OYO BUSINESS MODEL: How Indian Hospitality Unicorn OYO Rooms Earn?

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What started as a small room-leasing aggregator has now become an established brand in itself – Oyo Rooms all across India and also internationally with its Franchise Business Model. Many people thought of how OYO (On-Your-Own) Rooms were set up and make money. Oyo Business Model will make you understand all about the aspects of the company’s functioning and revenue model.

Oyo was first started as a hotel aggregator operating through an Aggregator Business Model. 

The app allows its users to book rooms across 230 cities in India and now it has expanded its operation internationally providing services in countries like Nepal, Malaysia, China, and Indonesia

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OYO BUSINESS MODEL: The Beginning

oyo business model

Founded by Ritesh Agarwal in 2013, Oyo started its business as a hotel aggregator in which it leased out rooms in hotels and sold them under their brand name. 

Earlier, Oyo was operating on an Aggregator Business Model but gradually through the years, it has shifted its business running on a Franchise Business Model.

In Franchise Business Model, instead of leasing out hotel rooms, Oyo partners with hotels, taking complete control over the services provided by the hotel and caters to its customers throughout the process i.e from beginning to the end of their stay in respective hotels.

Presently, Oyo is operating in 230 cities across India partnered with almost 44000 hotels and has over 1.2 million rooms under its branding.

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OYO ROOMS APP: How It Works?

Oyo app is designed to be user-friendly, fast, and organized, presenting various options to its customers. 

The app allows its users to book a room from the available pool of hotels across various locations all the country. 

After booking a room, the customer is asked to pay the respective amount and it’s done. It’s that easy!

After everything is settled, the customers can rate their experience and review the hotels from the app.

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UNIQUE SERVICES IN OYO BUSINESS MODEL

oyo business model

Oyo does not own rooms of its own, it has only partnered with hotels and provides services under its branding.

Oyo is highly focused on providing a quality-based experience to its customers. To become a part of its branding, hotels have to meet standardized criteria which include services provided, security, quality of the staff & rooms, and prices. Only after fulfilling these set of guidelines, they are allowed to use Oyo’s branding. 

Oyo has launched certain unique services along with their existing ones such as Oyo townhouse, Oyo studio stays, Oyo homes, Oyo flagship, Oyo silver key, Oyo wizard.

It has also expanded its services in the areas of booking wedding places and banquet halls, advertising different companies through its app and website.

REVENUE GENERATION: How OYO Make Money?

  • Oyo generates its revenue through various sources, it charges a commission from all its partnered hotels. The rate of commission is around 22% which can vary on the services and features of the room provided. 
  • In addition to this, Oyo collects a reservation fee from its customers. The difference between the selling price of the room and the rate of margin set by Oyo is the actual revenue earned by it.
  • Moreover, Oyo charges a nominal fee from those who want to advertise their companies on its app and website. 
  • Oyo wizard is a special feature in which a customer can subscribe and avail of exclusive discounts, special offers, deals, and much more. To become a member, customers pay a certain amount as a subscription fee which ranges from Rs 500 to Rs 3000.

NET WORTH, FUNDING & FUTURE

oyo business model
  • In 2019, Oyo’s revenue was estimated to be $951 million and the company overall was valued at $10 billion.
  • Oyo receives its funding from various sources. Some of them are Sequoia Capital India, SoftBank Vision Fund, Lightspeed Venture partners, Huazhu Capital Group

Oyo’s business is expected to grow even further in the coming years. It has established itself as the largest hotel network in India and it has also stepped up into the international domain, planning to spread out its roots even further. Oyo Business Model will make you understand all about the aspects of the company’s functioning and revenue model.

Visit: OYO Rooms