How to Compete with OYO: Strategies for Success

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A red sign with
A red sign with "OYO Hotel" stands in front of a parking lot, with trees and a blue sky with clouds in the background.
This isn’t just a success story; it’s a master class in strategic innovation and courageous entrepreneurship. Let’s explore how OYO reinvented hospitality and discover the globally applicable expertise in business.

1. The Unlikely Journey from SIM Cards to Hotel Rooms: OYO’s Origins

Earning one lakh a month sounds like a far-off dream at the young age of eighteen when most are struggling with college applications or their first steps into adulthood. However, what if that was only the start? It was for Ritesh Agarwal. It is quite amazing how far he has come from selling SIM cards to leading OYO, a business with a billion-dollar valuation that spans several countries.

 

2. The Birth of OYO: Filling a Gap in the Market

Adversity mixed with ambition in Ritesh’s early life. While seeing India, he came upon one major problem: there weren’t many good, reasonably priced places to stay. The cheap hotels were miserable, while the good ones were expensive, and not very usable. This gave rise to an idea. His laboratory was a small hotel in Gurgaon with a low occupancy rate. After making a ₹35,000 initial investment, he converted it into an OYO establishment that charges ₹999 for rooms. What was the outcome? 90% occupancy was attained. People desired excellence without having to pay a high amount for it.

3. OYO’s First Strategy: Reliability as a Service

Have you ever ordered a burger and got just the patty? That’s how unpredictable budget hotels were before OYO. Ritesh introduced the ‘OYO Standard’ – a promise of essential amenities across all properties. This included:

  • Three-click booking: Effortless reservations.
  • Spotless linens: Guaranteed clean sheets.
  • Complimentary Wi-Fi: Stay connected on the go.
  • Functional AC: A respite from the heat.
  • Early check-in: Convenience at its best.

This predictability became OYO’s hallmark, ensuring guests knew exactly what to expect.

4. Mastering the Value Life Cycle: OYO’s Blueprint for Success

A value life cycle is a journey from product creation to customer delight. OYO’s version involved signing properties, standardizing them to meet OYO’s benchmarks, and ensuring stellar service post-sale. Two critical tasks within this cycle demanded extra attention – and strategies.

A multi-story building with a prominent OYO sign, palm trees in front, and various shops at street level under a clear blue sky.
A multi-story building with a prominent OYO sign, palm trees in front, and various shops at street level under a clear blue sky.

5. Technology Meets Hospitality: OYO’s Stakeholder-Centric Approach

Key stakeholders are the heart of any ecosystem. For OYO, these were hotel owners, staff, and customers. Everybody had different needs:

  • Hotel Owners: Desired more revenue.
  • Staff: Sought ease of work and respect.
  • Customers: Wanted quality stays at fair prices.

OYO built a strong IT infrastructure to manage these efficiently. Using the Crypton App, cluster managers managed operations, and hotel partners had access to technology for smooth management. The app for customers? It has a standard design that is easy to use.

6. Scaling New Heights: The Playbook Strategy

While competitors took months to acquire properties, OYO did it in days. The secret? Playbooks. These detailed guides allowed rapid scaling, propelling OYO’s growth to dizzying heights.

7. Closing Loopholes: OYO’s Pivot to Franchising

Initially, OYO’s model had a flaw. Some hotel owners gamed the system for profit. By 2018, OYO pivoted to a franchise model, taking a commission and securing profits while maintaining affordability.

8. The Secret Sauce: Motion Study & Self-Esteem

OYO’s lesser-known strategy draws inspiration from Frederick Taylor’s scientific management principles. They eliminated unproductive motions (like full-service kitchens) and minimized incidental ones (with the introduction of OYO toolkits). These toolkits saved time and acted as marketing tools and self-esteem boosters. Sharing discount coupons from the toolkit made customers feel good, creating a positive feedback loop.

9. Lessons from OYO: Business Insights for Every Entrepreneur

What lessons can we draw from OYO’s explosive growth?

  • Become a Subject Matter Expert: Dive deep into customer pain points.
  • Build a Scalable Proposition: Identify processes that can be replicated quickly.
  • Find Errors in ‘Error-proof’ Areas: Constantly seek improvements, even in seemingly perfect systems.

 

Conclusion: Embracing the OYO Mindset

From a teenager selling SIM cards to the head of a global empire, Ritesh Agawam’s journey is a testament to innovation and adaptability. OYO’s story isn’t just about rooms and revenues; it’s about understanding human needs and harnessing the power of predictability, technology, and strategic thinking. Whether you’re an aspiring entrepreneur or simply looking to enhance your business acumen, there’s a page to take from OYO’s playbook.

 

Q/A Section

Q1: What was the key factor in OYO’s initial success?

A1: OYO’s initial success hinged on providing predictable, quality accommodations at affordable prices, filling a significant gap in the market.

Q2: How did OYO use technology to its advantage?

A2: OYO leveraged technology to streamline operations, improve stakeholder experiences, and facilitate rapid scaling of their business model.

3: What unique strategy did OYO employ to boost customer satisfaction and branding?

A3: OYO introduced toolkits containing essentials and discount coupons, saving staff time and boosting customers’ self-esteem when they shared those benefits with others.

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