OYO operates a two-sided technology platform designed to connect property owners with travellers seeking accommodation. The company aims to empower small entrepreneurs and owners in the hospitality industry by providing them with technology and services, while also making it easier for customers to find and book affordable places to stay.
The breakdown of the key aspects of OYO’s business model:
•Technology-Driven Platform: OYO’s core business involves a technology platform that provides a range of products and services. The company develops technology and brands, focusing on transforming fragmented hospitality assets into branded, digitally-enabled storefronts. This includes using machine learning for search and ranking of hotels, deep learning for hotel recommendations, predicting customer escalations, and offering faster payment options.
•Supply Side (Patrons): OYO’s platform serves the owners, lessors, and operators of storefronts listed on the platform. The company helps these patrons to transform unbranded and underutilized properties into digitally-enabled accommodations with the potential for increased revenue generation. By using OYO’s technology, patrons can efficiently manage and operate their hotels and homes.
•Demand Side (Customers): OYO’s platform also serves customers or travellers who book accommodations through the platform. It provides customers with access to a broad range of high-quality storefronts at competitive price points. Customers can book accommodations through OYO’s app, web & m-web platforms, online travel agents, and corporate tie-ups.
•Branding and Standardisation: OYO’s business model also focuses on branding and standardising the customer experience. It aims to turn fragmented, unbranded properties into branded, digitally enabled storefronts.
•Asset-Light Approach: OYO utilizes an asset-light business model, which means that the company does not own the majority of the properties listed on its platform. This model also results in minimal capital expenditure needs. OYO also has largely exclusive distribution rights and fixed revenue share agreements.
•Centralized Operations: OYO’s operations in India are critical to the company’s strategic initiatives and global growth, with over 70% of its workforce based there.
•Company-Serviced Hotels: In addition to its main platform model, OYO has also focused on company-serviced hotels which are leased properties operated by trusted patrons that provide a more consistent, premium experience.
•Revenue Generation: The company generates revenue through various sources, including:
◦Sale of accommodation services, recognized on a gross basis, where OYO controls the stay services before providing it to customers.
◦Commission from bookings, recognized on a net basis, where OYO acts as an agent.
◦Subscription income from membership programs.
◦Rental income from leased properties, recognized on a gross basis.
◦Other operational revenue, including value-added services and insurance commissions.
◦Royalty income.
•Global Footprint: While India forms the bedrock of its operations, OYO has expanded its footprint across more than 35 countries, with a focus on markets in India, South-East Asia and Europe.
•Focus on Cost Efficiency: A key component of OYO’s strategy involves improving profitability and resilience through cost efficiency. The company has made efforts to reduce staff and marketing costs.
•Risk Management: OYO has a business risk framework to manage risk, identify risk trends, and develop mitigation plans.
3.92%
