“ Analysis into Oyo’s Business Model and its Current position in the

Market”

A PROJECT SUBMITTED AS A PART OF THE

REQUIREMENTS FOR THE DEGREE OF
MASTER OF BUSINESS ADMINISTRATION

Submitted By:
Chetna Kumari (B-24)
Marketing – Information Systems
PRN: 20020441070
2020 - 2022

UNDER THE ESTEEMED GUIDANCE OF

Project Guide:
Dr. Pravin Kumar Bhoyar
Deputy Director
SIMS, Pune

SYMBIOSIS INSTITUTE OF MANAGEMENT STUDIES

(For Defence Personnel and their Dependants)
Constituent of Symbiosis International University
Range Hills Road,
Khadki,
Pune

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 SYMBIOSIS INSTITUTE OF MANAGEMENT STUDIES
(For Defence Personnel and their Dependants)
Constituent of Symbiosis International University
Range Hills Road,
Khadki,
Pune

DECLARATION

I hereby declare that project named entitled “Analysis into Oyo’s Business Model and its
Current position in the Market” is submitted for the Degree of Master of Business
Administration from Symbiosis Institute of Management Studies, Pune. It is my original
work and has been created by me during the completion of my project with Oyo rooms pvt
ltd, Gurgaon.

Chetna Kumari
PRN: 20020441070
B – 24 (Marketing – Information Systems)
Batch: 2020 – 2022
Place: SIMS, Pune
Date: 16-7-21

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 EXECUTIVE SUMMARY

The purpose of this report and analysis is to find and Understand the working of oyo rooms
and find the different ways by which it is generating Demands. We also deep dive into the
whole situation and speculate about the rumors about the company and correlate with the
rumors and speculation. The Company structure is also scrutinized.

The Project aims to look into various vertical and horizontal expansion of the company in
terms of new Branding and have an overview of the balance sheet and P and L account of the
Company.

The projects also aims to give an overview how the Hospitality has been affected by the
Pandemic and gives an overview of how the industry is helping the society and as well as
doing business for a win – win situation for the company.

Speculation of how the company is cutting costs and taking appropriate measures to stay
afloat during tough and times of crisis and change in the shareholding pattern

It was observed that the company has lost faith of many of its shareholders and has closed its
operations in other countries due to its rapid expansion which has ultimately lead to a huge
down turn for the country and now the country is merely able to stay afloat due to massive
mismanagement.

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 TABLE OF CONTENTS

S. No. Topic Page No.

Executive Summary 5

1 Introduction and Objective 10

2 Methodology 11

3 Analysis of Oyo Rooms Pvt Ltd 19

4 Conclusions 26

5 Recommendations 27

6 Bibliography 28

7 Annexure 29

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 Chapter 1.1

INTRODUCTION
Oyo is an Indian MNC of leased, owned and aggregator of hotels and
franchises them under its own name. The company was Established in 2013
by its Promoter Ritesh Agarwal at the age of 20. The startup has the second
highest no. of rooms in the world across more than 80 countries that include
India, China, USA, Indonesia, Vietnam, Japan, Saudi Arabia. Soft Bank
group, Didi Chuxing, Sequoia India, Hero Enterprise, Green oaks Capital,
Airbnb are its investors.

In 2013 Ritesh Renamed his country name to Oyo rooms from Oravel Stays.
Ritesh Agarwal had received a prize of $100,000 by getting selected in the
Thiel Fellowship award from Peter Thiel who is PayPal Co – founder. Oyo
currently has 15000 employees. The company has a keen interest in capex
and invests in it. It hires GM and Cluster managers to manage and supervise
operations and customer experience.

In April 2021 National Company Law Appellate Tribunal (NCLAT) had

passed an order regarding insolvency of OYO when Hoteliers held a petition
over issue relating to payment and unjust treatment by OYO.

As Far as Funding and has never been a Problem for OYO and it has
managed to mismanage its Money for Rapid expansion. Namely

 100 Million Dollars from Star Virtue Investment Ltd and Overall 1
Billion Dollars in 2018.
 Chinese Company Didi Chuxing Invested 100 million Dollars.
 Buy back of shares Through RA Hosipitality from Investors through
2 Billion Dollars deal to raise a 30% stake in the company.
 $1.5 Billion Dollars through Series F funding by Softbank,
LightSpeed Venture and Sequoia India.

It Had a Top Line of $951 Million as on 2019.

Oyo’s Strategic Acquisitions and Partnerships also is a main backbone for the
company. Some of the Important Ones are as Follows

 Acquiring the team of Qlik Pass for helping and establishing Data Science
Department in 2016.
 Acquisition of Novascotia Boutique in 2018 that is Chennai Based.
 Acquisition of Weddingz in 2018 that is based of in Mumbai.

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  Partnership with AirBnb and mutual consensus on enlisting its properties on
AirBnB app in 2019.
 Bedbank partnership with oyo for helping in Global Distribution.

 Acquiring Leisure Group based in Amsterdam well known for its Vacation
Stays in 2019.

 Acquiring Innov8 in July 2019.

 Entering into the American Market by partnering with Real estate giant
Highgate and acquiring Hooters casino Hotel.

The various Products and services Offered are.

 OYO Townhouse – Midcsale Neighbourhood that is targeted for Consumers

between the age group 25 to 35.
 OYO Home – Basically Home Managed by OYO in Different Locations
which People rent for a duration or Modern Home Management Systems.
 OYO Vacation Homes - A rental Vacation home with brands such as
Dancenter, Danland, Traum – Ferienwohnungen and Belvilla.
 OYO LIFE – Long term Rental affordable homes.
 Capital O – Normal Rooms booking Facilities.
 Collection O – Same as Capital O but focused more on business Travellers.

Chapter 1.2

OBJECTIVES
The Objective is to Dig into the Business Model and see how the Company
Functions and relate it with ongoing publicity it has received. its strong points and
criticisms and suggest some solutions to work around those Problems.

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Chetna Kumari (B-24)
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 Chapter 2

METHODOLOGY
Interview Method

The major mode of the study Was Conducted through a one on one
interaction with current employees to know about the current trends, the
future business plans, and all the shortcomings that were Conducted for deep
knowledge of the project.

All the Answers and responses were Noted, and an interpretation was
deduced.

Note – All the contacts here are the Personal Contact of me who were my
colleagues in the Management Trainee Program in Oyo Rooms.

Focus Group

A dedicated focus group of people who frequently visit oyo were asked
about their opinion of the brand and get a public perception of the brand and
how well people understand what the Brand Stands for and its various
Products.

Individual Experience

Last bug not the least the past experience working in the company for 6
months as a management trainee has been applied where I was working as a
Hotel Manager and overseeing all the operations of various Hotel Activity
with a hands-on experience by working at the Ground level. Where reviews
of the various Shareholders was personally handled and escalated to the
senior management.

The Focus here is given more in the Qualitative study of Oyo Rooms as a
whole and there is absolutely 0 to no quantitative study. The Study is
designed to be as descriptive and Imaginative the viewer as possible and easy
is articulated in a manner that everyone understands as easily as possible.

The Graphs and figures provided here are only for the reference purpose to
back up the study that was concluded through the research and understanding
by working in the internship.

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 Importance

60%
S.No Method Importance

1 Interview 23%
50%
2 Focus Group 25%

3 Personal Experience 52%

40%

30%

20%

10%

0%

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 Chapter 3

ANALYSIS OF OYO ROOMS Pvt Ltd

(Industry Overview)
While Oyo was facing difficulties before the Pandemic and was struggling
with some legal issues and small decline, but it was at its peak in 2019 with a
valuation of 2019 with 10 billion Dollars but due to the pandemic it has
come under a state of crisis. Oyo has not released it financial report to the
Public, but it had received a financial bailout by Softbank.

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Here is an overview of Oyo’s Financial Overview for the year 2019.

Its not only Oyo but Corona as a whole that has ate up all the revenue and bottom line for the
Hospitality sector.

The Above Studies the following reflects the respondents when asked questions about when
they will start using hotel Facilities.

Business Model Canvas of Oyo

Oyo came out as a Company that aggregated hotel under its platform but later on the quest
for expanding it later changed its business model by letting and convincing the hotel owners
to operate under the oyo brand name as a franchise.

Franchise here basically means hotels who partner with Oyo and use its brand name to gain
trust of the customers to avail the services. Oyo renovates the owner’s hotel according to its
own specifications and try to standardize its own experience. To become its partner every
hotel must meet certain guidelines.

OYO Basically targets the following customers.

1) Adventure travelers – People who want to travel alone and at an affordable price.
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 These are basically young professionals.
2) Leisure Travels – These are people who basically wants to relax during weekend and
plan to stay at oyo and have a little party time.
3) Business Travelers – Oyo has recently Partnered with many companies with people
travelling on a business trip frequently and need frequent accommodation.
4) Family Travelers – Oyo has recently started to leasing out its vacation and rentals
homes for family.
5) Unmarried Couples – Undoubtedly the biggest chunk of the revenue comes from
unmarried Couples this is also their USP and Oyo rooms and Unmarried Couple are
almost synonymous.

Oyo had grain transaction in India because was due its App and its innovations around it,
ease of locating Nearby Hotels, Holiday and packages, Loyalty programs, Amenities and
entertainment services.

Customer Touchpoints
Apps -Oyo serves the customers by empowering them to use their own App and let them
customize their own services.
Hotel Staff - This is the most important interaction with customer which interact with
customers during check in and provide all the necessary services. This a make-or-break deal
for any hospitality chain as the service quality is judged by this.
Customer Support - It has 24/7 customer service that it outsources to Indian big tech. But
issues most of the time are sorted via apps help section or chat bot service. It also maintains
NPS to track a property via customer feedback.
Social Media - Oyo does brilliant creative campaigns and tries to be in the news also and
markets itself.

Resources
 The only reason why oyo is still relevant in the market is due to its well-developed
app and the ease of using. The convenience is addicting even the service is not up to
bar.

 It has the second highest no. of rooms in the world with more than 45000 hotels on
board and 1.5 million rooms.

 It has huge Customer database which it analyses to understand its customers and
accordingly designs its strategies and help to personalize the experience.
 It has very Capable higher Management which workday and night for Companies
Success.
 And last but not least the most important contributing factor towards its success is it
major funding from venture capital companies like Softbank and Sequoia Capital who
are always read to back them even if they make a non sensical decision.

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The Main Functions of oyo where they invest the more are –

1) Developing their app and website and constantly improving it and tracking all the
activities on it. Apps is both ways as well as it is used by the employees for check in-
check out. Ordering inventory, paying bills, making new reservations, and ordering
food for Customers.
2) Partnering with hotels and vendors and Event management Companies to grow their
business as much as possible that is also one of the biggest problems that will be
mentioned further.
3) Creating a community for people so that people get hooked onto the brand to
develop a healthy relationship with community and invite people to sign up for its
programs.

4) Sales & marketing – Oyo during times of pandemic has shifted to Cold Calling and
are trying to have a push strategy towards its target customer. Marketing is involved
advertising and creative campaigns and making a presence on social media.
5) Customer Experience is tasked with 3rd party company (Brain Play) which is
comprised of hotel industry experts, they are responsible for setting the standard and
train the employees and also audit hotels for the standards.
6) Communication is the area where the company is under performing and needs to
improve upon as there is a lot of mis communication with oyo and Hotel owners and
its vendors and not all the terms of services are explained fully and hence a lot of
court cases against OYO.

Event
Organize
rs

Hotels
Ola

Partners

WhatsApp Google Maps

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Netflix Dineout
Oyo Operating Expenses

- The cost of developing the app and its features, maintenance, Cloud based
service fees and R and D costs associated with it.

- A major Costs is also directed Towards renovating its hotels and make sure the
Hotels under it are working at its full Capacity.

- Advertising & Marketing Campaigns on social media and buying up Corporate

licenses from Social Media Platforms. OYO wants desperately to be out there to
get itself recognized.

- Employees Salary like any other company the major chunk of its cost goes to
paying its employees salary.

- Maintaining its IT Infrastructure in terms maintaining servers and Carrying

Costs of huge amount of customer Data and constant upgrading of its
Infrastructure that also includes upgrading the structure and Software licenses
related to maintain such Costs.

- Commission to Hotel Partners is By Far the Cost for the Company and
considering it has more that 45000 partners just imagine the cost implications and
it varies from hotel to hotel.

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 - Legal costs in terms of payment to its lawyers and all the charges related to the
pending cases against it and private settlements to the Hotel Owners, Stamp paper
duties etc.

- Administrative Costs in terms of Supplies of Essential to Hotels. Like Dusters,

Snacks, Chemicals Cloth and other Expenses like Copyright, Patent etc.

Revenue For Oyo

S. No Source
1 Commission From Hotels
2 Room Reservation Fees
3 Membership Fees
4 Advertising
5 Sponsors
6 Consulting Services
Comments
22% Monthly Commission from Hotel Owners
subject to variability
Charging for the service chosen and per reservation
charges. 15-20% per reservation is charged from the
Hotels
Oyo Wizard Program which varies from Rs 500 –
3000 and it’s a premium fee.
By allowing other Companies and establishment to
post their ads on their website and apps.
Sponsorship fees from key partners by promoting
their name and driving the traffic towards their
business.
Acts as a business consultant and provides data
analytics services to its clients. It uses its own
database and consults its clients. It has a very small
part of Oyo’s revenue.

Strength Weakness Opportunity Threat

 Standardized Services  Poor HR Policies   Growing
Growing Millennial
Competition
 Brand recall and  Worsening Relations Population.
from Trivago and
Advertising with Partners  Zhostel. of India
Digitization
 Large Network of  Consistent bad   Corona
Business Pandemic.
in other
Partners
Chetna Kumari (B-24) experiences with  Shrinking Partnership
countries.
 Pocket Friendly Hotel
20020441070 customer Studies
Symbiosis Institute of Management   Diminishing
Launch Pof
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 Huge Investor Backing technology.
Reputation.
 Chapter 4
OBSERVATION
 Great Technology with an exceptional
IT infrastructure unparalleled by any other
Company.
 Huge Consumer Database that it can
Use for a Better customization and Increasing
Brand Loyalty.
 The Company will never die off
Because of its Investors especially Softbank
That will buy its owners if it collapses.
 Has one of the largest Networks of
Partners that it leverages for its own
advantage
 It has no real Competitor
 It is far more accessible than any
other
Hotel Chain and has a huge demanding
Leverage over the Hotels.
 Advertising and marrketing for oyo
Is the best and everytime comes up with new
Ways of generating Demand. For Ex – OYO
Care for Covid Affected People.
 Less Investments in HR and Training
That saves budget as everything is
outsourced
 Diversification of services that allows
It to generate more revenue stream. Like
Consultancy Services.
 4 Day working week that eases the
Pressure.
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 The Brand value is diminishing as the
services way below what is promised.
 There are many Pending cases against Oyo
by Hotel Owners for Payment Issues.
 Bad Reputation among partners many
people do not want to work with Oyo due to
its illegal activities and payment issues.
 The Hotels that Discontinue with Oyo as
partners are not taken off the app and
website and are shown as sold out that gives
a false image that Oyo is doing Great.
 The Revenue has shrinked from 10 billion
Dollars to around 1 billion Dollars in just 2
years. That is a bad sign for any investor.
 No Matter what it does Oyo just can’t seem
to shed off the Couple Friendly cheap hotels
which it still advertises on the app.
 Lack of Supplies in the hotels. All the Hotels
are undersupplied.
 Getting into Unethical Activities like
Prostitution.
 Shrinking Network of Partners.
 The Ground Staff is not trained at all. Hire
and fire policy.
 Employee safety issues. And many cases of
embezzlement from Employees.
 Hygiene Issue during Corona and increasing
costs of Hygiene.
 The franchise Hotels are being returned to
the owners because they are no longer
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 Competing with its own investor for
business. Ex – Air BnB
 Chapter 5
RECOMMENDATIONS

After a long and a detailed analysis of the company, the most Relevant Recommendation is
just to Slow down the growth of the company. Oyo become the 2nd Highest Largest
Company in Just Only 6 Years, this kind of growth is unsustainable and ultimately puts a lot
of stress on company as it is Difficult establish in 6 Years. It is recommended that Oyo just
stop its expansion and just retrospect where they are going wrong and accordingly move
forward.

Due to Rapid Expansion, it creates a ripple of other problems for example a ton of Non-
Performing Assets are increasing which is weighing down the company’s balance sheet.
Have a specific time inspect a hotel before onboarding them on. Most of the Hotels are do not
function 100% due to some structural or functional problem like nonfunctional Lifts, Leaking
Rooms.

Oyo must invest in its HR and come up with strong HR policies improve the skills of the
employee’s foe ex the training given to a Standard Hotel Manager is only 2 weeks with no
proper orientation. Make them learn new Skills. Bost of the Hotels still don’t have a
biometric System and there is no track for employee attendance. Even the customer Care
representatives are not trained and do not provide clear solution to the customers leaving
them frustrated and angry.

The next Suggestion is quite Simple Pay the Due to the Partners. Give them what they
Deserve. If necessary, appoint a Special PR for Owners and let them negotiate through a
proper channel of Communication and specify everything under the contract to the Owners,
make a special Team for Hotel Owner Grievances make them feel cared.

Get Rid of 3rd Party People for Staff like Housekeeping and Food. The various Cost Cutting
methods is hurting the standardizing qualities of the Hotel.

Create a Brand Identity by Opening so many ventures and so many OYO Brands is creating
an identity Crisis for its stakeholders, people can relate Oyo to a particular thing. There is a
lack of Direction and focus. It seems like its shooting arrow in the Dark.

Strict Audits of the Hotels by its Hotel Managers another problem that the company faces is
that it is very difficult to locate Hotels and are not pinned rightly on the Map.

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Provide Central Contracts to Big Co operative who have the resources to help in
maintenance of properties and for Free breakfast that it promises to its customers, which is a
huge issue in providing a standard Service.

Chapter 6
Bibliography
 https://bstrategyhub.com/oyo-business-model-how-does-oyo-make-money/

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