Sam Balsara, chairman, Madison World, introduced a young maverick Ritesh Agarwal, founder and CEO of Oyo Rooms, at the Indian Advertising Association India Chapter's Silver Jubilee Summit in Kochi. Interestingly, Agarwal (21 years old) decided to quit college after two days. When Balsara asked what prompted him to do so, Agarwal said, "Education is extremely important, but I would never let college interfere with my education."
Trying to understand his point, Balsara questioned if he was disenchanted with formal education. "Formal education may make lot of people successful, but I was always different. When I was 10, I started coding; while my friends went for vacations I would work with local sales people of FMCG brand like GSK in Orissa. Over this period of time, I realised that people who were trying to create value and solve huge problems were mostly entrepreneurs," he explained.
"A year later, I started my venture, failed once and then changed it to Oyo, it has been doing well so far," said Agarwal.
Oyo Rooms, which recently raised Rs. 630 crore in third round of funding, was born out of a personal pain point. The company started as an online booking service and during that period Agarwal stayed in various hotels and encountered problems almost every day.
"I realised that discoverability of hotels was not a problem, but predictability and trust were. I decided to take a single hotel in Gurgaon, standardise it and manage it end-to-end. I was a coder, housekeeping and sales person for that hotel for a month. Interestingly, this hotel had 95 per cent occupancy with massive repeat rates in six and a half months," he informed.
One can book, check in and check out from an Oyo Room, and also order food through a mobile app. In an Oyo Room, housekeeping takes only 12 minutes to clean a room, as toiletries and stationery is kept in a bag (Oyo bag) and given to the guest during check in.
"It is a way of monetisation for us, because FMCG companies are now using Oyo bag toiletries as a sampling exercise for their new products," Agarwal informed.
He compares Oyo's success with that of online cab/taxi services, stating that standardisation and good consumer experiences are driving the success of these businesses.
"In Gurgaon alone, we book 50, 000 nights a month, because the cost of driving fuel from Gurgaon to Ghaziabad for a professional is higher than staying at an Oyo hotel," he said.
When asked by Balsara if the focus was only on being a low-cost hotel, Agarwal clarified that 60 per cent of his business, today, comes from the budget segment and 40 per cent from mid-market (premium).
Good experience even in a budget segment is crucial for Oyo. The company claims to deliver free Wi-Fi, complimentary breakfast, satin linen, 32-inch LCD TV and a DTH connection.
Agarwal declared that his is not a loss-making venture and added that revenue is a combination of not just room tariff, but also occupancy. To scale the business further, Oyo is all set to roll out its first Rs. 50 crore advertising campaign.
Concluding the session, Agarwal shared that his focus is on building Oyo as the world's most loved hospitality brand. For him, "it's a destination; not an interim step towards anything else."
For feedback/comments, please write to firstname.lastname@example.orgFirst Published : September 07, 2015