STRATEGIC MANAGEMENT

Group 16 – Section E, IIM C 57th Batch

Strategic interest:

Operational excellence over multitude of

geographies through dynamic business modelling

Members:

Ayush Meshram (0336/57)

N Sri Pranav (0366/57)

Swastik Sourav (0393/57)

 1. OYO’s Strategic History – Timeline
(Background and funding)

OYO was founded by Ritesh Agarwal back in 2011 when he dropped out of college to pursue
his entrepreneurial dreams. It all started with his first venture named Oravel. Ritesh was
fascinated by the bed and breakfast segment in the Indian e-commerce market since back then,
and captured immense potential in the business he strived to establish. And as the size of this
segment was ever expanding, Ritesh knew that aligning customer expectations with the
ongoing market demands of commercial property owners will form the core of his venture’s
strategy going forward. Hence Oravel featured listing and budget accommodations of hotels in
the beginning, which later got popularly known as OYO rooms post Oravel’s conversion.

In 2012 Oravel (OYO) raised seed funding from VentureNursery’s angels, when it was just
sprouting with its goals barely clear in its mind. The cofounders of VentureNursery too felt that
B&B is a large and undeserved segment in India, and the indictors & metrics prevailing in the
industry as well as those proposed by Ritesh seemed very strong. It mad astonishing progress
in VentureNursery’s acceleration program. Other angel investors too thought that Oravel
(OYO) will pick up momentum real soon and lay down a foundation for a great business.

In 2013, Ritesh was one of the few to be selected for Thiel fellowship, which was a budding
program started by the founder of PayPal from the last two years. This fellowship gave him
immense funding amounting sum total of $100000. This led to the final commercial launch of
OYO based out of Gurgaon, and the idea of his start-up finally acquired the necessary push to
thrive and turn budding idea of his start-up Oravel into reality. Following this, in the August
of 2014 OYO also received its first series A funding.

Then starting 2015, OYO garnered a lot of attention in the Indian startups community and
became the face of Indian startups. In the March of 2015, OYO received a lumpsum funding
amounting to over $25 million from large investors like Seqoiua, Lightspeed India and many
others. Following this investment, in April of 2015, OYO launched its first mobile application.
This acted like the necessary catalyst to OYO’s success story as a accommodation chain start
in the coming years. It allowed customers to book their hotel rooms directly from the mobile
application, which went along with the lines of nationwide e-commerce boom. OYO had
horizontally integrated into a lot of Indian geographies other than just Gurgaon, which included
Mumbai, Bangalore, Kolkata and Goa, the most sought after metro cities and tourist spot
respectively. The growth pace of OYO’s expansion was massive, and within a short span of
time, it had expanded to around 100 cities in India, with over 2000 hotels and 20000 rooms.

Amidst its breathtaking expansion, in the July of 2015, OYO gained yet another immense
funding amounting to $100 million from a Japanese investor named SoftBank. This made
OYO’s financial standing sound enough for the pertaining financial year. OYO was backed by
the most influential of investors, who were powerful enough in this era on a global scale.
 2. OYO’s Strategic History – Timeline
(Expansion and challenges)
As a result of OYO’s brand expansion, financial backing and ever expanding product portfolio,
OYO’s hotel chain business reached its 1million checkmark in the very beginning of 2016
itself, and underwent international expansion starting from Malaysia. After witnessing its
success and carrying forward its businesses internationally, OYO also expanded to Nepal and
other parts of the world by 2017. This sparked the enormous development that OYO was soon
to underwent, and laid grounds for diversification of OYO’s portfolio of offerings.

OYO emerged as the sole proprietor and conquered majority of Asian pacific markets that
revolved around the commercial hotel industry. 2018 marked as the year when OYO
established its monopoly empire in the Asia-pacific and sparked off its international penetration
on a large scale by successfully building its operational chain in Dubai, Singapore, UK and
China. It also successfully established itself as a unicorn in September of 2018, when it raised
a capital of 1 billion dollars with the aid of SoftBank, who still backed OYO as a major investor
by lending funds worth 800 million dollars and 200 million dollars were lent by investors in
the past itself.
In 2019, with the solid backing of investors like Sequoia India, Hero Enterprise, China Lodging
group, OYO had already established itself as a reliable leader in the global market. It now had
more than 300000 rooms in over 500 cities globally, and Ritesh aspires for OYO to be expand
its portfolio to such an extent, that OYO becomes the largest hotel chain business in the world
by the end of 2023.

However, 2020 posed some challenges to OYO, with the hit of worldwide global COVID-19
pandemic. OYO experienced a huge dip in its revenue streams, as its operations were
completely hindered especially in the initial 21 day lockdown which was imposed in India.
Owing to this OYO had to make strategic changes in its organizational structure, and strengthen
its IT foundation to meet the new normal expectations of WFH and serve its customers in the
most feasible fashion that seemed possible.

It was a unique year for OYO filled with unique findings, demands and possibilities. OYO
served over 2500 distinct pin codes in India, and accommodated around 24 lakh user sessions
through its Yo! Help feature. It made the necessary transition in its operations to the online
medium in order to make this possible and answer all user queries in a real-time fashion. It also
addressed the hospital segment by laying down grounds to accommodate more than 73000
repatriated Indians and aided them in finishing their institutional quarantine at OYOs across all
major cities in India. These guests accommodate the niche segment of travelers particularly
from the Middle East nations like UAE, Saudi Arabia, Oman and Qatar.
OYO’s reach over all social media platforms amounted to over 204.8 Million. These handles
mainly comprised of Instagram and Facebook, where their most reached out posts engaged
through creative means of collaboration with distribution channels like Netflix and glocalized
videos like Namaste for engaging with the local Indian population in innovative ways.
 3. OYO’s ecosystem

OYO's ecosystem is entirely built around providing a quality traveller and guest experience
which is supposed to increase guest loyalty. Customer loyalty comes first in the company's
market policy.
OYO understood that the further growth depends on hotel brands which will create significant
value for consumers, partners and the overall ecosystem surviving the multiples stakeholders.
OYO was launched into the market when there was a desperate need for a hotel brand that
could offer trustworthy experiences, operate at scale and master the field operations, online
distribution and multi channel customer service. OYO’s core team stepped up to the challenge
and delivered stellar results. The response of customers by feedback and retention and retrieval
on service shows the trust and preference enjoyed by OYO customers.

Maintaining this standard by delivering stellar stay-experiences in non pricey and beautiful
living spaces is OYO's success secret. OYO business model was that it took a brand which is
a Hotel chain with OTA like distribution capabilities. Solving for predictability, and solving
real problems on the field and image-building was more of an output than input metric. It puts
forth all the strengths of the traditional model with none of the negatives or lackluster.

It is re-redesigned, a combination of top tier technology and hospitality to deliver a stellar

customer experience, space utilization and business performance. It received multiple
investments from multiple venture capitalists in initial rounds and spread its wings along the
southeast Asian hospitality market. Remarkably, OYO had touched a hundred and fifty cities
across India by 2015. the flexibility to use technology to boost efficiencies and increase
operational ease at each bit purpose catapulted OYO into increasing globally.

The world’s accommodation market stands at a hundred and sixty million rooms and could be
a $3.6 trillion chance and growing. OYO simply captures one percent of the larger pie so that
they foresee a huge opportunity for them to make a very foremost complete in times to come.
each complete stands around some core values. For OYO, the initial acceptance criteria and
therefore the direct investment in upgrading associate degree edifice before it becomes an OYO
is one amongst the most elementary differentiators.

The core attribute has continuously been put before the client before the other metric or
selection. With one amongst the youngest CEOs at its helm, OYO sure enough has managed
to disrupt the welcome sector in Asian countries up to now. Thus, there's no stopping for OYO.
where there's a scope of welcome business, there ought to be OYO, and its entire ecosystem of
products, services as well as offerings is ingrained so effectively in the Indian market for
lodging, that OYO today stands unparalleled nationwide as the clear cut market leader in the
accommodation segment.
 4. Frontline operations (Customer booking model)

The front line operations comprise a supply chain system that make up a mechanism to
ensure smooth transition of the customer journey, who wishes to associate themselves with
OYO.

This mechanism comprises of majorly three entities: Guests, Bookings and Rooms. These three
entities are independent and are linked to each other through various operational and feedback
mechanisms, that ensure that the needs of the customer in the picture are being fulfilled
effectively. The customer in this picture is the entity Guests, who are the set of people OYO
wishes to serve in their commercial hotel chains, which is their major frontline business.
Bookings are the entities that ensure that each guest has a unique ID associated with OYO
rooms and their respective parameters. This ensures that OYO serves each and every customer
with utmost care and efficiency. Then comes the rooms, which are the main offerings of OYO
rooms for their respective guests. The purpose of these rooms is to accommodate guests in the
way that serves them best.

Now we move on to the pillars that comprise the mechanism to ensure that all three entities are
knit packed and working in synergy for OYO’s customers. These comprise of four pillars:
Guest, External Reservation System, Bank and real-time Schedulers. The guest serves the pillar
of initiating a booking request and confirming it in order get their respective room booked.
External Reservation System here acts as a catalyst to process these requests and ensure that
all booking requests are being accommodated by the system. Then the scheduler keeps a real
track of time of the customer demands, by accommodating requests in real-time and locking
them whenever any kind of booking is initiated, to ensure minimal loss in bookings and
optimize real-time availability of rooms.
Then the last pillar in the picture involves the bank, especially in the current age where UPI
transactions are booming. Banks serve a purpose to validate all the initiated payment requests,
and ensure that the required booking is processed once the monetary validation passes through
all the necessary stages.

Finally, once the mechanism completes its set of tasks smoothly in a holistic fashion, the Hotel
Front Desk Clerk processes the final request to accommodate the respective guest to their
respective room. It goes through a checklist that make up the hotel application for the respective
guest. This checklist first ensures that a reservation is created, either through the online medium
by OYO’s app or through real-time offline demands of the respective customer. Then it ensures
that a reservation is confirmed based on whether the booking is processed through all the stages
discussed above. If it is, then it fulfills the reservation for the guest. If its not, then the clerk
proceeds to cancel the reservation in picture. And open the cancellation, its ensured that the
room is made available once again, and the fee/refund is initiated as deemed fit.
 5. Backend operations (Business Model
operations)

OYO’s business model is entirely based on a collaborative model with the local hotel chains,
and is popularly termed as the aggregator model. They have partnered with all of these hotel
chains in the name of collaboration, and their USP is to incentivize the sales of these offerings
to mutually benefit these hotels as well as to leverage OYO’s brand name. The major offerings
that OYO provides come under the purview of service level offering, where a particular user
owns the services offered by OYO rooms for a specific period of time. These offerings are
standardized, cost effective and encompass economies of scale.

The business model can be broken down into various chains of processes. The core of the entire
supply chain of establishing partnerships through mutually beneficial contracts, lies the
aggregator. Aggregator acts as the broker who maintains frontline contact with all hotel chain
providers locally, as well as across other geographies. This person visits the providers on a
regular basis, and presents the business model in order to partner a deal with the specific
provider. Once the provider decides to get into a contract with the aggregator, OYO establishes
a partnership with the said provider.
Provider leverages the brand value of OYO to their own advantage, in order to incentivize
growth in sales and attract more customers to their respective hotel chains. This also
incentivizes OYO as they cater to an increasing number of customers in terms of engagement
and over the top quality of offerings. This mutually benefits both the partner as well as OYO,
and results in the fulfillment of aforementioned promises that were established on a contractual
basis. Upon successful fulfillment of this contract, the aggregator in the picture gets rewarded
with the necessary commission which is a portion of the sales achieved through capturing said
incentives in place.

During the term of its contract, OYO also owns a portion of provider’s inventory as a part of
its operational stakes. The major purpose of this is to lend that OYO flavor to all the partner
chains in the picture, and organize their hotel rooms as a part of OYO brand name. This
leverages OYO’s brand name, and establishes credibility in the minds of the customer who
wish to associate themselves with OYO. This also ensures that standardized services are
provided to all the customers, and OYO’s contract of rooms meets the expectations set by OYO
in the past, and even exceeds them every once in a while.
There are various functional departments within OYO that are there to ensure all these
processes happen smoothly, and the most important of them all is the city operations and the
product development department. City operations department ensures that all properties are
maintained on a regular basis, all accounts are reconciliated and all escalations are raised to the
appropriate authorities and resolved in real-time. Product development department ensures that
OYO hires fresh talent from top tier engineering and B-schools to constantly innovate its
offerings and always align its mission and goals with the prevailing market demand.
 6. Leveraging Technology

Initially, OYO started off as associate degree individual business model. within the individual
business model, the firm collects the data regarding explicit goods/service suppliers (hotel
owner), makes the suppliers their partner, and sells their services below its own whole (OYO).
Likewise, OYO as a whole, provides services with uniform quality and worth.

OYO doesn't own any of those properties and instead, invests in selling and manages in
improvement of quality for the hotels below its fold. The partners/service suppliers additionally
don't become the workers of OYO, however functions as homeowners independently. Simply
put, the business model of OYO is associate degree plus lightweight business model wherever
minimum capital is invested to start out a business venture. The business strategy is predicated
on the principle of conveyance associate degree unbranded edifice below a typical whole
scheme and connecting the shoppers with the hoteliers through their web site and proprietary
Apps.

By the start of 2016, with its growth and investment from SoftBank et al., OYO pivoted towards
a one hundred pc inventory-exclusive franchise. During this model, the corporate gets a set
range of rooms from the decision maker for a set quantity reciprocally. With this franchise
model, OYO ceased to be a edifice individual and instead started operational hotels below the
OYO whole. In 2018, OYO Hotels & Homes completed its transition to changing into a 100
percent hired & franchised hotel chain.

OYO has a dedicated B2B portal, that is particularly centralized to ensure that the business
dealings happen on a one to one basis. It also enables access to OYO inventory to ensure direct
bookings happen smoothly, and its centralized around OYO so that every transaction is
integrated well with OYO’s backend ecosystem. OYO also has a 24X7 call service channel
being opened up to account for all service defaults and customer requests through a dedicated
customer support team, which is led by relationship managers who incentivize full-time
support. OYO also has a dedicated technology system for stakeholders other than customers to
maintain synergy within all aspects of supply chain associated with the organization.

Following this, the complete edifice is restored as per OYO whole and quality standards with
capital expenditure invested with in pluss primarily by asset homeowners to deliver core
guarantees to customers and guarantee higher returns to plus homeowners.

However, the operational model of OYO remains constant (like the edifice individual business
model), but has the essence of the franchise model as well.
 7. Technology ecosystem for stakeholders

OYO has continuously worked towards ensuring that its technological offerings encompass as
many aspects of business as seems possible. Apart from its mainstream application that is
majorly used by the customers to avail OYO’s offerings for their personal/business purposes,
OYO has three other major set of application offerings. These offerings encompass
stakeholders like Employee, Property Owner, and feedback lenders.

Beginning with application offering for employees, OYO has a special mobile app named OYO
Mitr. It gives specific access to all the employees and interns associated with OYO for the short
as well as the long term to promote OYO on a personal as well as business level marketing PR
initiatives. Everyone associated with the OYO Mitr app initiate transaction for offerings by
personalized bookings on behalf of other stakeholders and decentralize the entire transaction
by sharing the details with their team leader and also with the associated set of customers. All
interns are also mandated to book a minimum set number of rooms if they wish to avail their
association with OYO rooms. This strengthens OYO’s tightly knit bond amongst their
employees as well as with their customers, and fosters interpersonal relationships on a business
level.

Then there is an application build specifically for owners. This application is embedded with
the interface that helps the owners to navigate across their properties virtually and amend
necessary listings, changes and maintain their property portfolio across OYO’s chain of hotels.
It’s core expertise lies in the accounting of property’s sales as well as bookings, that were
initiated in the purview of OYO. It also acts as the medium where owners can keep a track of
their savings, earnings as well as profitability on the go. It also keeps a track of the inventory
and helps regulate maintenance and sanity checks every now and then to ensure that sales
function appropriately and there’s enough stock in place to account for shortages and sudden
demand shocks. It also acts as the necessary interface to raise, respond and accommodate issues
from the customer’s as well as OYO’s point of view. It acts as the necessary bridge and as the
mediator who helps maintain smooth operational functioning of OYO’s processes. It also
serves as the ideal platform for offering fast, real time and customized customer services with
the aid of their expert owner engagement team, responsible for engaging with property dealers
and overseeing issues wherever it seems fit for the particular offering.

Then there’s an app that accounts for feedbacks separately, owned and operated by OYO as a
standalone application separate from all the aforementioned applications. It has eventually
integrated it with the hostel ratings feature of its present application, and it stands on the
grounds of being completely customer centric with the motto “By You, For You”. It wishes to
establish transparency in its offerings and make sure that the entire ecosystem of bookings
becomes autonomous enough to realign itself with the customer’s personalized as well as
market expectations associated with lodging, on a mass as well as local scale.
Moving forward, OYO strives to make structural changes in its business operations to
accommodate the new normal, and to drive its business with technology as its core, by being
true to its origins and also ensuring autonomy in its entire business ecosystem.
 8. Competitive Advantage and USP

OYO has established itself as the face of the emerging startup ecosystem which has been
thriving steadfast since the dawn of 2015. It laid grounds to revamp the lodging and
accommodation industry not just all over India, but also globally by thriving towards niche
differentiation.

The business model of OYO too is particularly tough to imitate, because of its immense
network that has segregated like a spider all across the hotel chains as well as in the minds of
the customers, due to its ever expanding brand image and portfolio. This is a testimony of
Ritesh building OYO right from the start, by being the face of the business all throughout, and
working with the frontend clients as well operations teams by himself to better understand the
market demands and needs of its brand partners. Then with its ever expanding portfolio and
markets, OYO has also ensured that innovations are integrated cumulatively with all of OYO’s
offerings. This tough imitability of OYO’s business model forms the core upon which OYO’s
competitive advantage stands uptight.

OYO has three main objectives in play, to ensure that the competitive advantage is sustained
and it’s mission to serve its customers in a real-time fashion, are fulfilled to the best of OYO’s
abilities. The first objective that OYO strives to fulfill, is standardization of all of its products,
servings as well as offerings. OYO assures all of its customers a premium quality room
experience across all of its self-owned hotel chains as well as those of its partners. It specifically
rejuvenates the user experience through mass customization to ensure that all the partnered
rooms possess standardized quality offerings that OYO stands for, and are regularly integrated
with appropriate feedback systems. Second objective that OYO strives to fulfill, is
affordability. To become a leader and sustain the competitive edge in the Indian market, OYO
always optimized on its price offerings for all its services. This pricing is highly competitive
in nature, as they’re economical enough for majority of the Indians to prefer it over any other
competitor, if economical pricing is one of the priorities while deciding upon lodging. And as
is evident by the Indian market demands, price has, and will always be a major decision maker
for any business that wishes to establish its position in the Indian market. The third, and
possibly the most important aspect of OYO’s differentiative capabilities, is its strong foothold
in technology. As was always evident since the time OYO started out as a mere startup, OYO
always wanted to associate its business model with e-commerce chains. And the way OYO is
majorly technologically driven even now, it has fully linked all its operational functionalities
and successfully ensured that each and every customer exercises a seamlessly awesome
experience with OYO’s offerings as well as the entire process of fetching the particular set of
offerings and accommodating all sets of criticisms and feedbacks.
These differentiators, and competitive advantages has ensured that OYO remains not just the
first of its kind, but also one of its kind despite many competitors and niche players who’re
trying to capture the tapped as well as untapped markets. This has made OYO’s business model
as well as operations nearly impossible to imitate, and set up a benchmark owing to its unique
way of running and expanding their business. This uniqueness possessed by the ever expanding
business model sustained by OYO through its giant brand portfolio, is the unique selling point
that OYO banks upon, and the necessary differentiator that makes it stand apart from all of its
competitors and rivals.