and approximately one-third of its total customers were
repeat customers—a fact that underlined the effectiveness of its customer centricity and loyalty program.

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 t
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OYO was an acronym for “own your own,” indicating the company’s customer-centric philosophy.57 OYO’s
tag line was “India’s largest branded network of hotels.” It had a very strong social media and digital presence,
with more than 270,000 Facebook fans, approximately 8,000 Twitter followers, 1.5 million mobile app
downloads, and many popular short films and videos on YouTube.58 The OYO app was one of the highest
rated in the Google Play Store, and was among the top three in the travel and accommodation category.59 To

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support one of its social media campaigns, OYO made a short film with two popular Bollywood actors, which
soon went viral online. Agarwal claimed that after the film debuted, bookings increased 25 per cent
overnight.60 Thus, OYO’s digital strategy was highly effective in contributing to the brand’s creation.

In September 2015, OYO earmarked 50 million for a nationwide advertisement campaign.61 The mass media
campaign, titled “#AurKyaChahiye” (“What else do you want?”), involved television ads as well as digital,
print, radio, and out-of-home media. The campaign highlighted the brand promises—affordability,
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accessibility, and predictability—and conveyed OYO’s competence in providing everything required for a
comfortable stay. OYO also used other innovative campaigns in various cities; for instance, it created transit
ads on all the premium buses that connected the airport and city in Bangalore. Furthermore, the company
spent approximately 5 million every month on offline marketing in an attempt to create momentum.62
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Agarwal summarized his concerns regarding the competition: “I am never concerned about these big hotel
chains because . . . [I am certain they] will never catch up with us. What I am afraid of is a 16- or 17-year-
old will have nothing to lose and disrupt the space, like we did.”63
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OYO’s business model invited many copycats into the budget hotel aggregation space (see Exhibit 5), and the
battle sometimes turned vicious. For instance, in April 2015, OYO engaged Zostel Hospitality Private Limited
(Zostel) in a legal battle over alleged copyright violations. OYO asserted that some of its former employees had
copied certain proprietary documents and the central reservation system software, which were being used by
Zostel to launch “Zo Rooms,” a venture with numerous similarities to OYO. By November 2015, the online
hotel aggregation industry was flooded with comparable start-ups, such as Fab Hotels (owned by Casa2stays
No

Pvt. Ltd.), Vista Rooms (owned by Vista Rooms Pvt. Ltd.), Treebo Hotels (owned by Ruptub solutions Pvt. Ltd.),
Zip Rooms (owned by Spree Hotels &Real estates Pvt. Ltd.), and Wudstay (owned by Wudstay Travels Ppvt.
Ltd.). Based on OYO’s success, these start-ups had sensed a huge opportunity in aggregating stand-alone budget
hotels, which lacked proper systems and a recognizable brand name. According to Agarwal, OYO’s model had
given rise to approximately 30 copycats, or imitators in India and globally.64

In November 2015, Makemytrip Inc., an OTA, delisted budget hotel aggregators, including OYO, Zo Rooms,
and FabHotels, and launched its own budget hotel network under the brand name Value Plus. This action
triggered a similar response by other OTAs, including Goibibo.com and Yatra.com. The Value Plus business
Do

model was very similar to that of OYO. By November 2015, Makemytrip had approximately 1,000 hotels
under the Value Plus brand, which delivered facilities almost exactly like those offered by OYO. The company
also had approximately 27,500 hotels listed with it in the conventional online hotel-booking category, which
accounted for about 45 per cent of its total revenue.65 Further, Makemytrip estimated that only 3 per cent of
its daily hotel room sales and 10 per cent of its total bookings were contributed by all budget room aggregators
combined, and it was unprofitable to accommodate competing firms on its platform.66

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 t
Other OTAs, such as Yatra, and Goibibo, also developed their own versions of budget hotel chains under

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the brand names TG Rooms and Go Stays, respectively. OTAs could charge 15 to 25 per cent margins on
hotel rooms, compared with the 5 per cent margins generally received from booking flight tickets.67 These
new launches posed some threat to OYO, because OTAs could easily synergize the network effects between
hotel bookings and travel bookings (see Exhibit 6). In addition, many OTAs had access to a huge customer
database, and had the technological competence to deliver differentiation to hotels in terms of customer

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acquisition, yield management, and operational efficiency. According to OYO’s chief growth officer, only
10 to 15 per cent of its customers used OTA platforms to reach OYO.68

OYO’s bookings per month reached 250,000 in December 2015.69 However, the company was
contemplating the need for more revenue streams; for instance, it considered an option to combine the

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kitchens under its partner hotels to launch a food delivery start-up under the brand OYO Café. Another idea
was a spin-off, on-demand service business that would cater to the housekeeping and service operation
needs of the hotel industry.70 OYO also considered augmenting its current offering by adding new services
such as keyless check-in.71 The company knew that it could not rely on venture funding forever, because
the high probability of it drying up sooner than expected. With all of these factors in mind, Agarwal had
been focusing on building scale, recruiting the right talent, building cutting-edge technology, and creating
a generally compelling brand.
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By the end of January 2016, Agarwal was well on his way to making OYO a truly outstanding company—
but OYO’s diverse challenges required effective strategies and solutions. Would it be possible for OYO to
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keep up the pace of growth with the changes in the competitive context? Would the company be able to
open robust revenue and profit streams? Should the company consider getting in to related businesses by
modifying its current model?
No
Do

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2006 18
2009 26
2012 36

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2013 37
2014 38
2024 (estimated) 71

Source: Compiled by the case authors from Octane Marketing Pvt. Ltd, e-Travel Marketing India: Path to Purchase 2015, 6,
Octane Research, January 2015, accessed January 2, 2016, http://octaneresearch.in/wp-content/uploads/2015/01/e-Travel-
Marketing-India.pdf.

2012

o 29
py
2013 67
2014 116
2015 171
2016 (estimated) 382

Source: ICRA Research Services, Online Travel Agents Boon or Bane?, 3, ICRA Report: Hotel Feature 2015, September
2015, accessed January 2, 2016, www.travelbizmonitor.com/images/Feature_Hotels_Online_travel_agents.pdf.
Co

2015 310.7 20.8

2016 (p) 388.3 22.9
2017 (p) 469.9 25.2
t

2018 (p) 563.9 27.7

2019 (p) 671.0 31.4
No

2020 (p) 791.8 33.4

Note: p = projected.
Source: KPMG, The Future: Now Streaming, 13, KPMG-FICCI India Media and Industry Report 2016, December 19, 2015,
13, accessed January 18, 2016, https://home.kpmg.com/content/dam/kpmg/pdf/2016/04/The-Future-now-streaming.pdf.
Do

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os
Too many terms
Ease of searching 53 29
and conditions
Online portals are
Instant information 50 28

rP
not trustworthy
Multiple options to Better rates and
43 28
choose from discounts offline
Prefer personal
Saves time 43 27
contact
Concerned about
Easy to compare online
41 22
various options cancellation

yo policies

Source: Adapted by the case authors from TNS and Google India, Understanding the Indian Hotel Buyer: A Report by Google
India, 12–21, Travel Biz Monitor, 2014/15, accessed January 5, 2016, www.travelbizmonitor.com/images/Google%20Report
_%20Understanding%20the%20Indian%20Hotel%20buyers.pdf.
op
tC
No
Do

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 t
os
)

rP
OYO $125.65 40,000 rooms 999–4,999 Budget hotel 1 million Overall: 4.2
million aggregator Number of
5-star
ratings:
51,675
Zo Rooms $36 11,000 rooms 999–3,500 Budget hotel 100,000 Overall: 3.8
million aggregator 5-star

o
ratings:
2,012
Value Plus Company 1,000 hotels 900–2,000 Budget hotel 10 million Overall: 4.2
reserves aggregator (Makemytrip) 5-star
from OTA ratings:
Makemytrip 110,654
py
TG Rooms Company 12,000 rooms 499–3,500 Budget hotel 1 million Overall: 4.1
reserves aggregator (Yatra) 5-star
from OTA ratings:
Yatra.com 85,104
Go Stay Company 11,000 rooms 599–1,999 Budget hotel 10 million Overall: 4.1
reserves aggregator (Goibibo 5-star
Co

from OTA Group) ratings:

Goibibo 576,213
Stayzilla $20 About 30,000 From 999 Market place 100,000 Overall: 3.9
million (Includes for home 5-star
home stays, stays and ratings: 925
hotels, and budget
villas) accommodati
on
Fab Hotels $5 million 2,000 rooms From 999 Budget hotel 1,000 Overall: 4.1
aggregator 5-star
t

ratings: 7
Wudstay $3 million 3,000 rooms 999–3,000 Budget hotel 10,000 Overall: 4.3
No

aggregator 5-star
ratings: 187

Note: * 85 per cent of India’s smartphones use the Android operating system.
Source: Compiled by the case authors from Rajiv Singh, “Clash of Clans, Online Travel Agencies vs Budget Hotel
Aggregators,” Advertising Age India, December 7, 2015, accessed January 10, 2016, www.adageindia.in/digital/clash-of-
clans-online-travel-agencies-vs-budget-hotel-aggregators/articleshow/50073993.cms; BS Reporter, “WudStay Eyes 10,000-
Room Inventory,” Business Standard, October 13, 2015, accessed December 29, 2015, www.business-
standard.com/article/companies/wudstay-eyes-10-000-room-inventory-115101200304_1.html; Tinesh Bhasin, “How to
Choose a Hotel,” Business Standard, November 1, 2015, accessed January 2, 2016, www.business-
standard.com/article/pf/how-to-choose-a-hotel-115110100735_1.html; the Google Play Store app profiles for OYO Rooms,
Do

Makemytrip, Zo Rooms, Yantra, Goibibo, Stayzilla, FabHotels, and Wudstay, accessed January 3, 2016,
https://play.google.com/store/; Octane Marketing Pvt. Ltd, e-Travel Marketing India: Path to Purchase 2015, Octane Research,
January 2015, accessed January 2, 2016, http://octaneresearch.in/wp-content/uploads/2015/01/e-Travel-Marketing-India.pdf.

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Permissions@hbsp.harvard.edu or 617.783.7860
 t
os
rP
Online 25 Makemytrip 25
Walk-in 28 Goibibo 18
Corporate: business-to-
16 Yatra 14
business
Guests calling directly 12 Bookings.com 11
Corporate booking via
11 Expedia.com 4
phone call
Local travel agent
Others yo 7
1
Others

Source: Compiled by the case authors from Divya Sathyanarayanan, “Only 25% Hotels Booked Online, Says Study,” The
Economic Times, January 12, 2016, accessed January 25, 2016, http://articles.economictimes.indiatimes.com/2016-01-
28

12/news/69704913_1_hotel-segment-hotel-chains-market-share; Adarsh Srivastava, “The Curious Case of Which Indian OTA

Owns the Hotel Booking Pie,” travHQ, January 14, 2016, accessed January 18, 2016, www.travhq.com/news/the-curious-
case-of-which-indian-ota-owns-the-hotel-booking-pie/.
op
tC
No
Do

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Permissions@hbsp.harvard.edu or 617.783.7860
 t
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1
This case has been written on the basis of published documents only. Consequently, the interpretation and perspectives presented
in this case are not necessarily those of OYO Rooms and its parent company, Oravel Stays Pvt. Limited, or any of its employees. A
“unicorn” refers to a start-up that has reaches a valuation of US$ 1 billion. The term was coined by Aileen Lee. See Aileen Lee,
“Welcome to the Unicorn Club: Learning from Billion Dollar Start-Ups,” November 2, 2013, accessed May 25, 2016,
https://techcrunch.com/2013/11/02/welcome-to-the-unicorn-club/.
2
“One Million Check-ins and We Are Just Getting Started,” Official OYO Blog, January 25, 2016, accessed January 30, 2016,

rP
www.OYOrooms.com/officialOYOblog/2016/01/25/one-millionth-check-in-and-we-are-just-getting-started.
3
IANS, “Online Aggregators Creating Fresh Life in Hotel Booking,” Moneylife India, October 9, 2015, accessed December 11, 2015,
www.moneylife.in/article/online-aggregators-creating-fresh-buzz-in-hotel-bookings/43619.html.
4
Ashish K. Mishra, “Will the Real Ritesh Agarwal Please Stand Up?,” Live Mint, January 7, 2015, accessed April15, 2016,
www.livemint.com/Companies/7CN7u5d4i3bfYgBAZLdLpM/Will-the-real-Ritesh-Agarwal-please-stand-up.html.
5
Mahdav Chanchani, “Ritesh Agarwal’s Journey from Being a SIM-Seller to the Helm of OYO Rooms,” The Economic Times, August
3, 2015, accessed March 23, 2016, http://articles.economictimes.indiatimes.com/2015-08-03/news/65165759_1_ritesh-agarwal-thiel-
fellowship-OYO-rooms.
6
Information in this paragraph and the next two paragraphs taken from Saritha Rai, “Why a 21-year-old Is Building OYO as an Uber (and Not
an AirBnB) for Hotels in India,” Forbes, August 6, 2015, accessed November 24, 2015, www.forbes.com/sites/saritharai/2015/08/06/why-a-
7

yo
21-year-old-is-building-oyo-an-uber-and-not-an-airbnb-for-hotels-in-india/#4891c7ce7350.
Purba Das, “Want to Start Your Own Business? Know What Helped OYO’s Ritesh Agarwal Start His Own Company!” Business
Insider India, June 17, 2015, accessed November 4, 2015, www.businessinsider.in/Want-to-start-your-own-business-Know-what-
helped-OYOs-Ritesh-Agarwal-start-his-own-company/articleshow/47718013.cms.
8
Saumya Tewari, “‘OYO Is My Destination, Not an Interim Step’—Ritesh Agarwal, Founder and CEO, OYO Rooms,” afaqs!,
September 7, 2015, December 1, 2015, www.afaqs.com/news/story/45516_OYO-is-my-destination-not-an-interim-step---Ritesh-
Agarwal-founder-and-CEO-OYO-Room.
9
Tanvi Dubey, “Awesome Startup Employee Shrey Gupta Is OYO Rooms’ Very Own Optimus Prime,” Your Story, December 11,
2015, accessed January 1, 2016, http://yourstory.com/2015/12/awesome-startup-employee-shrey-gupta-OYO-rooms-optimus-prime/.
10
PTI, “OYO Rooms Aims to Have 450 Hotels under the Brand by 2015 End,” The Economic Times, December 21, 2014, accessed
op
January 3, 2016, http://articles.economictimes.indiatimes.com/2014-12-21/news/57280899_1_hotels-brand-expansion-plans.
11
Chanchani, op. cit.
12
All currency amounts are in U.S. dollars unless otherwise specified.
13
Purba Das, “Want to Start Your Own Business? Know What Helped OYO’s Ritesh Agarwal Start His Own Company!” Business
Insider India, June 17, 2015, accessed November 4, 2015, www.businessinsider.in/Want-to-start-your-own-business-Know-what-
helped-OYOs-Ritesh-Agarwal-start-his-own-company/articleshow/47718013.cms.
14
= INR = Indian rupee; US $1= 67 as on January 4, 2016. Staff Reporter, “OYO Rooms Raises Rs 630 Cr in Funding Led by
SoftBank,” The Hindu, August 3, 2015, accessed November 28, 2015, www.thehindu.com/business/OYO-rooms-raises-rs-630-cr-in-
funding-led-by-softbank/article7495373.ece.
tC

15
Anushree Singh, “Exclusive: OYO Rooms’ CEO Says Soon Staying at OYO Hotels Will Be Like Staying at Luxurious Homes! Easy Walk-
in, Easy Walk-out,” Business Insider India, October 16, 2015, accessed January 4, 2016, www.businessinsider.in/Exclusive-OYO-Rooms-
CEO-says-soon-staying-at-OYO-hotels-will-be-like-staying-at-luxurious-homes-Easy-walk-in-easy-walk-out/articleshow/49416395.cms.
16
Ritesh Agarwal, “From Kanpur to Kulalaumpur. Hello 2016!” Official OYO Blog, December 31, 2015, accessed January 25, 2016,
www.OYOrooms.com/officialOYOblog/2015/12/31/from-kanpur-to-kuala-lumpur-hello-2016.
17
Manisha Natarajan, “I’m 40 in a Start-up World. What to Do,” NDTV, August 17, 2015, accessed January 4, 2016,
www.ndtv.com/blog/in-a-start-up-world-what-does-a-40-something-do-1208124.
18
Rai, op. cit.
19
All information in this paragraph taken from Adi Narayan, “A New App Wants to Make Hotels a Hit in India,” Bloomberg
Businessweek, October 14, 2015, accessed January 24, 2016, www.bloomberg.com/news/articles/2015-10-14/a-new-app-wants-to-
No

make-hotels-a-hit-in-india.
20
PricewaterhouseCoopers Private Limited, Hospitality Insights from the Indian CEOs’ Desk, 6, PwC India, February 2012, accessed
December 30, 2015, www.pwc.in/assets/pdfs/publications-2012/hospitality-insights-from-the-indian-ceo-desk.pdf.
21
Narayan, op. cit.
22
ICRA Research Services, Online Travel Agents Boon or Bane?, 3, (Gurgaon, India, September 2015), accessed January 2, 2016,
www.travelbizmonitor.com/images/Feature_Hotels_Online_travel_agents.pdf.
23
Rajiv Singh, “Clash of Clans, Online Travel Agencies vs Budget Hotel Aggregators,” Advertising Age India, December 7, 2015, accessed
January 10, 2016, www.adageindia.in/digital/clash-of-clans-online-travel-agencies-vs-budget-hotel-aggregators/articleshow/50073993.cms.
24
Unless otherwise noted, all information in this paragraph is from Singh, op. cit.
25
Nilotpal Chakravarti, “Media Inner,” IAMAI, November 17, 2015, accessed January 3, 2016, www.iamai.in/media/details/4486.
26
ICRA Research Services, op. cit.
27
TNS and Google India, Understanding the Indian Hotel Buyer: A Report by Google India, 11, Travel Biz Monitor, 2014/15, accessed January
Do

5, 2016, www.travelbizmonitor.com/images/Google%20Report_%20Understanding%20the%20Indian%20Hotel%20buyers.pdf.
28
Oravel Stays Private Limited, OYO Rooms Company website, 2015–16, accessed January 5, 2016, www.OYOrooms.com/about.
29
PTI, “OYO Rooms Aims to Have 450 Hotels under the Brand by 2015 End,” The Economic Times, December 21, 2014, accessed
January 3, 2016, http://articles.economictimes.indiatimes.com/2014-12-21/news/57280899_1_hotels-brand-expansion-plans.
30
Shweta Saxena, “Challenges in Room Aggregation Business in India,” Exploring Startups, December 9, 2015, accessed January
16, 2016, www.exploringstartups.com/challenges-in-room-aggregation-business-in-india/.
31
Purba Das, “Want to Start Your Own Business? Know What Helped OYO’s Ritesh Agarwal Start His Own Company!,” Business
Insider India, June 17, 2015, accessed November 4, 2015, www.businessinsider.in/Want-to-start-your-own-business-Know-what-
helped-OYOs-Ritesh-Agarwal-start-his-own-company/articleshow/47718013.cms.

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Permissions@hbsp.harvard.edu or 617.783.7860
 t
os
32
Venkatesha Babu, “Room with a View,” Business Today, October 25, 2015, accessed January 22, 2016,
www.businesstoday.in/magazine/features/online-budget-hotel-aggregators-are-catching-the-fancy-of-investors-and-travellers/story/224414.html.
33
Das, op. cit.
34
Madhav Chanchani, “Softbank Invests Rs 630 Crore in OYO Rooms,” The Economic Times, August 3, 2015, accessed January 5,
2016, http://articles.economictimes.indiatimes.com/2015-08-03/news/65165352_1_ritesh-agarwal-OYO-rooms-softbank.
35
Dubey, op. cit.
36
Vandana, “Roam to Rooms,” The Week, December 27, 2015, accessed January 20, 2016, www.theweek.in/theweek/cover/ritesh-

rP
agarwal-has-redefined-the-rules-of-the-hospitality-industry-with-his-oyo-rooms.html.
37
Tewari, op. cit.
38
Madhav Chanchani, “Softbank Invests Rs 630 Crore in OYO Rooms,” op. cit.
39
Dubey, op. cit.
40
Oravel Stays Private Limited, “OYO Support: FAQ,” accessed January 24, 2016, www.OYOrooms.com/support/home.
41
Anurag Gaggar, “The Making of the OYO App,” Official OYO Blog, December 12, 2015, accessed January 17, 2016,
www.OYOrooms.com/officialOYOblog/2015/12/12/the-making-of-the-OYO-app.
42
Pankaj Mishra, “Failing Is Often the Reality of Starting Up: Ritesh Agarwal, CEO OYO Rooms,” The Economic Times, September
3, 2015, accessed December 22, 2015, http://articles.economictimes.indiatimes.com/2015-09-03/news/66178479_1_ritesh-agarwal-
OYO-rooms-oravel.

o
43
Shweta Modgil, “How OYO Is Building an Empire, Room by Room,” Inc 42, September 3, 2015, accessed December 28, 2015,
https://inc42.com/buzz/how-OYO-is-building-an-empire-room-by-room/.
44
Payal Ganguly, “Tech Startups Like Zostel and OYO Rooms Help Travellers Find Quality Budget Stays,” ET Tech, April 1, 2015,
accessed December 17, 2015, http://tech.economictimes.indiatimes.com/news/startups/zostel-OYO-rooms-help-travellers-find-
budget-stays/46765666.
45
Dennis Schaal, “Interview: OYO Rooms’ CEO on Reinventing Distribution,” Skift, December 21, 2015, accessed January 25, 2016,
https://skift.com/2015/12/21/interview-OYO-rooms-ceo-on-reinventing-hotel-distribution/.
py
46
Sandeep Soni, “Meet OYO Rooms’ Founder Ritesh Agarwal: The Indian Wunderkind!” Entrepreneur, September 22, 2015, accessed
January 4, 2016, www.entrepreneur.com/article/250907.
47
Narayan, op. cit.
48
Narayan, op. cit.
49
Tewari, op. cit.
50
Oravel Stays Private Limited, “Search Results,” OYO Rooms company website, accessed January 28, 2016, www.OYOrooms.com/search?.
51
Sandeep Soni, op. cit.
52
Harsimran Julka, “Days after Blocking OYO, MakeMyTrip Makes Room for Its Own Value+,” The Economic Times, November 13,
Co

2015, January 6, 2016, http://articles.economictimes.indiatimes.com/2015-11-13/news/68252560_1_aggregators-rajesh-magow-

own-brand.
53
Tewari, op. cit.
54
Soumonty Kanungo, “Will Use the Funds for One Large Customer Initiative, Says Ritesh Agarwal of OYO Rooms,” DNA India,
September 9, 2015, accessed January 15, 2016, www.dnaindia.com/money/interview-will-use-the-funds-for-one-large-customer-
initiative-says-ritesh-agarwal-of-OYO-rooms-2123281.
55
Ayush Mathur, “Building Partnerships with OYO Rooms,” OYO Rooms Official Blog, March 16, 2016, accessed March 17, 2016,
www.OYOrooms.com/officialOYOblog/2016/03/16/building-partnerships-with-OYO.
56
NextBigWhat.com, “Ritesh Agarwal, OYO Rooms: Aims to Do 1000K Booking Nights Per Month by Year End (Interview),” Next Big
What, August 5, 2015, accessed December 29, 2015, https://news.nextbigwhat.com/ritesh-agarwal-OYO-rooms-297/.
57
NDTV Convergence Limited, “Walk the Talk with Founders of Paytm and OYO Rooms,” video, 23:49, NDTV, October 23, 2015,
accessed January 3, 2016, www.ndtv.com/video/shows/walk-the-talk/walk-the-talk-with-founders-of-paytm-and-OYO-rooms-388026.
t

58
Devesh Gupta, “What OYO Rooms Gains from Its Debut Mass Media Campaign,” Advertising Age India, September 24, 2015,
accessed January 3, 2016, www.adageindia.in/marketing/cmo-strategy/what-oyo-rooms-gains-from-its-debut-mass-media-
No

campaign/articleshow/49081943.cms.
59
“Man Behind OYO Rooms: Ritesh Agarwal,” Our Own Start-up, accessed January 15, 2016, http://ourownstartup.com/man-behind-
OYO-rooms-ritesh-agarwal/.
60
Kanungo, op. cit.
61
Tewari, op. cit.
62
Kanungo, op. cit.
63
Rashmi Menon, “Meet OYO Rooms’ Ritesh Agarwal: The Dropout Who Dined with Peter Thiel,” The Economic Times, August 19,
2015, accessed January 2, 2016, http://economictimes.indiatimes.com/magazines/panache/meet-OYO-rooms-ritesh-agarwal-the-
dropout-who-dined-with-peter-thiel/articleshow/48536789.cms.
64
NewsCorp VCCircle, “Our Model Has Created 30 ‘Copycats’: OYO’s Ritesh Agarwal,” VCCTV/YouTube video, 18:58, August 20,
2015, accessed January 16, 2016, https://youtu.be/5nHQ2jJzuNA.
65
Harsimran Julka, “Days after Blocking OYO, MakeMyTrip Makes Room for Its Own Value+,” op. cit.
Do

66
Johari, op. cit.
67
Julka, op. cit.
68
Snenha Johari, op. cit.
69
Aditi Shrivastava and Madhav Chanchani, “ Consolidating Startup Inc: Budget-Hotel Aggregator OYO Rooms Starts Talks to Buy
Zo Rooms,” The Economic Times, December 3, 2015, accessed January 18, 2016, http://articles.economictimes.indiatimes.com
/2015-12-03/news/68742103_1_OYO-rooms-ritesh-agarwal-fresh-funding.
70
Aditi Shrivastava, “OYO Rooms to Woo Customers with New Food Technology Venture and Housekeeping Service,” The Economic
Times, November, 16, 2015, accessed January 25, 2016, http://economictimes.indiatimes.com/small-biz/startups/OYO-rooms-to-
woo-customers-with-new-food-technology-venture-and-housekeeping-service/articleshow/49795696.cms.
71
Soumonty Kanungo, op. cit.

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