OYO makes room for different segments

With an eye on netting multiple customer segments across the country, online budget hotel-room aggregator OYO Rooms is going aggressive with the launch of two new categories this year — OYO Homes and Studio Stays by OYO.

With OYO Homes, the company is tapping into the growing number of travellers who prefer home stays that offer a local flavour of the destination in terms of cuisine, experiences and location.

With Studio Stays, the company is looking to tap into another growing segment of students who travel for internships, college admissions and entrance tests; as well as first jobbers who need a decent place to stay while they look for homes to rent or buy in a new city.

“We have been experimenting with home stays since March this year in popular locations around the country such as Coorg and Delhi, and have recently partnered with Madhya Pradesh Tourism and Uttarakhand Tourism for home stays which will be co-branded with home stay owners as OYO Homes.

“We are also looking to offer niche experiences to specific customer segments such as students who are on internships and working professionals moving to a new cities, with Studio Stays, which are priced upwards of ₹7,999 per month.

“We launched this in summer and saw a flood of guests in the North-East, Bengaluru, Kochi and Delhi,” Ritesh Agarwal, founder and CEO, OYO Rooms told BusinessLine .

Asked about OYO’s aborted plans to close its acquisition of ZO Rooms, another player in the budget-hotel aggregator space, Ritesh said: “We are still having conversations with ZO; I can’t comment on specifics.”

OYO, whose flagship brand continues to be OYO Rooms with a price proposition of ₹999-1,499, entered the premium segment with OYO Premium rooms priced ₹1,500-3,500 last March, in a move to garner larger wallet share from customers.

Today, Premium rooms constitute 25 per cent of OYO’s rooms, and in the next 12 months, is expected to contribute 20-25 per cent to its overall revenue. “All this, without any advertising; people just discovered it on our site.

“We recorded maximum number of Premium room bookings at pilgrimage destinations, where there are no branded hotels.”

Asked about OYO being in danger of diluting its core proposition by forging partnerships with various brands, Ritesh said: “We continue to be focused on our core offering. The time spent and the cost incurred with these partnerships are very limited because we have an open-source API that we can give to partners, just like Uber and Ola have done, where anyone can start selling OYO from their website in 24 hours.”

Stating that partnerships are focused on three core offerings to customers — availability, predictability and affordability — he elaborated: “We are making sure that we are available to everybody with our partnerships, IRCTC, OTAs, Thomas Cook. To deliver predictability, we have partnered with Biotique for in-room toiletries, Airtel for Wi-Fi and DTH, and small laundromats in cities to provide clean linen in our rooms.

“To provide affordability, we have made a few acqui-hires such as a data analytics firm to help us deliver the cheapest room prices in every town.”

Achin Khanna, Managing Director, Consulting and Valuation – South Asia, HVS, said there are 1 million hotel rooms in the country, of which 1,20,000 are branded, including both global and regional brands.

This number does not include the new age, tech-enabled branded hotels such as OYO, ZO and others which are targeted at the large unbranded segment, which constitutes 88 per cent of the total available hotel rooms in India.