Hotel start-up woos guests with Netflix, early check-in

Founded by Ritesh Agarwal in 2013, OYO (an abbreviation of On Your Own) started off operations in Delhi and NCR with two hotels. The mission was to offer clean and comfortable hotel experiences at a right price point. Agarwal was shortly selected as a Thiel Fellow i.e. an under 20-entrepreneur and recipient of a grant of $1,00,000 from Peter Thiel, the co-founder of PayPal and an early backer of Facebook. Agarwal’s firm has become one of the largest hotel brands pan-India, providing 7,500 hotels as part of its brand network, with more than 70,000 rooms. The start-up registers a booking of close to one million room nights every month. 

Talking about the way his enterprise operates, Agarwal says, “The business model involves operating on a franchise-based (80 per cent) and self-operated (20 per cent) set-up. The enterprise operates in three specific segments – the super economy category – where room rates range from Rs 1,000 to Rs 1,500; the Premium - from Rs 1,500 to Rs 2,500 and the Townhouse where room rates are priced upwards of Rs 2,500. We bank on smart innovations such as the Sunrise Check-in (6 am check-in plan) and offering customers free access to Netflix subscriptions in the rooms as part of our USP.” 

The hospitality industry generates twice as much employment as the IT industry. It’s also why the firm trains and certifies more than 200 people every month from OYO Skill Institutes (OSI), which the founder refers to as their contribution to the Skill India initiative. The start-up will be setting up an OSI in Chennai in the future. 

Currently, OYO has a regional presence in Chennai, Puducherry, Kodaikanal, Ooty, Tiruchy, Coimbatore, Salem and Madurai. Agarwal says, “Presently, we are focused on the Budget or Economy section of users with 70 per cent of bookings falling in this category. The flagship, Premium and Townhouse categories make up for the remaining 30 per cent of bookings.”

The Townhouse, a relatively new offering from OYO, is being set up in Bengaluru and Hyderabad – inspired by the studio apartment concept i.e. a managed hotel-brand designed to function as a social hotspot to cater to city dwellers. The outfit which has been backed by the likes of Sequoia Capital and Softbank has received a funding of around $200 million to date. 

Chennai makes up for nearly 7 per cent of the total room-inventory in OYO’s India-wide network. 

The city performs 10 per cent better on average room-occupancy compared to the national average. 

At Rs 1,600 its average room revenue (ARR) is also 7 pc higher than the national average (monthly).

In 2016, Chennai along with Goa was the highest-growing city for same-day and overall hotel bookings for OYO. Both these cities were also the top-contributors to hotel-booking via app. 

Based on room-tariff in 2016, Vadapalani emerged as the most expensive location in Chennai (at Rs 3,000 per night) while Egmore was the most affordable (Rs 770 per night).