In conversation with Maninder Gulati, Chief Strategy Officer, OYO, who shares his views on franchising and how has it boosted the business.
A cluster of media houses were busy in following a trend set by the leading newspaper about change in the business model of hospitality venture OYO from aggregation to franchising. Maninder Gulati, Chief Strategy Officer, OYO, clears the air on the whole controversy in an exclusive interview with Indian Retailer.
Aggregation is a small word for a billion-dollar brand like OYO. “We scaled our business within a short span of time which has motivated other people to follow our business model, terming it as an aggregation.” However, the company refuses to have a specific business plan and has been running on strategies that fit its bills. “In conventional words, aggregation was a part of partial inventory business, which ended just 14 months ago,” he added.
What is the business strategy that has made this brand so popular?
The OYO business is not confined to OYO Rooms there are other ventures like OYO Town House and OYO Homes. The organisation has franchised 3000 plus and adding up 400 each day.
Our primary goal is to build our brand in the hospitality sector for which we polish every property as per market standards. Based on the customer feedback, OYO has been consistently auditing all its hotels every week. In short, we drive, standardise and distribute these hotels. After the China players, we are the first ones to bring more than 95 per cent of the business via our own platform, which is an app, web and the offline network.
Currently, 95 per cent of our business is based on the franchise model. We have manchised about 500 properties where we actually provide our hotel manager. It’s a franchise plus-plus where the hotels are not just getting our esteem brand but operating standards, a channelized revenue model, and a team that actively participates in the distribution.
What is the criterion for becoming a franchising partner with OYO?
In order to enter into the OYO family, a hotel has to meet certain basic criterion falling under the realm of infrastructure, legal aspects, staff, and services. Firstly, the hotel should at least be a four-storey building with 12 to 15 rooms. Secondly, the property should not be tainted in any disputed legal record. Thirdly, the room services and staff should complement Oyo standards with perfect housekeeping and kitchen service as well as sufficient staffing size at the front office.
What kind of support and training will you offer them?
Today, we have more than 50000 club keys in more than 3000 hotels on full inventory basis. We add around seven thousand seats on a monthly basis. We assist these properties in transformation, standardisation, distribution, and required fixation in their revenue model. We fetch more than 95 per cent of the consumers via OYO app. In fact, our entire organisation is built around an app; we provide a number of apps to our partners, including the property’s app, an integrated booking app that connects the entire OYO family; the owner’s app, one-stop app that helps in regulating the business on a daily, weekly and monthly basis. It is a franchise plus-plus model as we introduce hassle free and innovative tools like ‘OYO Captain’ that analyses customer feedback, helps in auditing and customer servicing.
Moreover, we go out of our way to support our partners in revenue management. The entire online team come forward to work with partners like booking.com, Paytm in order to generate as much business as we can. The model runs on a combination of a lot of data sciences, pricing algorithms, distribution strategy platform which expedites the whole process of the business.
Furthermore, we are the first ones in India to introduce the manchise model which allows us to deploy our staff in the hotel. We also run an OYO skilled institute to train our staff.
What is the minimum investment you expect from a hotel?
We will take 20-25 per cent of the total business we have generated for a hotel. Instead of breaking the money into bits and pieces, we take a lump sum amount and we spend 300-400 dollars on renovating a room.