OYO to open 10,000 rooms in 45 cities

Tech-enabled, branded hospitality network OYO Rooms, which went live with its website oyorooms.com in April 2013, is set to become India’s largest branded hospitality network of budget hotels with 10,000 rooms in 45 cities.

At present, OYO has a network of 2,000 rooms in 13 cities with the largest number in Delhi/NCR.

The two-year-old start-up, founded by Ritesh Agarwal, who dropped out after the 12th standard, raised ₹150 crore last month from Greenoaks, Sequoia and Lightspeed Ventures to fund its expansion.

Before that, the company had received seed funding of ₹30 lakh from VentureNursery.

“Of the 60,000 branded hotel rooms in the country, the largest inventory is held by the The Taj Group with 9,000 –10,000 rooms. We will exceed 10,000 rooms by the year-end,” Ritesh Agarwal told BusinessLine .

Pointing out that there are 350 million budget travellers in the country who are looking for high quality, standardised rooms, Agarwal said: “There are 1.5 million unbranded budget rooms in the country which are priced between ₹2,500 and ₹4,000.

“However, very few of them offer the budget traveller a standardised, predictable experience with assured facilities, services and amenities.

“OYO Rooms are priced between ₹999 and ₹1,499 inclusive of taxes and are equipped with comfortable beds, air-conditioning, TV, free unlimited Wi-Fi, clean attached washrooms and complimentary breakfast service.” While Delhi/NCR is currently OYO’s largest market, Agarwal says in the next three to six months, Bengaluru will take the lead and hold that position for the next three years.

OYO will expand its Bengaluru offering from 300 rooms in 30 hotels in MG Road, Brigade Road, Koramangala, Whitefield and Indiranagar to 2,000 rooms in 150 hotels over the next 12 months.

“The city attracts a diverse customer base; repeat rate of customers is very high. While hotel stays are always planned, the capability of these customers of making an impulse decision to stay in OYO hotels is also high,” he adds.

Asked how long he can sustain the pricing given that Ginger, the budget brand from the Taj stable, has long since crossed the ₹999 price band, Agarwal said: “Our prices will remain the same and will not succumb to seasonality or spike in demand.

“We spend just $80-$90 to transform an unbranded room to a predictable room and assure most of the hotels we partner with, 90 per cent occupancy rates from just 25-40 per cent that they manage to do.

“So revenues double or treble and everyone is happy and we work on a revenue sharing model with the hotel owners.”

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