I won IBSAF(ICFAI Alumni Federation) Award 2018 after doing hard work during internship and learning from OYO Rooms. I solely give my respect and affection for building that potential and making me understand about the working model of hospitality sector.

1. CASE STUDY
ON
ORAVEL STAYS PVT LTD.
(OYO ROOMS)
By
DEEPAK KUMAR GOUDA
17BSPJP01C027
(IBS JAIPUR)
Under guidance of:
DR. RAHUL SWAMI

2. ABSTRACT
“Journey of learning begins at the end of your comfort zone” very true as this is what I
learned from my internship at Oyo Rooms where I worked under the guidance of Ms.
Shephali Gupta (MM CEO – Sales) and Mr. Shahnawaz Behlim (Pan India Sales Manager).
Under their valuable guidance I was given tasks like:
1. Maintaining the records of Marketing and sales of the company.
2. Meeting with corporates Pan India through leads, Cold Calls and promoting the Services
of the company through meetings, presentations, proposal letters and videos.
3. Responding to all queries on time.
4. Making presentations for Corporates to give them a rough idea about the specifications
of the services provided by the Company to the customers.
5. Doing this gave me a deep insight on how we can create our presence in market by
Finding Customers and convincing them to experience our services. I did cold calls and met
21 corporate tycoons and convinced them for the services of the company as per their
requirements.
The case brings the edge to think how an idea on hospitality and initiated budgeted hotels
arousing lot of investment in this segment. The attention of investors has prompted for
tourism and hospitality.
INTRODUCTION
OYO Rooms is the country’s largest budget hotel chain with about 50,000 rooms in 500
hotels all over India. Oyo doesn’t own hotels; instead, it ties up with certain hotels and
acquires some rooms to be given out to people who want to avail OYO services. It focuses
on standardizing the hotels in the non-branded hospitality sector.
OYO Rooms is a very successful venture as it has managed to solve the issue of
affordability, cleanliness and availability of budget hotels across all Tier-I and Tier-II cities
in the country.
We feel amused to accentuate the success of OYO Rooms which is a privately owned
company headquartered in Gurugram, Haryana, established in 2014. A dream brought to
light by founder and CEO Ritesh Agarwal. In 2014 OYO embarked its journey with just
one hotel in one city and then to many which manifest its innovations and technology.
The company is able to provide wide range of services, offers and affordability of rooms at
a reasonable price to make it easier and happier for people to stay in hotels. With the launch
of its app, OYO assure to assist with marketing and promotion of its services for support in
market.
From a single hotel in May 2013 to over 6500+ hotels at present, OYO had an exciting
journey. Its aim is to become the world’s most loved hotel brand.

3. OYO – INDIA : AT A GLANCE
One of the huge and promising industries in the world is SERVICE Industry and it
believes “ Always give people more than they expect.” One such company in this sector is
OYO Rooms.
HISTORY
We are all aware of OYO rooms which is a very successful start-up. OYO rooms is the
country’s largest budget hotel chain with about 50,000 rooms in 500 hotels all over India.
Oyo doesn’t own hotels, instead, it ties up with certain hotels and acquires some rooms to
be given out to people who want to avail OYO services. It focuses on standardizing the
hotels in the non-branded hospitality sector. Oyo rooms is a very successful venture as it
has managed to solve the issue of affordability, cleanliness and availability of budget hotels
across all Tier-I and Tier-II cities in the country.
Mr. Ritesh Agrawal is a college dropout and to pursue his dream of becoming an
entrepreneur he travelled all over the country and during such travels, discovered the
problem with budget hotels. At the age of 17, he launched Oravel travels, modelled after
Airbnb, which later branched out to become OYO rooms. Soon he discovered that the
problem with budget hotels was bigger than just availability, so, to counter other issues, he
launched OYO.
PRESENT
According a recent report shared by the OYO Rooms team, the company claims to have
reached a unit level profitability, which means, on an average, they are making profit on
every room sold. Currently, the average booking rates of the rooms range from Rs 1,400 to
1,800. Ritesh Agarwal, Founder and CEO of OYO, says that their team has delivered a 15x
YoY growth with 2.3 million booked room-night transactions in the first quarter of 2016.
Over 95 per cent of their traffic comes via their own sales channels. Delhi, Hyderabad,
Kolkata, and Gurgaon are believed to be the key cities driving profitability. The Oyo team
now plans to grow deeper in their key business and triple their inventory by the end of this
year.
According to several reports, the budget hotel aggregation market is believed to be
somewhere between $20 billion and $40 billion. Apart from OYO, Treebo, Wudstay, Zip
Rooms and Stayzilla are major players in the domain. Even biggies like Paytm are entering
the space. Qik Stay says that it’s looking at capturing close to one-fourth of this market
size. Its expected revenue for FY17 is Rs 180 crore.
The newer players are not only giving OYO a stiff competition, but they are also making
veterans like MakeMyTrip and Goibibo tighten their belts.
● 50,000 rooms under Oyo brand in tie-up with 5,500 hotels
● The Taj group has 16,500 rooms globally, of which 13,000 are in India

4. ● Total number of branded hotel rooms in India as of March 2015 was 112,284
● Oyo's turnover in 2014-15 was Rs 2.4 crores.
● The room aggregator is in the market to raise $400 million, but may have to make do with
less after having tied up with Ola, MobiKwik and Zomato to solve basic problems of
travel, payment and food.
FUTURE
OYO’s innovative business model is unique and indigenous to India and they are solving
problems of small hotels with the help of cutting edge technologies and processes. Because
they are not emulating a global template, they are sometimes not very well understood and
often their metrics are misrepresented and quoted out of context.
In the quarter ending June-2017, They witnessed Their highest grossing months with total
booking value closing just shy of $100mn setting higher watermarks for ourselves. Net of
cancellations, our average daily realized rooms nights have grown 30% Q-o-Q and 1.7X Y-
o-Y. The foundation of their capabilities is strongly laid and in an industry where players
are showing growth by consolidation, they have grown only organically with a single-
minded focus on bringing quality living spaces at the right price and locations.
Their quarterly Realized room nights and *revenue (net of discounts, cancellations and
future bookings) have grown by about 12x in last 2 years. That’s the money guests have
paid for the room nights used.
They are growing at such a fast pace and at the same time making giant leaps in the quality
of guest experience which they measure using an NPS* score and Advocates.
The NPS score in the past one year has more than doubled. NPS at a network level is 42%
and for our new offering OYO TOWNHOUSE it is ~8
Budget hotel brand OYO, backed by SoftBank, plans to double its inventory of 70,000
rooms to 1.5 lakh by the end of next year to cater to growing business and leisure travel in

5. the country, founder Ritesh Agarwal told ET. It will add between 10,000 and 20,000 rooms
this year.
WORTH
“March 2016, Oyo had gotten into a net transaction profit, which means that for every Rs
100 they sell, they were making Rs 100-plus. Their gross margin has been 25% and net
margin is at 16%,” It is explained below in detail with graph representations.
INVESTORS OF OYO ROOMS
With the funding round from Softbank Group in August 2015, OYO’s current shareholding
looks like this:
Founders 18%
Lightspeed Venture Partners 19%
Sequoia Capital 18
Softbank Group 15%
Greenoaks Capital 10%
DSG Consumer Partners 4%
According a recent report shared by the OYO Rooms team, the company claims to have
reached a unit level profitability, which means, on an average, they are making profit on
every room sold. Currently, the average booking rates of the rooms range from Rs 1,400 to
1,800. Ritesh Agarwal, Founder and CEO of OYO, says that their team has delivered a 15x
YoY growth with 2.3 million booked room-night transactions in the first quarter of 2016.
Over 95 per cent of their traffic comes via their own sales channels. Delhi, Hyderabad,
Kolkata, and Gurgaon are believed to be the key cities driving profitability.
The business model of hotel aggregators is simple as they simply connect the guest
(customer) with the hotel by listing hotels on their website and take a commission as their
revenue.
OYO Rooms declared in February ’16 that it has hit 1 millionth night bookings. It has been
in operation for about 2 and half years now and claims to have 4,500 hotels in their partner
network with 45,000 sell-able rooms.

6. But, let’s take their own revealed numbers and try to analyze the business economics. Let’s
consider their per room purchase cost is 1,000 and they are selling it at 1,200, giving them a
handsome about 20% margin per room per night here; which again is way too higher than
the industry average but let’s assume that everybody just loves OYO and customers want to
pay that much premium for that awesome stay! Now, although they got 1 million room
nights booked in over 2 years, let’s be generous and assume that they got it all in the
current year itself. This will make their current year GMV at 120 crores so far and actual
revenues at Rs 24 crores with 20% margin. Now, that’s 2 crores in actual revenues per
month.
OYO COMPANY’S BUSINESS OBJECTIVES
OYO Rooms has one objective to offer standardized stay experiences at an unmatched
price. Oyo provides standardized hotel rooms with features such as an air-conditioner, TV,
complimentary breakfast and Wi-Fi with 24×7 customer service support. OYO rooms can
be booked online using Mobile app. Also they have their presence in all the travel/booking
websites.
BUSINESS MODEL OF OYO ROOMS:
• Oyo Rooms Business Model is a hotel aggregator model. The users under the
name of Oyo rooms buy the services. Just like Uber, Oyo provides rooms with
standardized quality and price.
• Oyo Rooms provide visitors with quality hotel room stays at different places
around India. They have partnered with hotels and made them work with them
under their name.
• Now, OYO work in Franchise Model.
• It makes a contract and signs the properties under its flagship with 70% hotel share
and 30% OYO share.
• Through this model, the guest check in issues reduces and many hotel categories
launched under OYO:
1. Smart property (budget)
2. OYO flagship
3. OYO flagship and frontier
4. OYO Townhouse
APPROACH/ STRATEGY ADOPTED BY OYO ROOMS
To retain its ranking and perform way above the competitors OYO is focusing on the mass
as well as on digital marketing section aggressively for lead generation and customer
acquisition.
It has strong social media presence on Facebook with over 2.7 lakh fans and a Twitter

7. following of over 8,000 followers. The brand claims to have over 1.5 million app
downloads with a good number of active users. To fast track its growth, OYO Rooms is
organizing several campaigns on social media platforms such as:
● Dubsmash Contest
● #AurKyaChahiye videos on Youtube.
● Father’s Day Celebration campaign, and IPL Final Verbal Combat.
● Jai Hind was the most successful one that featured Bollywood actor Manoj Bajpai
and Raveena Tandon.
● The video fetched over 1 million views to the brand. Some of their recent endeavors
areA Salute to the heroes of 1965 war and Oyo Explorer – Pune.
RESULTS ACHIEVED BY OYO ROOMS
● OYO’s traction and market coverage has swiftly increased because of being listed
with travel aggregators like MakeMyTrip , Cleartrip and com.
● Launch of OYO café, OYO We for Women travelerS and OYO Premium for high-
end customers
● Tie-ups with major brands such as Airtel for wi-fi support, ZO rooms, Thomas
Cook, Air Pegasus and Tourism and Hospitality Skill councils.
DETAILED DESCRIPTION BASED ON MY EXPERIENCE
OYO Rooms is blocking rooms at these hotels by paying monthly rent in advance at a
discount I stayed at several of OYO rooms and inquired at many to find out how they are
working with OYO. At one hotel that I stayed recently in Delhi, I asked the manager how
OYO Rooms is giving a room at a much lower rate than they themselves are giving to their
direct customers. He said the obvious that they are blocking these rooms for the entire
month by paying in advance. Now, we have a corporate discount for our company at that
hotel so the manager revealed the numbers to me. He said that despite this, OYO is selling
these rooms at much cheaper rates than the hotel is selling those to them. So, for example,
the hotel is selling a room to a normal guest at 2,250 Rs. per night and to a corporate guest
at 2,000 Rs. per night; their deal with OYO Rooms for several of rooms is coming to some
1,500 Rs. per night. OYO was selling a room at 1,150 Rs. per night at that hotel. This
simply means OYO Rooms is making a loss per room per night there in order to buy
customers.
OYO is not the only one in hotel industry even though they claim that their model is
innovative. A customer doesn’t care much as long as the inventory and availability is there.
Loyalty is not there with hotel partners as well. Several other hotels where I inquired I
mentioned that I found this hotel on OYO Rooms as well and they are offering a cheaper
rate than the ones mentioned on that hotel’s site or as conveyed on phone. They were spot
on to the discount here and said we will give you the room at the same price as which OYO
is selling it to you.
And you might wonder why would they want to do that? The question is, why they
wouldn’t? Remember, OYO Rooms has to buy out the rooms for the entire month in order
to claim it as ‘their property’ and then ‘standardize’ it with their kit, set up and then sell it

8. under their brand name online. The hotel is already happy as they’ve got the money upfront
irrespective of whether the inventory is utilized or not. Whether OYO is able to resell those
rooms or not is not the hotel’s problem since they’ve got the payment. They are worried
about the unsold rooms with them now, so when a customer comes in directly, it is a no
brainer that many of these hotels try to sell their unsold rooms first to them even if they
have to match the dart cheap pricing provided by OYO. Because for a hotel with 20-25
rooms, if OYO is booking 10 of their rooms (as per their claim) for the entire month, the
hotel is already hitting break even for the given month and might already be profitable for
the given month! So, they can afford to offer rooms at such dart cheap rates now to such
customers as anything is a bonus now. But, they won’t do it right away since they don’t
want to lose the easy money coming from OYO.
You might be thinking how I found out about that hotel from OYO Rooms since they don’t
reveal hotel name and address! Well, I am not going to break any confidentiality of their
site structure here. But, being a normal customer or visitor you can find it out yourself as
well. OYO brands these hotels with their prime location and displays partial
address/locality as well. For example, take this property named OYO ROOMS - GREEN
PARK, DELHI. Now search on Google with its address and you will find with its contact
number etc.
Now, of course, as a normal guest you wouldn’t want to do this because even if you call the
hotel directly, last thing they can do would be to match up with the OYO pricing which you
are getting with OYO anyway. Well, unless you don’t trust OYO anymore due to a bad
experience yourself or after reading some horrible reviews online of customers being
stranded on roads in nights despite booking in advance with OYO Rooms.
The bottom-line to understand their business model is simple – OYO is a hotel room
reseller. Instead of taking a commission, they are buying out the rooms and then reselling
them at their own rates. In order to do this, they are spending money on standardizing these
rooms and in co-branding as well. On paper the idea and model looks good, but, my friend
– idea is cheap, implementation is everything.