Where would you stay if you go to a new city for a vacation or on a business trip? In a hotel right? But how would you know if the hotel you are going to stay at is going to provide good service or not? How would you choose a good hotel if you have never been to that city to know which ones are the good ones? And above all the price of the hotel room also matters. It is not possible that everyone could afford to go to a five-star hotel where they will surely get a great room and good service. Most of the people who travel are looking for cost-effective options. Because they don’t want to spend too much money as they will be using the hotel room only to rest and keep their luggage. So it’s definitely a challenge to find good hotels.
Another great thing about the current world is that you don’t have to go to a hotel in person to get a room. It has become quite easy to book a hotel in today’s world. You don’t even have to call the hotel for a reservation, you can simply book the rooms you want using your mobile. There are quite a few mobile applications that allow you to do this. More and more people are using these applications as they find them very useful. There are many advantages to using an application to book hotel rooms. The first thing is you don’t have to research hotels as there will be information about them. You will have the list of the best hotels at your dispense. The main reason is it saves a lot of time, energy and money. Today’s article is about one such company called Oyo rooms.
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What is Oyo?
Before knowing about the business model of Oyo and the ways in which it makes money it would be great to know something about the company. Oyo rooms or Oyo is a hospitality chain that is based out of India. The founder of this company is Ritesh Agarwal. But Oyo was not the name of the company when it was initially founded. When it was first founded it was known as Oravel stays. This enabled people to list their hotels and book hotel rooms for people who are on a budget. After that, the founder has stayed in a lot of hotels all around India and decided to change a few things. It was in 2013 that he decided to change the name from Oravel to Oyo. Oyo has undergone a lot of changes since then. They helped Oyo to grow their popularity and expand their business.
Oyo has decided to partner up with hotels to give their customers the same experience in all of the hotels that they are associated with. In the beginning, the company used to lease a few rooms but this has gradually changed. In recent years Oyo rooms have gained a lot of popularity. This is mainly because they have become the first option for youth to book hotels across all the cities in India. It happened mainly because of the steps taken by Oyo. Oyo does not own any hotels by itself. What it does it partners with hotels and renovates them. It does this so the hotels meet their standard of services. After it is done the hotel is listed under the brand name of Oyo. One of the main reasons it has been successful is because of the standard of services they provide to their customers around the world.
Business model of Oyo
Currently, Oyo rooms have one of the largest networks of hotels around the world. In the span of seven years, it has managed to expand to many other countries. In India alone, it has nearly half a million listings in more than 5000 cities. Today this aggregator is present in several countries like Nepal, China, Malaysia, Philippines, Japan, Indonesia, Saudi Arabia, Vietnam, US, UK, and UAE apart from India. To be able to expand a business in such a short span of time is really commendable. So let’s take a look at the key components of the business model.
Hotels
If you are a hotel aggregator then the first thing you need is the hotels that are willing to partner with you. Oyo has been very successful in convincing hotels to get associated with them. This is very impressive because it started in a country like India where no one has ever heard of a concept like this before. It goes for both hotels and customers. The great thing about this is that they not only list the hotels on their platform but they are also willing to modify them so that they meet their standards.
This is one of the best moves by Oyo because they will not only be partnering with the hotel but they will also be helping them to improve themselves to get more customers frequently. There will be many hotels that will be old which are out of business most of the time. Since they run in losses they cannot renovate themselves. Oyo not only renovates those hotels but also puts their brand name beside it. This is a great way of promoting the hotel to improve their businesses. Many hotels have benefited from this.
Oyo Townhouse
This is one of the newest additions to the services that are provided by Oyo. Oyo townhouses are built to give the customers a completely new experience of staying in a hotel. It aims to give the customers space and comfort they always look for. These townhouses are aimed to attract and facilitate the needs of millennials. So you will have access to WiFi connectivity and TVs with a Netflix subscription. Not only that you can also shop when you stay at these townhouses. Currently, there are more than 250 Oyo townhouses
Oyo vacation homes
These are great options for people who want to rent homes during vacation. Oyo vacation homes are one of the largest and top vacation rental management companies in the world right now.
Oyo Silver key
If you are traveling for business then you would want to stay in hotels that take care of your requirements. This is exactly what the Oyo Silver key is all about. It is an exclusively designed service that is aimed at business travelers. If you travel frequently due to business then you will definitely love the Oyo Silver key as they provide you with all the facilities you need to make your business trip successful.
Oyo Home
These are the rooms that you can rent in the local neighborhoods of a city. You can rent homes, apartments, cottages, rooms that are present in various neighborhoods in the city. One does not have to worry about the services as these places meet the standards of Oyo. Oyo makes sure that these places have all the facilities that you look for in a place. These are great if you want to rent out homes for your family.
Oyo Life
This service is also targeted towards millennials. It aims to provide millennials with homes that they can rent. They are really great as they don’t provide options that are too costly. All of their listings are affordable and well managed.
How does Oyo make money?
With a lot of services to offer Oyo has more than one way to generate revenue. Since it is a hotel aggregator it is not hard to predict where most of its money comes from. Let’s look at the ways in which Oyo makes money.
Commissions from hotels
This is something that is quite easy to understand. The primary source of Oyo’s revenue is the commission it gets from the hotels. Each hotel pays a part of its income that is generated through Oyo. Oyo charges 22% of the total amount as its commission.
Reservation fee
This is the fee that is paid by the customers who stay at the hotel that they booked through the platform. When a customer books a hotel through Oyo they will pay them a fixed amount to the company as a fee. This fee depends upon the hotel that you are going to stay in.
Subscription fee
Oyo has a premium service called Oyo wizard. One has to pay a subscription fee to avail of its services. This subscription provides lots of advantages for the people who get it. They will get lots of offers, services, and discounts that other users do not get.
Advertisements
As a platform, Oyo runs a lot of ads. It charges money to run the ads of other businesses. Not only that it also charges money to advertise Oyo rooms.
Consulting services
Since it has been very successful in growing its business it also offers consultancy services to other similar businesses. Many hotels, clubs, etc approach Oyo rooms to get help from them to improve their businesses. In turn for their services, Oyo rooms receive payments.
Conclusion
This is the business model of Oyo rooms. It is an aggregator business model. You can know about the business models of various companies on Postling. If you want to know about the business model of an online food delivery service then you can check out the business model of Zomato.
