Ritesh Agarwal’s net worth is around INR 7253 crore which is $1.1 billion dollars as per the Hurun Rich List 2020 making him the world’s youngest self made billionaire after the famous Kylie Jenner.
OYO rooms has been one of the most successful start-ups in India being the country’s largest budget hotel chain. OYO has over 23,000 hotels, 8,50,000 rooms and 46,000 vacation homes across the globe. In the Oyo model, hotels are not owned, instead Oyo ties up with certain hotels and acquires a few rooms to be given to people who want to avail the services of OYO. It focuses on standardizing the hotels in the non-branded hospitality sector. Oyo rooms has been one of the most successful ventures as it has managed to solve the issue of affordability, cleanliness as well as availability of budget hotels across all Tier-I and Tier-II cities in the country.
Well, it is all the brainchild of the man with the OYO vision, Ritesh Agarwal, a successful entrepreneur is just 26 years old and has had several accolades to his credit. Born to a humble family in Cuttack, his journey of becoming one of the most successful entrepreneurs wasn’t a walk in the park. In fact, in the era of start-ups, he had to face several difficulties in trying to make his unconventional idea work.
Ritesh Agarwal gained enough success by understanding business needs and building something that people want. It’s not always easy to get a start up funded. But nowadays you don’t have to travel to silicon valley and have lunch with venture capitalists to get money. Try looking for an online loan broker for funding your start up.
Here’s some more you should know about the man behind OYO rooms:
1. Ritesh Agarwal is a college drop-out
To pursue his passion of becoming an entrepreneur, he enrolled into Indian School of Business & Finance, Delhi however he did leave college mid-way to start his own company. He was hesitant about his decision but he took some tough choices to accomplish his dreams.
2. Before OYO, there was Oravel
Ritesh Agarwal has been a wayfarer himself and travelled across the country before launching OYO and during such travels he discovered the problem with budget hotels. Thus at the mere age of 17, he launched Oravel travels, which he modelled after Airbnb. However, it later branched out to become OYO rooms. He had discovered that the problem with budget hotels was bigger than just availability, so, to counter other issues, he launched OYO.
3. The sole resident Asian to have won a Thiel fellowship
The year he launched Oravel travels, he was nominated for the Thiel fellowship. The fellowship is designed by Peter Thiel, the founder of PayPal and provided a college drop-out, less than 22 years of age, a sum of $100,000 to pursue a start-up dream. Needless to say, he has been the only Indian to receive it.
Ritesh Agarwal who is merely 26 years old, has certain awards and credentials to his name, some of which are:
– Forbes “30 under 30” in the consumer tech sector
– Top 50 entrepreneurs in 2013 by TATA First Dot powered by NEN awards
– TiE-Lumis Entrepreneurial Excellence award in 2014
– Business World young entrepreneur award
5. Apart from an entrepreneur, he is an author, a coder and a great orator
At a young age, his book- A complete Encyclopaedia of top 100 engineering colleges, was published and soon became a best seller. Agarwal started coding at the tender age of 8 and at the age of 16, he got a chance to be one of the 240 students who were a part of an Asian camp held at the Tata Institute of Fundamental Research. He was the youngest speaker in the panel of Think EDU panel,2014 and is a constant at VCCircle events.
6. World’s Youngest Self Made Billionare after Kylie Jenner
Oyo rooms raised $1 billion in September 2018, even a year after that in July 2019 Ritesh Agarwal bought $2 billion in shares in the company, which tripled his shares. In the year 2020, Agarwal’s net worth is around INR 7253 crore which is $1.1 billion dollars as per the Hurun Rich List 2020 making him the world’s youngest self made billionaire after the famous Kylie Jenner.
From a regular 17-year-old to the owner of a million-dollar company at the age of 22, Ritesh Agarwal’s story is what fantasies are made of.
A friend’s destination wedding in Jodhpur had just wrapped up. As guests began to leave, we friends hung around our hotel terrace, enjoying the beautiful view from the top and sipped onto steaming masala chai. Another friend brought out what looked like a bottle of moisturizer with OYO printed on it in bold orange letters and began dabbing the sweet-smelling liquid onto herself in the pleasant winter sun. “I love these complimentary cosmetics, man. Dibs on the pouch.” Our host had booked OYO rooms for us and with its well-kept rooms and prompt service, it was just about perfect. The knowledge that our generous host did not have to lose a limb to afford the rooms let us enjoy the wedding guilt-free. Perhaps this is how Ritesh Agarwal, the founder of OYO, has called dibs on a huge section of tourists in the country.
High quality rooms, good service and affordable prices – just the perfect mix to win over a tourist. You’d think that for a company to cater so well to its customers, it must have been an old market player with a legacy of family-run businesses. It’s not. The brain behind the company is 24-year-old Ritesh Agarwal who founded the company back in 2013 when he was only 19.
From a regular 17-year-old to the owner of a million-dollar company at the age of 22, Ritesh Agarwal’s story is what fantasies are made of. Ritesh was born in a Marwari family in Bissamcuttack, a small town in Odisha. Even as a kid, he yearned to do his own thing. It was this love for entrepreneurial living that led to a 13-year-old Ritesh selling SIM cards.
“As a young kid (growing up in Rayagada in Odisha), I had the aspiration of doing something exceptionally different. A lot of people say if you have limited exposure, you’re handicapped. But I got more opportunities when I grew up in that place because as a young kid, more often than not, people would compare you on the basis of age rather than skills,” he said at the Odisha Investor Meet in Bengaluru.
Studying for his engineering entrance exams in Kota, Ritesh knew from the start that the conventional was not for him. More than his books, he was excited by the young and enterprising world around him. He would sneak out to Delhi from Kota every weekend to meet entrepreneurs.
At an age when most of us were busy securing admissions into colleges, some of us still confused about the career choices we were making, Ritesh Agarwal decided to listen to his heart. It was now or never. A good idea should never be made to wait.
Much has been talked about the fact that he did not complete his graduation and dropped out of college. Not many know that it was this very fact that made him eligible for the Peter Thiel fellowship, something that, in Ritesh’s own admission, proved to be crucial in his journey as an entrepreneur. “The¬ acceptance rate is lower than the Ivys, but the catch is that you have to drop out of college,” he reminisced while speaking at the Techcircle Startup 2015 convention. Ritesh was the first Asian resident to have won the fellowship.
In an interview with Economic Times he talks about how the month-long fellowship at Stanford taught him to ‘think big’. As part of the fellowship, he also received a grant of $100,000.
In 2011, at the age of 18, he founded Oravel, a platform for booking budget hotels, that later became OYO. How much experience and skill could an 18-year-old have? What he lacked in years, he compensated in experience and research. For months, Ritesh travelled across the northern part of the country, staying in budget hotels himself, doing first-hand research, talking to customers every single day to learn the problems and expectations of his customer base. Those who know him well know of his trademark backpack that he carried everywhere he went, even to investor meetings – it was his home in a bag; he wouldn’t know where he would be spending the night each day.
He was spending his savings on room rent staying at bed n breakfast apartments. Not everybody let a young entrepreneur stay for free as part of market research for his venture. Speaking at the Techcircle Startup 2015 convention, Ritesh talked about how that was a huge learning experience for him and he knew he had to stay put despite his diminishing bank balance at that moment. “My family was well-off and it’s not like they couldn’t have helped me, but the problem is if I had picked up the phone, being 18 years old, and told my family ‘Guys I’m broke’, the first thing they would’ve told me is to come back home.” It was a choice he had to make – it was now or never.
The young man left no stone unturned in understanding the budget hotel industry and it finally, showed results. Oravel Stays Pvt. Ltd. was scaled to OYO in 2013.
OYO, which is an acronym for ‘On your Own’, started with one hotel in Gurgaon in 2013. Today, the company has 8500 hotels in 230 cities across India and has even launched in Malaysia. In just 3 years, OYO has been named as India’s largest budget hotel network.
Ritesh’s incredible journey can be best understood in his own words: “At the age of 19, I was clear about one thing – I did not want to build something that was another business. I wanted to create something that created a real impact. And if I lost, out, I would have great learning […] I will not build something that one thousand people kinda like, I will build something that 5 people will fall in love with.”
This is Softbank Vision Fund’s second big investment in India after a massive USD 2.5 billion round in Flipkart, last month.
Gurgaon based online hotel aggregation firm Oyo has raised a massive round of about USD 250 million led Softbank’s Vision Fund making it amply stashed with fresh cash to fight rivals MakeMyTrip, Yatra, ClearTrip, FabHotels and others.
Investment arm of automobile company Hero Enterprises and existing investors Sequoia India, Lightspeed Venture Partners and Greenoaks Capital also participated in the round.
The startup has so far raised about USD 442 million including this round.
Launched in 2013 by its 24-year old founder Ritesh Agarwal, OYO claims to be operating in more than 230 cities across India, Malaysia and Nepal.
It last raised around USD 62 million from existing investor Softbank in August 2016. Across India and Malaysia, Oyo claims to be operating over 70,000 rooms.
This is Softbank Vision Fund’s second big investment in India after a massive USD 2.5 billion round in Flipkart, last month.
“OYO has solidified its position in India as the leading accommodation brand for consumer affordability and high quality standards. We’re excited to continue to support OYO as they further expand their position in India…and other markets around the world,” Justin Wilson, SoftBank’s Board representative on OYO said.
“As a business family, we have always set new paradigms; so OYO’s unique business model excites us. The differentiated thinking and ingenuity that Ritesh and his team bring to this industry gives us confidence that OYO can scale, innovate and set new benchmarks,” said Sunil Kant Munjal, Chairman of Hero Enterprises.
Speaking on the development Ritesh Agarwal, CEO of Oyo said that the company will deploy fresh capital to take its made-in-India business model to international markets. “These markets are characterized by a similar supply-demand imbalance in real-estate and hospitality,” Agarwal said.
The budget hotel accommodation market has heated up with activity in the last couple of years.
The online travel agency space last year witnessed the merger of the two big firms, MakeMyTrip and GoIbibo.
Previously, the companies had also delisted Oyo from their platform citing conflict of interest. Earlier this month, another start-up in the budget hotel space, Treebo too delisted itself citing issues high commissions.
Oyo’s rival MakeMyTrip is trying to strengthen its own budget hotel segment and had launched ValuePlus in 2015. On the other hand, GoIbibo had also launched GoStays.
In an interaction with Moneycontrol recently, MMT chief executive Rajesh Magow said that the company is targeting the hotels and packages segment to contribute at least 70-75 percent of its revenue in the next 3-4 years, expressing its aggressiveness on the accommodation market.
MMT currently gets 54 percent of the business from hotel and packages and 46 percent from flights.
Besides MakeMyTrip, Oyo has smaller rivals such as Treebo Hotels that raised USD 34 million in Series C round led by Hong Kong-based investment firms Ward Ferry Management and Karst Peak Capital, just last month.
Budget hotel aggregator OYO Rooms is closing a $90-million financing round. The funding is led by its largest shareholder, SoftBank.
Budget hotel aggregator OYO Rooms is closing a $90-million financing round, according to a report by Times of India. The funding is led by its largest shareholder, SoftBank. The report claims that OYO has already received $61 million, and the rest would be pumped in soon.
In a RoC (Registrar of Companies) filing by OYO in June, the company had claimed to be raising Rs 413 crore through a proposed rights issue of shares and was also looking to buy back shares worth Rs 60 crore from certain undisclosed investors. OYO declined to comment for this story.
The report suggests that the fresh capital is going to be used to strengthen OYO’s new offering – Flagship, which leases properties and services them for better experience. Flagship has over 70 operational properties currently.
It is believed that of the $90 million, the remaining $29 million will be a mix of debt and equity. The TOI report also suggests that OYO is picking up $5-million debt financing from InnoVen Capital. Apart from SoftBank, the other key investors of OYO are Sequoia Capital and Lightspeed Venture Capital.
This $90 million is SoftBank’s second round of investment in the company. OYO Rooms had raised $100 million from SoftBank last year. Mumbai-based VentureNursery, one of its first investors, which had held a two-percent stake in OYO, exited netting Rs 60 crore in a secondary sale of shares. The accelerator had put in Rs 25-30 lakh in the company during 2012-13.
This raising of funds is to take on the other players who are entering aggressively into the space, most importantly Treebo Hotels, which raised Rs 112 crore from a round led by Bertelsmann India Investments and existing investors. Also, after facing flak from customers on the service at OYO Rooms, Flagship is expected to redeem the company’s image.
OYO Rooms had shared a report in May that claimed that the company had reached unit-level profitability, meaning, on an average, OYO makes a profit on every room sold. As of May this year, the average booking rates of the rooms range from Rs 1,400 to 1,800. Ritesh Agarwal, Founder and CEO of OYO, says that their team has delivered a 15x year-on-year growth, with 2.3 million booked room-night transactions in the first quarter of 2016.
However, rumours of SoftBank looking to invest again in OYO had been making the rounds for several months now. There also were reports of a rift between VentureNursery and other investors at the end of last year, coinciding with the news of OYO buying Zo Rooms, its closest rival in an all-stock deal. Reports suggest that Zo went out of business and could not raise funds, and when Tiger Global, its investor pulled back from India, it left Zo with few options.
SoftBank, over the course of last year as well as 2016, has pumped more than $1 billion across its Indian bets – OYO, Snapdeal, Ola, Housing and Grofers. This funding in OYO comes at a time when higher rounds seem to be slowing down and bigger ticket sizes are no longer seen. Also, SoftBank seems to be taking it easy on the investment front, after the Housing debacle.
Ritesh Agarwal, the CEO of Oyo Rooms, released a statement claiming that this 15X growth implied that the company has delivered 2.3 million booked room-night transactions in the first quarter of 2016 – this translates to more than 766,000 rooms a month.
Last week, SoftBank released its quarterly report that contained an update summarizing the state of state of Oyo Rooms, the Indian startup in which it had famously invested $100m late last year.
The slide contained the following graph claiming that Oyo has grown 15X year-on-year in the last one year.
SoftBank quarterly report May 2016 — Oyo Rooms update
Ritesh Agarwal, the CEO of Oyo Rooms, released a statement claiming that this 15X growth implied that the company has delivered 2.3 million booked room-night transactions in the first quarter of 2016 – this translates to more than 766,000 rooms a month.
All of this would have been fine if not for one little fly in the ointment.
A little less than a year back, Oyo had released a similar statement claiming that it was booking “400,000 rooms a month”!
Clearly, Oyo was either “exaggerating” the numbers then or they are doing so now.
What makes this even more interesting is a similar graph that SoftBank had inserted in an earlier report where Oyo was said to have grown a mind-boggling 34X times year-on-year with 895,000 rooms per quarter (approximately 10,000 rooms per night) for the Oct-Dec 2015 quarter.
Graph from SoftBank quarterly report — Jan 2016
But this graph is interesting for one more reason — rather than “booked room nights”, it speaks of “used room nights”.
Therein lies the tale of how Oyo is, in all probability, the startup equivalent of a Ponzi scheme!
Let’s take a step back to figure out how this scheme operates.
Contrary to this widely-believed notion, Oyo is not a “hotel chain”. Despite Ritesh’s constant attempts to position his company as “India’s largest hotel chain” comparable to the likes of ITC, Oyo is at its essence merely a hotel aggregation platform which delivers customer leads to low/mid-budget hotels. Oyo owns exactly zero hotels. Oyo operates exactly zero hotels on behalf of others. So Oyo is as much a hotel chain as MakeMyTrip is an airline company.
Oyo does do one thing somewhat uniquely — the hotels to which it routes customer leads to are co-branded with the Oyo brand. This ostensibly guarantees customers predictability and standardized room quality.
How does Oyo make money?
Traditionally, this works on the basis of commissions — a MakeMyTrip or ClearTrip kind of agent will walk to a hotel and tell him “I’ll be an agent, give me commission”. Sure, says the hotel owner. If the hotel has a good room booking system, then the agency will set it up so that they can request for room availability at any time, and they will negotiate a rate that they can use for different days. If the hotel does not, the agency will attempt to “block” rooms for certain days, adjusting the blocks on a regular basis so that the hotel can continue to accommodate walk-ins while the agency manages to book their inventory too. The commission for a booking is typically a percentage of the room rate and ranges from 15% to 30% of the total.
One big problem with this model, at least from the perspective of agents like Oyo, is that the hotel owner sees this as a purely commercial/transactional type of arrangement — a hit-or-miss “race to the bottom” business model with progressively tighter margins given the fact that there is zero stickiness and the hotel owner can tie up with any number of agents simultaneously.
To secure an initial mandate from the hotel owners around using the Oyo brand, they offered sweeteners in the form of “soft loans” (ostensibly to refurbish or improve hotel infrastructure — supply new mattresses, equip them with WiFi, new paint jobs etc) but the broad model was still the same.
Enter “Minimum Guarantee”.
To ward off competition and to build a deeper relationship with hotels, Oyo came up with a “minimum guarantee” offer.
The minimum guarantee model involves the agent committing a certain amount of business to the hotel and only taking a cut on the incremental revenue. So let’s say a hotel has 10 rooms. The agent pre-blocks say 5 rooms and guarantees the hotel owner with a certain sum of money per year for those rooms. Let’s say Rs. 4 lakhs. The agent now has to fill this inventory — if he is unable to drive at least Rs. 4 lakhs of revenue for these rooms and say does only Rs. 3 lakhs instead, he has to pay the hotel owner the difference of Rs. 1 lakh out of his pocket. If he is able to generate say Rs. 6 lakhs of revenue for these rooms, the hotel owner gets to first keep Rs. 4 lakhs and the incremental Rs. 2 lakhs is shared between the hotel and agent usually in a 70–30% split or thereabouts. So at the end of all this, the agent gets Rs. 60,000 (30% of Rs. 2 lakhs).
This is a great model for the hotel as it derisks his inventory risk and shifts the burden to the agent.
However, this wasn’t enough for Oyo to win the game.
Competitors soon cottoned on and started offering minimum guarantees to hotels and the market became increasingly crowded and noisy.
That’s when Oyo took the step that took them down the Ponzi rabbit-hole.
Take a look at the note below extracted from Oyo’s financial statement. Do you notice anything unusual?
Extract from Oyo Rooms annual report for FY 2014–15
Minimum guarantee is listed as an operating expense!
Well, ideally there should have only been one operating cost item related to minimum guarantees — “Minimum tariff loss” that recognizes the shortfall the Oyo would need to pay out of its own pocket. But the fact that Minimum guarantee itself is an operating expense implies that Oyo was not only offering such guarantees, it was actually paying these amounts up-front!
While this might seem like a harmless thing that buys hotel loyalty, it is in fact a dangerous step that leads to all kinds of perverse incentives and adverse behaviour.
Unraveling the Ponzi
The hotel owners were delighted to get this upfront minimum guarantee — not only were they derisked from unused inventory, they got paid in advance which greatly helped working capital requirements.
But it created two specific types of perverse incentives for hotel owners.
Firstly, now that they were paid in advance, they were under no pressing obligation to maintain the hotel to the standards that Oyo aspired towards — after all, even if they gave poor-quality rooms to Oyo’s customers, what is the worst that Oyo could do? They couldn’t terminate the agreement or even if they did, they wouldn’t get their investment back. So, a cursory search of any of the hotel review sites will show you a great number of complaints from consumers who got stuck with pathetic rooms that they booked through Oyo.
Secondly, the minimum guarantee was an unexpected bonus in another way. Since Oyo rarely picked up the entire inventory of a hotel and because the hotels themselves hardly had any type of dashboard that would show details of walk-ins, hotel owners could give out rooms that Oyo has already paid for to their direct customers! While in theory Oyo monitored inventory usage, in practice, they had close to zero visibility. This would often lead to situations where customers who would book rooms on Oyo finding the hotel refusing to honor the booking by claiming that they were overbooked. Again, one can see numerous examples of customer complaints of this nature on the hotel review sites.
This essentially meant that both the benefits— standardized room quality and predictability — that Oyo touted as its core value propositions were completely frittered away. Oyo had basically shot itself in the foot.
While this was a bad thing, there was something even worse.
Oyo would buy rooms at say Rs. 1,999 per night — the only way it could make any money was if it sold the same room to a customer for Rs.2,000 or more. Not only did Oyo discover that this was easier said than done, especially during lean and off-peak seasons where uptake was very low but they also realized (rather belatedly?) that these rooms have zero inventory value! If a night passed without being used, the entire Rs.1,999 was down the drain with nothing to show for it.
But if they could sell a room even for Rs. 1 per night, they could at least count this as a “used room night”. Of course, this wouldn’t make much of a difference to their revenue figures but what if they could bandy this as a metric that is shown growing up and to the right?
This imperative kicked off the fire sale — not only did Oyo offer rooms at severely discounted prices (losing as much as Rs. 1,000 on each room night as per some estimates), they literally gave away rooms for next to free! There are well-traveled stories that Oyo grew so desperate to shore up this metric that their representatives went out to local colleges and handed out coupons in the parking lot to any student couple who could use the room for as little as one hour for a session of “joint studies”! This one-hour type of booking also meant that they could potentially turn over multiple bookings per day and further boost their used room nights count (of course, some hotels refused to honor such bookings while others weren’t so puritanical).
Now, if you are thinking that all of this is fine (maybe unethical on multiple fronts but not illegal) but how exactly does it constitute a Ponzi?
Let’s take a step back and revisit what the metric “booked room night” means. It implies a transaction where a hotel room night was booked. But nowhere does this guarantee or explicitly say that the room was booked by an actual customer. So a minimum guarantee paid upfront is also technically a room booking in itself!
So we have a potential situation where Oyo could be selling zero rooms but could still tout a huge count for booked room nights because…they are buying the rooms! This essentially means that they could be touting traction not on the basis of SKUs that they sell but those that they — a bizarre turn of events that gives the phrase “buying traction” a completely new spin! This also means that forget about having negative gross margins, we could potentially be looking at a situation where a product has a negative selling price!
Admittedly, there is no way to know for sure whether the numbers reported by Oyo fall in this hoary category but the point is that Oyo is now reporting vanity metrics that can stage-managed and gamed in any which way they choose and quite easily at that. While vanity metrics are bad for a number of reasons, in most cases, they are at least directionally correct but in this case, there is hardly any correlation.
The teenage boy – Ritesh Agarwal is the Founder & CEO of OYO Rooms – fastest growing Branded network of hotels offline & online.
The teenage boy – Ritesh Agarwal is the Founder & CEO of OYO Rooms – fastest growing Branded network of hotels offline & online. With a current valuation of nearly 360 Cr, OYO rooms does nothing out of the box but provides travelers the coolest yet cheapest efficient, young, standardized rooms with no add-ons attached to it!
Ritesh Agarwal (born 16 November 1993) is an Indian entrepreneur and the founder and CEO of OYO Rooms. He started his business career at age 17. He is the first resident Indian to win the Thiel Fellowship. More recently, he was named by Forbes in its “30 Under 30” list in the consumer tech sector.
He was born on November 16, 1993, in Bissam Cuttack and was raised in a middle-class Marwari family. His father works with an infrastructure corporation and his mother is a homemaker. He has three siblings.
He went to Sacred Heart School in Rayagada, Odisha. After finishing class 12th, he enrolled in Indian School of Business & Finance, Delhi. However, he didn’t continue with his college education and dropped out to start his own company without his family knowing of this move.
He has often talked to the media about how he was scared of his parents getting to know that he has dropped out of college. In an interview with the Economic Times, Agarwal said, “When the newspapers started reporting it. My dad came to Delhi and was perplexed to see the office. It took me a day to convince him. My mom was very unhappy because she felt who would take me for a groom? You needed to be at least a graduate.
Professional Life
In 2011, Ritesh moved to Delhi with intentions of starting up something of his own and at the same time to prepare for SAT to move to the US for further studies.
Now, money back then was not a problem for him because he had savings from Kota and the pocket money was good; roughly Rs.15,000 for a month.
But fortunately or unfortunately, SAT never happened. Hence, he used to do nothing but meet and read about entrepreneurs, start-ups, businesses, and especially Airbnb!
Now, Ritesh during his days had seen and always felt that budget hotels in India didn’t even meet the very basic needs of a budget traveler. Hence, capitalizing on this opportunity, he started his first venture in 2012 – Oravel Stays! It was an aggregator of bed and breakfast stays across India.
In simpler terms, it was meant to be destination for short and midterm rentals for bed and breakfast joints, private rooms and serviced apartments.
In a matter of no time, he also secured funding of Rs 30 lakhs from VentureNursery, an accelerator firm which brought together a bunch of storied investors to nurture start-ups.
With sufficient money in his pockets, he started working on his new found interest and at the same time, he also presented his idea at the Thiel Fellowship – a global contest intended for students under the age of 20. He managed to reach amongst the top ten winners who received a sum of $100,000 [over two years (about Rs 2.7 lakhs / month)] as well as guidance and other resources, to drop out of school and create a start-up, from PayPal co-founder and Facebook investor – Peter Thiel.
And as a last resort Ritesh tweaked his present business model and in 2013 re-launched Oravel as “OYO Rooms”.
OYO means “ON YOUR OWN”
OYO Rooms was nothing but an idea to create India’s largest chain of efficient, young, standardized rooms with an intention to build the coolest chain of no add-on rooms which might not have Spa, Gym etc like the star hotels but will live upto the basic standards & high expectations for prices like never before. OYO’s team would visit the place, audit the hotel to understand the changes that would be required to standardize the property as per OYO standards, and shares the same with the hotels.
What motivated Ritesh even more was that, by now the company was clocking gross bookings of more than Rs.1 Cr. per month.
Since then; OYO Rooms has gone on to become India’s first technology driven network of standardized branded budget hotels and has also widely expanded its presence to 350+ hotels and more than 4000 rooms in 20 cities like Delhi, Gurgaon, Noida, Bangalore, Mumbai, Pune, Goa, Jaipur, Hyderabad, etc, and also aims to expand further to 1000 hotels in 25 cities by 2015 end.
Additionally, their OYO Rooms mobile app has been downloaded more than 160,000 times and more than 20,000 bookings have been made so far. The app ranks amongst the best-rated apps on Google Play Store and has also been listed as one of the top three apps in the ‘Travel & Local’ category.
Awards And Recognition
First resident Asian to win Thiel Fellowship, 2013.
Top 50 Entrepreneurs in 2013 by TATA First Dot powered by NEN Awards.
Named as one of the ‘8 Hottest Teenage Start Up Founders in the World’ in 2013 by Business Insider.
TiE-Lumis Entrepreneurial Excellence Award in 2014.
According to a report shared by the OYO Rooms, SoftBank-backed budget hotel room aggregator OYO Rooms said it has attained profitability at an aggregate level, which means, on an average, they are making profit on every room sold.
According to a report shared by the OYO Rooms, SoftBank-backed budget hotel room aggregator OYO Rooms said it has attained profitability at an aggregate level, which means, on an average, they are making profit on every room sold.
Oyo Rooms claimed that it was operationally profitable until June 2015 before it went for expansion but regained profitability at a network level from February 2016, as per a statement.
Ritesh Agarwal, Founder and CEO, Oyo Rooms said,
“Our team delivered 15 times year-on-year growth with 2.3 million booked room-night transactions in the January-March 2016 quarter while our gross merchandise volume (GMV) continues to grow every month. Over 95% of the traffic comes from our own sales channels such as app, web and call centre”
Gurgaon, Delhi, Hyderabad and Kolkata have been among the cities which have been driving profitability for the company. The firm aims to triple its inventory by December 2016, he said.
Ritesh credited the profitability to OYO’s innovating revenue-sharing models, a deep understanding of markets, to enabling new demand growth channels, and a strong data science driven approach to control occupancy and room pricing.
In April this year, Oyo Rooms had raised $100 million in its fifth round of funding from existing investors including Japan’s Softbank, and an international sovereign fund. The startup, has forayed into south-east Asia through the launch of its operations in Malaysia.
Founded in 2013 by Ritesh Agarwal, Oyo rooms is one of the largest aggregator in Hotel rooms in the country. The company has already raised a total of $125.65 million in four rounds.
In February 2016, OYO Rooms had acquired Tiger Global-backed smaller rival Zo Rooms in an all-stock deal.
This article was originally published in KnowStartups
