During a town hall meeting with employees and hotel partners in November 2020, OYO’s founder, Ritesh Agarwal, tried to strike an upbeat note. Following the progress with vaccine trials he was confident that the travel and hospitality industries would bounce back strongly.
This sentiment is shared by Harshit Vyas, SVP and COO, Franchise Business for OYO India and South Asia. When he had joined the budget accommodation startup in 2013, he was one of the first five employees focusing on business development for OYO’s foray into Gurgaon. From introducing hotel owners to a new revenue model to equipping them with technology to better manage their operations, Vyas tells us how OYO is focused on continuously delivering value to its asset owners.
What major changes have you witnessed in OYO since you joined the company in 2013?
In the initial days, convincing hotel owners to associate with OYO was a Herculean task. Being a completely new, untested business model, they were sceptical about the value and prospects that we offered.
Soon, they started seeing repeat customers and greater revenues. They also noticed how hotel operations, revenue management and CRM became more efficient and convenient via OYO apps, which eventually led them to trust us. Back then, we had just started our journey and were focussed on offering standardised and affordable stay experiences for travellers across price points. Over time, the company underwent tremendous changes. Our presence across India and international territories is now backed by our strong operational capabilities and ability to use technology to improve efficiencies at every touchpoint.
How exactly are you providing value to these hotel owners?
By following improved communications and process changes especially this year, we have witnessed higher Net Promoter Score results quarter vs quarter in 2020. We also introduced several changes over the last couple of months.
For instance, we simplified our deal and reconciliation structures. Nearly 60% of our properties are onboarded on the Crystal Deal with a brief, three-line reconciliation statement, which is an industry first in many ways. 75% of the new asset partners joined us through non-physical meetings.
Payments were moved to weekly cycles for all OYO hotel owners. This step led to bigger on-ground impact on cash flows, asset owner delight and decision making. Moreover, we worked hard to ensure that our partners experience strong demand from us even during the pandemic. We served them with newer sources of revenue, such as quarantine demand, stays for first responders, government channels, etc.
To facilitate quicker resolution of partner queries, we encouraged the use of our CO-OYO partner facing app. This, and a realtime response mechanism, reduced more than half of booking related partner issues, especially during the pandemic.
Today in India, over 80% of the properties have opted to be on OYO Secure, a prepaid wallet based system. To address the queries related to pricing changes, we introduced a partner self-serve pricing tool, Tariff Manager. It has seen 85% adoption among part ners. Moreover, it has resulted in ~40% reduction in queries related to pricing changes between March and October 2020.
Earlier, OYO provided management staff to help partner hotels ensure consistency in customer experience. Why did it choose to transition to a revenue-sharing model, where it will charge partners a share of the entire revenue?
In terms of the business model, almost 98% of our assets globally are on revenue sharing commercial models. This type of model is recognised worldwide and prevalent with many global hospitality brands. The revenue share arrangements are fair and incentivise partners substantially to earn the right yield on assets. These deals further guarantee higher owner share and the hotels are prioritised on the OYO app and website for revenue increase. Our growing win-back of partners and supply base indicate that they understand the need to operate on a revenue share basis in the new world.
What key differences have taken place in OYO’s partner relationship in 2019 and in 2020?
As a young company, we witnessed significant growth. At times, we went ahead of ourselves and pressure-tested our organisation at multiple levels.
2019 gave us an opportunity to reflect on our learnings, especially in terms of our partner relationship. We transformed our processes how we engage with partners to strengthen trust and transparency.
Earlier in 2020, before the pandemic hit us, more than 400 senior OYO leaders in India, including myself, personally met about 4,500 asset partners across 5,000 hotels. Even during the pandemic, we maintained a constant flow of communication with asset owners. Multiple teams on the ground have been engaging with them and addressing their queries.
As a result, we are pleased to share that over 2,250 asset owners from the above total have multi properties with us. Following process improvements, over hundreds of hotels chose to return to the OYO family.
How did the pandemic affect the growth in OYO’s hotel partner ecosystem in India?
Today, there are over 1,100 OYO hotels that are among the top 10 hotels in their respective cities. In terms of our current hotel partner network, while we still have the scale, we are currently focussed towards achieving pre-COVID levels of supply in the country. More than 50% supply of our franchise hotels have returned to pre-COVID level occupancies.
Asset owners in India choose OYO as we continue to add 15,000 to 18,000 rooms per month. We are focused on business recovery, cost management and strong engagement with our partners and customers. We believe this will help us become a reliable value hotel provider in 2021.
What kind of financial assistance did OYO extend to its partners during the pandemic?
We are doing everything to help our partners during these testing times. We are working with them to open supply in a planned manner, closely tracking the demand-supply equilibrium. OYO also provided financial relief of over INR 24 crores during the lockdown period. We waived off multiple charges including value added service charges, Wizard membership accruals, etc. Partners whose financials were most affected by COVID-19 were given steep take rate discounts to support them throughout this tough time.
Since March, we made weekly payments and simpler reconciliation settlements, irrespective of past dues at the property. This helped thousands of partners manage their working capital requirements. Moreover, we partnered with multiple lending institutions in India ranging from NBFCs, private sector banks and new-age fintech companies to identify and facilitate adequate financing for hotel transformation, up-gradation, Capex and working capital requirements.
Certain services for a large section of eligible asset owners are also being provided free of charge for the limited period. These include Free Tariff Manager value added services. Our partners appreciated
our efforts in enabling them during these times.
How was this effectively communicated to your partners?
Multiple channels of communication enabled asset owners to directly reach out to us and vice versa. This includes the CO-OYO app, OYO OS and partner support helpline through a central inbound number. We also have dedicated portfolio managers who are well equipped to address any query or issue.
We continue to maintain our engagement with partners through OYO Sambandh, a large scale partner outreach program. Through it we connected with over 2100 partners across the country where relationships had been challenged and shared our efforts to support them. The OYO Samvaad series was introduced so our partners could have dialogues with key representatives in travel and tourism. We regularly educated them and created awareness on post-lockdown initiatives via detailed emails and visual instructions.
We organised over 60 webinars, which were attended by over 4,000 of asset partners where we discussed their queries and concerns. We also spoke to several stakeholders in the ecosystem on behalf of our partners.
Since it caters to all categories of guests, from millennials to corporates, OYO has adopted a multi-brand strategy featuring OYO Townhouse, Collection O and OYO HOME brands.
How is OYO building a sustainable business in India by helping asset partners operate their hotels during COVID-19?
In terms of business revival of our India operations, occupancy has been over ~45% of pre-COVID occupancy level. We are currently working on enabling a large number of partners and consumers to recover entirely to pre-COVID levels and grow the network on the back of the improved products and experiences.
To enable this, we continue to make significant investments in our technology capabilities. OYO launched a couple of marquee initiatives for customers over last several months like contactless check-in and ‘Sanitised Before Your Eyes’.
We are looking to invest more in technology and data sciences for the future. On the partner side, new features and dual language support has led to the majority of partners using Co-OYO app where partners can see daily occupancies, revenues, etc., regularly.
Does OYO focus only on small scale or economy hotels or will it collaborate with midscale or upscale brands too?
We work with every segment of hoteliers, including small, medium and large scale, to improve guest experience and occupancy, and thereby yields. We believe that the opportunity in the economy and mid-scale continues to be large and sizable.
In the budget segment, we have empowered thousands of micro- entrepreneurs in India over the past seven years to become job creators.
What tech initiatives has OYO undertaken recently for its partner community?
As an organisation that has technology deeply embedded in everything we do, we have leveraged our capabilities to sail through this crisis. We are using technology to adhere to property audits and ensure our hotels follow standard operating measures using our in-house app, Krypton which in return results in an elevated customer experience.
The self-service Co-OYO app for hotel partners enables efficient tariff management, revenue maximisation, reconciliation and payments, booking modifications, guest experience model (3C) and hotel management.
