SYMBIOSIS INSTITUTE OF MANAGEMENT STUDIES

ENTREPRENEURSHIP ASSIGNMENT
OYO ROOMS

Submitted to: Dr. Amit Agrawal

Submitted by:
Tanmay Bhagwat D - 56
Umang Tiwari D - 57
Shobit Kumar D - 52
 OYO ROOMS

OYO ROOMS FOUNDER: RITESH AGARWAL

HISTORY:
To become an entrepreneur and follow is passion, Ritesh Agarwal enrolled himself in School
of Business and Finance, Delhi. To achieve his dream, he left the college in the midway of
his course and started this venture. Oyo Rooms has been a very successful start-up. It has the
largest budget hotel chain with tie-ups with 500 hotels across all India and about 50000
rooms.
Oyo rooms has been able to tackle the issue of affordability, availability and cleanliness of
hotels across tier-1 and tier-2 cities in India. Initially, he launched a company named Oravel
Travels at the age of 17. This company was followed the business model of Airbnb. The year
he launched Oravel travels, he was nominated for Theil Fellowship. The fellowship was
designed by the founder of PayPal, Peter Theil. Oravel Travels received a sum of hundred
thousand dollars so that he could pursue his entrepreneur dream.
From December 2013 for the coming ten months, Minimum standardization of hotels was
done to meet the customer requirements. Auditing requirements were fulfilled by oyo rooms
and were done in every 2 days by the company using the mobile app, which is geo-location
and room focused with real-time images. Continuous improvement was possible when the
company was able to to compare the audited results and the customer feedback which was
given to them. The model stands disrupted in the market saturated with travel agencies,
making the start-up to scale rapidly to more than 2,500 hotels in 125 cities across India in just
one-and-a-half years.
Unlike its service, the margin for OYO Rooms from every hotel is not standardised. It earns
1ten to fifteen per cent from high-street locations where visibility is important, twenty five to
thirty per cent from midstreet locations and 40-45 per cent from low-street locations.
However, the startup ensures that every hotel earns at least 1.5 times of profit that they could
have earned by renting the place. But how does OYO Rooms maintains that at such lower
price points? To this, Agarwal replied that, We drive 90 per cent of the business to hotels
since it is about occupancy or volume. For example, Indigo charges much lesser than other
airlines because it runs at 85 per cent occupancy. Currently, we are close to $100 million in
yearly run rate.
Agarwal used to take a day out every month travelling to any random city checking out hotels
and meeting the local people. Since his age was very less, people never realized that he is a
owner of a company with fifteen hundred people as employees. so a housekeeping guy or
a chef whom I talk to also feels that I do housekeeping or cooking. But in reality I do such
things like housekeeping once a month at some of our hotels or parking cars as valet. The
good part is that I dont look like neither I tell them about my identity, says Agarwal with
confidence.
TRENDS OBSERVED BEFORE THE VENTURING:

Before Agarwal ventured into Oyo rooms, following trends were observed which helped him
shape his business model:
Eased restrictions on the construction, meaning that more such budget hotels could
now be constructed.
The preferences of guest were evolving with time which in turn could be implemented
easily in budget hotels.
With the coming up of digitization age, people do not prefer to go to a hotel and then
book a room. This also involves careful inspection of the room before the customers
are sure of it. This happens mostly with unknown hotel brands.
Ola model by then was a successful model and trend of booking cab through mobile
was on a roll. This inspired Ritesh Agarwal to implement a similar model.
By then, traditional lodging types were existing with shared economy and apartment
rentals.
Hotels were realizing that a decorated lobby is not enough to gain the loyalty of the
customer. Free wifi or internet access became a never ending need.
Irrespective of the scale of operations of the hotel, mobile enabled front desk will
undo the restrictions that usually hotel management software possesses.

Problems identified before venturing in the opportunity

Ritesh Agarwal started OYO Rooms at the age of 19. Ritesh has travelled all over the
country at a very young age and throughout his travelling days he faced many problems in
country when it comes to hotel/lodging services. The main problem that he realized was there
in market was the absence of affordable yet standardized accommodation. Large hotels are
standardized but not affordable, whereas budget hotels usually lack standardization. Ritesh
explains that this is problem that is not only limited to India but globally. When Ritesh
witnessed this accommodation related problems again and again he decided to do something
on this front. First was the birth of Oravel Stays. Oravel was the Indian version of Airbnb.
Running Oravel Stays, Agarwal had stayed at bedand- breakfast serviced apartments every
day, mostly in Gurgaon and realized that the challenge was not about finding affordable stays
but the lack of standardization. Ritesh narrates his own experiences. Below is a small
statement of his which shows the real picture of the market much before OYO was there
My experience as a customer was very bad. You call the hotel owner, he wont answer, you
reach the hotel but you find doors locked, you get in the hotel and find receptionist sleeping,
switchboards in the room not working, washroom has water leakage, and so end-to-end
experience was broken. Globally, no one took the pain to standardize this,
This is not what only Ritesh faced. This is something that every common man faces when
he/she heads out to a different city. While this is the problem that led to the start of OYO
Rooms, other problems helped in customizing and developing OYO Rooms which indirectly
made customer the boss. For example another problem that Ritesh and many others for that
matter used to face was the absence of feedback of the customers who have already used the
service. How important the feedback is can be understood by taking one example given
below
Lets say that there are 2 hotels at a location. Hotel A & B. Again there are two
customers say X & Y. Customer X once stayed in Hotel A and his experience was horrible.
Bad service, below standard food, absence of anything exclusive in room etc. At the same
time customer Y was staying at hotel B. Experience of customer Y was very pleasing. He
experienced very good service, hygienic and tasty food and very elegant accommodation.
Now both of these customers have made their mind for the accommodation choice for their
next visit and wish to convey this to others as well. But because of the absence of proper
feedback system they cant and hence many more customers probably would end up staying
in Hotel A instead of B
OYO resolved this by giving proper feedback system on its platform both for Hotel and
Customer. In this way both the parties can give feedback for each other so that others can
decide accordingly.

Gaps identified before venturing in the opportunity

Mr. Ritesh Agarwal comes out very candid when he is asked the gaps he identified before
venturing in the opportunity. As per him majorly he spotted below given 2 gaps before
starting OYO Rooms
(a) Gap between consumer expectations and consumer perceptions
(b) Gap between the idea creation and the realization that nothing can be done
without a good team (basically nothing can be done alone)

Mr. Ritesh realized that what consumers are expecting are many times no getting fulfilled
because of lack of their access to all the options. Had the consumers had access to all the
options they would have always selected the best of all which would have driven the market
players to automatically upgrade themselves.
With this Ritesh knew that nothing can be done alone and there is huge gap between what he
is planning and what actually can be implemented with him working alone. To tackle this he
got some of Indias best (in their field) individuals in the core team. Like to manage the
supply side (registering new hotels and lodging facilities with OYO) he brought Mr. Anuj
who now heads the supply nationally. Second individual hired as COO of OYO was Mr.
Abhinav who at that point of time was running the largest factory of largest consumer goods
company in India. he had the analytical view of a young age start-up which is going to have
extremely efficient processes but also had the ability to sort of marshal a large team along
with him to ensure that the quality of experiences is right in every form across the experience.
Likewise more such talents were recruited and soon the core team built up as one of the most
talented core team of a startup this country had ever seen. Results are in front of everyone
now.
Personal Characteristics of the Entrepreneur: Ritesh Agarwal

Ritesh Agarwal is owner of Indias biggest Internet platform to book rooms online: OYO
Rooms. He has been sensational as his idea has been unique and novel i.e. to provide
mid-range priced rooms to middle class in India. There was a time when nobody thought
booking rooms online would be so hassle free. Credit goes to him. He has an innate talent
of understanding the business. The business partners and even the angel investors who
have been associated with him in past has said that he has an ability to FOCUS on the
minute details of business. This is indeed a vital quality one should have to become a
successful in life, especially when it comes to business one should be focused in whatever
one does.
He brought change in the way people thinks and hence in their lives. He worked hard to
create ideas from his mind to make change peoples lives. Before venturing into OYO
rooms as he was operating his Oravel business and he had to stay in 100 different
locations and found out that the main problem with hotels is not the finding out of it but
to predict what sort of experience this hotel might give. He worked on this and came up
with OYO rooms.
He is a fighter. There was a time when he faced so many problems that his family called
him and asked him to come back to home. He never wanted this to happen, and he didnt
even give up till the last hope. He had strong hope that the model will succeed in future.
He had a time when he had to sleep on stairwell as well, but he didnt give up. This shows
how dedicated and optimist person Ritesh Agarwal is. He is very humble and very agile
in his approach. Being humble removes barriers between where one is and opportunities
waiting. Its just one being humble and ground to earth. Almost all Silicon Valley Leaders
are very humble as stated by Ritesh, this makes him even more humble. He believes in
this world of changes, one has to be ready for changes and should be agile to work with
the change and find out solutions to it.
He is a person who looks at a large picture, bigger picture. He strongly believes if you can
hold with larger picture, things fall in place for you. It is not advisable to waste time on
trivial things. He believes that hiring best talent is important and then your work gets
solved easily. This shows he is a true leader who focus not only himself but also believes
in others potential as well. He wishes to expand the supply of business and continue
providing customers more initiatives to attract them and better customer experience. He
coups with criticism with a positive outlook. He believes that positive criticism is good,
initially it causes regret but it also gives a sense of introspection where we can find where
we went wrong and do well
At last he is a family man. Inspite of busy schedule, he visits his family often. This shows
he is a family man and he has compassion in life.
Porters 5 Forces Model for OYO ROOMS

Industry
Rivalry

Bargaining Bargaining
Power of Power of
Suppliers Customer

Threat of Threat of
new Entrants Subsitutes

Bargaining Power of Suppliers: It is relatively high as they are main source of business
for OYO Rooms. They ask them certain prices and make sure that their rooms are
occupied throughout the month. The cost of switching the suppliers is low as they target
only zero to 2 star hotels and give a restructured facility for their customers.
Bargaining Power of Customers: As always said customer is a bread winner for any
industry, they never make a customer unhappy. So the customers can bargain with the
OYO Rooms, and they come up with new options which suits Customer needs. As the
customer base is huge for OYO and increasing, they allow user to gain incentives and
cashbacks.
Intensity to Existing Rivalry: Relatively few competitors in the sector as the less number
of firms are in the completion and doing same sort of work. The industry is growing at a
rate of 15% per annum which is a healthy growth rate. The strong brand image is main
reason OYO is getting well in the sector.
Threat of Substitutes: As the product and services offered by OYO are on very different
lines, they have substantial product differentiation. Limited number of substitutes is also
favouring OYO to remain in business.
Threat of New Competitors: This industry involves low barrier to entry. OYO has very
well defined distribution network and it affects them positively. The strong Brand is
advantage for OYO to stand in the competition. This is a big factor in their success.
Value Ritesh Agarwal Delivering to various stakeholders is to remain focused in what
you are doing and be ready for criticism. He takes criticism in a positive manner. He is
also very meticulous to his work and makes sure that the business provides its customers
the expected or desired experience once they enter into OYO ROOMS.

References
www.oyorooms.com/team
www.wikipedia.com
www.entreprenuer.wiki/Ritesh_Agarwal
articles.economictimes.indiatimes.com
biogtime.com
www.livemint.com