Disrupting The Hotel Business Thro' Technology: DR Amit Rangnekar

Disrupting the hotel business thro technology
Dr
Amit Rangnekar
www.dramitrangnekar.com
Quiz
Q:
Indias largest branded hotel chain?
A1 Taj
A2
Oberoi
A3
Leela
A4 ITC
A5
Other
Case learnings
E
xecuting a smart idea to deliver India's largest branded network of
hotels through disruptive technology
C
overage
Aggregation
Disruptive innovation
Brand building
Scalability
Alliances
Services
Disruptive technology and

innovation
Technology
creates a new market and value network, disrupts an existing market,
value network and an earlier technology
Reduced
B2C transaction cycles
Innovation
driving UX design
Executionefficient technology, high CAC, valuation
Flipkart,
Lenskart, BabyOye, Pepperfry, Ola / Uber, Redbox/ IRCTC/
Makemytrip, Bookmyshow, Zomato
OYO Rooms
I
ndia's largest branded budget hotel chain
1
53 cities, 3000+ hotels, 50,000 rooms
O
nline 'hotel' marketplace aggregator of branded budget hotels
Founded to solve the problem of the lack of predictability,

affordability, accessibility and availability at budget stays
Potential
415m
Indians travel every year

Budget
accommodation- 1,00,000 hotels, 1m unbranded rooms, $10b

Unlock a
new set of travellers

Sharing
economy
In
smaller towns, people check into OYO hotels when power supply goes down
at their home our hotels guarantee air-conditioning; younger Indians check
in to budget hotels because they dont want to go home drunk Kavikrut, OYO
Porters 5 Forces- Hotels
IndustryAttractive
To New Entrants- High

No entry barriers, funded
Scale, promotion challenges
No pricing power
Competitive Rivalry
Bpo Suppliers-Low
Fragmented
Common products
First mover
Fragmented budget segment
Huge demand, competition
Lack standardisation
To Substitutes- Low
No switching costs
Bpo Buyers- High

Choice
No differentiation
Low loyalty
Founder
R
itesh Agarwal, CEO, b1993

B
usiness at 13, Oravel, OYO at 18

C
ollege dropout entrepreneur

Think out-of-the-box
Get things done
Make a difference
Fun-is-work
Entrepreneurship Insights
I dropped out of college within days of joining because I felt
attending classes would slow me down from doing what I
really wanted to do - building my own start-up. Huffington
Post
Newspapers started reporting my success. My parents were

disappointed to know I dropped out as they felt I would be
an ineligible groom without graduation
Oravel Stays
As a student travelled and stayed at
over 100 budget hotels
Difficult to get a pleasant and
reliable consumer experience
2012, Oravel (Airbnb model)
Connect budget travellers to
affordable BnB in major cities
Quality and standards- no
guarantee
2013 BnB aggregation cant solve
budget travellers issues
The Thiel Fellowship

2013, 1st Indian Thiel Fellow
Pay Pal founder, Peter ThielFacebook, Tesla investor
$100,000 fellowship for 20
people every year
Eligibility- college drop-outs
U-22 years to pursue their idea
Mentorship, network of
techpreneurs, investors, scientists
Learnt value of solving a big
customer problem creatively
OYO- Founding idea
Delivery
Solution
Create online
Provide
network,
predictable, reliable
standardised,
standardised
service standards,
reliable, buget hotel
service- so
budget hotels dont
service, xp
travellers know
Need
Star hotels deliver
budget hotels
what to expect and

get
Business Model
Aggregator, asset-light- no
ownership, investment, inventory
Disruptor for traditional capitalweighed-down hotels
Adopt hotels into its fold, set
standards- services, staff
Sell rooms under OYO brand, share
revenues with hotels
App-based booking, services,
seamless UX
Eminently swift-cash, faster
revenue realization
Traction- list with travel
aggregators / discovery platforms
Selecting and managing Partners

OYO studies supply side data not
demand- Do hotels need us?
Owners- emotionally attached,
unprofessional, funds dry
OYO Compatibility playbook- partners
approval guideline
Audit unbranded hotels- owners, UX,
infrastructure, service
OYO- technology, quality, service
training
Partners- networked, assured
bookings, visibility, high yield
Minimum 10 rooms guaranteed + app
bookings
Controls
Hotel management hands on, OYO
value adds
30 point touch point auditservices, supplies, standards
Clean rooms, comfortable bed,
cleam bathrooms, linen, attached bathrooms, bed, AC, LCD TV, WiFi, complimentary breakfast,
branded toiletries, 6-inch shower heads, F&B
Audit- >3 negative feedbacks
(reliable), terminate
Ritesh Agarwal visits a OYO hotel
twice every week
Funding
2012-13 Incubation- $50,000
VentureNursery
Dec 2012 Thiel Fellowship $100,000
(65L)
Jul 2013 Seed funding Lightspeed,
DSG
May 2014 $650,000 (4cr) Sequoia
+ Lightspeed
Dec 2014 $25m (162 cr)
Lightspeed, Sequoia, Greenoaks, DSG
Aug 2015 $100m (Rs 650 crore)
SoftBank Group
Invested in- technology, marketing,
quality standards
Talent
2013- 3 people to 2015- 500
Employees- Harvard, IIT, ISB,
IIM graduates
25- average employee age
Hire people better than you,
freedom to contribute
Talent- e-commerce,
technology, consulting, hospitality, travel
Teams- marketing, supply,
transformation, sales, HR, product, IT, reservation, operations, finance
Technology
Resources
Reach
Scalable model
Direct
Other hotel
Indirect
Organised
aggregators
hotels
Unorganised
hotels
Government
TDC
Clubs
Broad
Internet
Video
conference
Aggregators
Hotels
Stayzilla $20m- Nexus Ventures
ZO rooms $45m- Tiger, Orios, Sol Primero
Treebo Hotels $6m- Matrix, SAIF, Jun14
Wudstay Hotels $3m- Mangrove, Nimbuzz, Jul14
Fabhotels ($5m), Zenrooms ($10m), V resorts ($2m), Roomoncall

($0.3m) E-travel- Goibibo- GoStays; Yatra- TG Rooms, TG Stays;
MakeMyTrip- Value+
Hostels- Zostel
Vacation home aggregators- Tripvillas, Roomnhouse,

Guesthouser
TOI 25Sep15 http://timesofindia.indiatimes.com/tech/tech-news/Startups-give-low-cost-hotels-in-India-amakeover/

articleshow/49101035.cms
http://inc42.com/buzz/how-oyo-is-building-an-empire-room-by-room/
Key competitors
TOI 25Sep15 http://timesofindia.indiatimes.com/tech/tech-news/Startups-give-low-cost-hotels-in-India-a-makeover/articleshow/49101035.cms
OYO M&A Zo (ET 17Dec15)

Al stock deal,
no liability of Zo dues, absorb 40% employees

Zo founders /
investors 7% stake in OYO (Parent Zostel)

Zo
cashstrapped, unable to raise fresh capital

Zo 11,000
rooms, 1,000 hotels, 50 cities

OYO- extend
dominance
Online travel
agencies blocked budget-hotel aggregators
Zostel
Aug13 IIM/IIT graduates- Rs 20L-affordable
backpack/ youth stay
Founding idea- EU youth hostels VFM, need
gap in India, leased
@4-500- dorms/ bunk beds, 1-3500 AC/ non
AC rooms for 2
USP- `experience- clean, lively- laundry,
internet, library, gaming
2015- 20,000 backpackers, 10 locations (1
Vietnam), 1.5cr sales
Funding- 5 cr Presha (Malaysia), expand
India, SEA, EU
65% foreigners+ 35% Indians, new segmentsolo female
Growth- geographies, franchising, social
media, reviews, Wom
Corporate Level
Organic
Diversification
Alliances
Aggregating partner budget

hotels
M&A
Integration
Divestment
Business Level
Differentiation
Standardised service
Cost Leadership
Focus
Hotels
Scale
All India
Innovation
First mover, disruption
The disruption
Organised
Hotel Chains
E-Travel SitesMakemytrip,
Cleartrip, Ibibo
Unorganised
Hotels
Unorganised
Lodges
Hostels
Tour operators
Organised
Budget Hotels
BnB, Homestays,
Vacation stays
Strategic groups
Predictable Service Experience

Taj ITC Oberoi Lalit Leela
Intercontinental
Marrio Hilton
tt
Holiday InnCarlson Starwood
Best Western Accor
Price
Ginger
Stand Alones
Lodges
Small Hotels
Kamats
Perceptual map
Predictable Experience
Taj
ITC
Intercontinental
Oberoi Leela Marrio

tt
Hilton
Lalit
Luxury Carlson Holiday InnStarwood
Ginger
Accor Best Western Kamats
Stand Alones
Lodges
Government Tourist Complex
Unpredictable Experience
Budge
Target Segment
Segment
Business
Leisure
Pilgrimage
Luxury
Upscale
Midscale
Budget
Economy
OYO Rooms
Travel
Target consumer behaviour

Convenience seeking
mpatient
Need immediate
response
onnected
Value seeking
Willing to pay
ising expectations
poilt for choice
Value Pricing
s 999-4000
5% lower than similarly-spaced hotel rooms
FM- reliable service, comfortable and predictable stay
Reach- 153 cities
OYO Technology
C
ustomers- efficient hotel booking app
H
otels- Inventory, services, billing app
O
YO- virtual visibility
Se
amless access, low transaction cycle
Addressing Pain Points
Insight,
innovation, alliances transform rules of the game

Identify,
understand, tech enable, fullfill pain points, intelligently

Seamless
integration, easy on-the-go options, superior UX

MobiKwik
wallet- one tap payment, fast, smooth check-in/out

OLA- intra city
travel
Zomato-
accessible food options
Sign-Up
Multiple choice Check facilities Check rooms
Book rooms
Ease of use
Inventory discoverable and bookable onl
Sign-Up
Multiple choice Check facilities
Book
Hassle free
Check out location, rates, rooms, facilities before book

Convenience
Check in/out, order room service and other services on t

Physical evidence
OYO Rooms- WYSIWYG
IMC
Online and offline marketing channels

Strong referral network
30% o
Dec 30
50% o
proper
Aggressive promotion
Visibility
Branding provides franchise-like product consistency
UX
We have successfully used technology to create and
provide a hassle-free and seamless experience to our
customers. And we are going to continue using
technology to reinvent the OYO customer
experience,
Hotels
Hassle-free
Standards
Value
Budget
Assurance
App
Online
VP
Functiona
l
Economic
Emotiona
l
Reliable
Affordable
Hassle
free
Access to standardised budget hotels that offer

predictable and high-quality stay with standardised
amenities
4
1
Position
Reliable, VFM, hassle
free
Identity
Predictable
budget hotels
xp
2
Customers
Mind
3
Image/ Perception
Easy to use App
Standardised xp
Dr Amit Rangnekar www.dramitrangnekar.com
Nature of
Global and Indian hotel majors, significant
competition
regional players, unorganised competition,

travel aggregators
Target segment
Price conscious budget travellers seeking

reliable hotel standards
Consumer
Price sensitive, value seeking
behaviour
Reason to believe
Visibility
Hotels
Affordable
Affordable
Reliable
Hassle free
Dr Amit Rangnekar www.dramitrangnekar.com
Relevant- tech, reliability and affordability, key parameters

Unique- standardised budget hotel experience
Believable- across 153 cities, 3000+ hotels
OR
Desirable- budget hotel consumers are price conscious
Deliverable- across 153 cities, 3000+ hotels
An
affor
da bl
e, re
drive
l i a bl
n ha s
e, tec
sle fr
h
ee b u
dget
expe
hot e
rienc
l
e
Articulating core brand values, delivering brand

promise
WYSIWYG
Affordable
VFM Budget
hotels
Reliable
Hassle free
App based
Ease of use
Standardised
Convenience
WYSIWYG
App, 2 step
booking
Predictable
Brand Extension
OYO- standardised budget
hotel experience
OYO Premium- luxury
service experience @Rs2500+
OYO WE, women specific
properties, Jan15
Comfort zone, privacy,
space
All women staff,
customized women toiletry kit, on-call beauty parlour services, books selection
WE Gurgaon, Delhi and
Noida, 15 more
OYO- MTDC revenue-share
agreement on the anvil, scale up
Architecture- Branded House

Corporate
Brand
Product
Brand
OYO
Endorsed
Brand
OYO Premium
OYO WE
Sub Brand
OYO-MTDC
Proposed
ry
Technology
enabled
e
ag
Im
tio
ns
hip
Re
la
Ju
dg
em
en
t
Online budget hotel

app, predictable
service
Hassle free
s
ng
eli
Fe
Reliable,
VFM
y
alt
loy
se
Pe
rfo
rm
an
ce
en
Int
No
resonance
Building blocks
Awareness
Identity
Low loyalty, awareness, salience
Relationship
(Brand to customer)Trust
Reflection (Customer
identifies wrt brand)Tech savvy, value seeking
Personality (Soul)Simple, ease of use
Culture (Brand in
customers conscience)
Technology enabled
Self-Image (Customer
identifies brand wrt self)VFM, reliable
Internalisation
Externalisation
Physique (Purpose)Budget hotels
Scale up
Year
Cities
Hotels
Rooms
2013
14
250
2014
13
200
10000
2015
153
3000
75000
2016
250
6000
150000
2018
500
15000
360000
Scale up- add new partners in 1 week, on signing

agreement
Valuation (Rs Cr)

6500
7000
6000
5000
4000
3000
2000
1000
0
14
110
300
600
Building OYO Rooms
Dominant
leader
M&A Zo
Rooms
153 cities
3000+
hotels
Alliances
Penetration
College
Dropout
Funding Rounds
OYO
Rooms
App
Oravel
Stays
Thiel Fellowship
2012
2013
2014
2015
2016
59
OYO Business Model Canvas (Osterwalder)

Key
Partners
Key
Activities
Value
Proposition
Relations
hips
Target Segment
-Hotels
-Investors
-Technology
firm
-Mobikwik
-Zomato
-Ola
-Software
-Technology
-Aggregation
-Standardised
stay
experience
-Hassle free
-Convenience
Experience
-Innovation
Performanc
e
-Affordable
-Available
-Budget travellers
-Young
professionals
-Techies
-Single women
-Family
Key
Resources
-App
-Skilled staff
-Execution
-Funding
-Leadership
-Innovation
-Problem
Channels
-App
-Digital
media
-ATL, BTL
Challenges
Fast scale up
Consistent
service
Offline QC
mechanisms
Manage and
deliver customer experience
Brand growth,
loyalty
Funded
competition
Make money
Unicorn?
References
http://inc42.com/buzz/how-oyo-isbuilding-an-empire-room-by-room/
Ritesh Agarwal's journey from
being a SIM-seller to the helm of OYO Rooms Madhav Chanchani, ET Bureau Aug 3, 2015, AUG 6, 2015 @ 02:31 AM 55,517
VIEWS
Why A 21-Year-Old Is Building OYO
As An Uber For Hotels In India Forbes
What is the business model of OYO
Rooms? https://www.quora.com/What-is-the-business-model-of-OYO-Rooms Sanjeeva Shukla
Quora Updated29 OctAkshay
Kapoor
A business model for budget hotels
1 Apr 2015 S Meera
http://www.thesmartceo.in/startingup/a-business-model-for-budget-hotels.html
OYO and its ways:
http://www.techgig.com/assessmen...http://m.adageindia.in/marketing...
http://economictimes.indiatimes....
http://www.forbes.com/sites/sari...
Fortune Air BnB Pffefer 14Nov14
Extra
India's largest branded network of hotels
Standardized stay experience, unmatched price
Standardized- same amenities and experience all across
Affordable- high value
Technology Driven- delivers a seamless customer xp
Oyo- virtual hospitality brand
Aggregates budget hotels, guesthouses
Branding provides franchise-like product consistency
Managed properties marketplace
Vision Worlds largest network of branded hotels
Focus smaller cities and towns, revolutionize budget travel
Demand- branded, predictable budget hotel experience
250 hotels, 13 cities
Add 50 new hotels every month
80-90% occupancy levels
50,000 room bookings monthly
AirBnB model- not exactly applicable to India
Class B/C hotels quality standards inconsistent
Competitors- Stayzilla, ZoRooms, Zostel
India's largest hotel chain
Invest + expand mode- fund tech, hiring, market development
Investment- smart marketing, management, improve hotel quality
Ritesh Agarwal carries a rucksack to meetings, with change over clothes

Regularly checks into OYO hotels
Hands-on approach, strong grip on all business levers
"It helps me get a pulse of what customers and hotel owners want and also gives me the convenience of not maintaining a home
Pillars- Process, technology and team
You will stay like never before.
Discovering hotels + standardising hotels
Team- fleet on street- check 20-30 hotels in a day in a city
Transformation 3-5 days, OYO board
Technology glue to achieve a cohesive transformation
Tab- bridged gap between intent and delivery, enabled control and efficiency
UX is futuristic
Till 2015 hotels did not seek a second meeting, now sought after
Technology key success enabler and future driver
Next- OYO Premium Brand Hotels
Quotes
O
ur goal is to change the way people stay away from home
We are at the forefront of solving a problem of lack of predictability of

experience across hotels in the country. We are excited to have global
investors like SoftBank partner with us in this vision. Their experience
in building innovative companies globally will bolster our efforts to
grow into one of the world's most trusted hotel businesses.
"
The owners own and manage the hotels while we essentially provide
training, standardisation of the product and marketing of these
hotels, which is our main value addition to these properties."
Air BnB/ Uber/ Alibaba/ EBay (Fortune,

Forbes, WSJ)
Sharing economy/ marketplace- money sans responsibility
Making a business out of not being responsible
Platforms/ marketplaces
Take a cut for bringing buyers and sellers together
No employees, investments, inventory, responsibility
Uber- aggregate taxis and drivers, connect through
technology- no cars or drivers employed
Airbnb- makes money for providing affordable bnb
accommodation through technology, without any property investment, operating costs, maintenance and repairs
Ola- business model- give customers to hotels, share
profits
eBay- connects C2C
Alibaba
Amazon- warehouses, employees
No responsibility, greater profits
Companies with physical business- tax, regulate, employ,
benefits, compliance, enforce, liability, guarantee

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How does OYO standardize budget hotels?

How does OYO standardize budget hotels?

What are some of the challenges faced by OYO?

What are some of the challenges faced by OYO?

Disrupting the hotel business thro technology

Disruptive technology and

Founded to solve the problem of the lack of predictability,

Indians travel every year

accommodation- 1,00,000 hotels, 1m unbranded rooms, $10b

new set of travellers

Porters 5 Forces- Hotels

To New Entrants- High

Bpo Buyers- High

itesh Agarwal, CEO, b1993

usiness at 13, Oravel, OYO at 18

ollege dropout entrepreneur

Newspapers started reporting my success. My parents were

The Thiel Fellowship

OYO- Founding idea

reliable, buget hotel

budget hotels dont

Star hotels deliver

what to expect and

Selecting and managing Partners

Stayzilla $20m- Nexus Ventures

ZO rooms $45m- Tiger, Orios, Sol Primero

Treebo Hotels $6m- Matrix, SAIF, Jun14

Wudstay Hotels $3m- Mangrove, Nimbuzz, Jul14

Fabhotels ($5m), Zenrooms ($10m), V resorts ($2m), Roomoncall

Vacation home aggregators- Tripvillas, Roomnhouse,

TOI 25Sep15 http://timesofindia.indiatimes.com/tech/tech-news/Startups-give-low-cost-hotels-in-India-amakeover/

TOI 25Sep15 http://timesofindia.indiatimes.com/tech/tech-news/Startups-give-low-cost-hotels-in-India-a-makeover/articleshow/49101035.cms

OYO M&A Zo (ET 17Dec15)

no liability of Zo dues, absorb 40% employees

investors 7% stake in OYO (Parent Zostel)

cashstrapped, unable to raise fresh capital

rooms, 1,000 hotels, 50 cities

agencies blocked budget-hotel aggregators

Aggregating partner budget

First mover, disruption

Predictable Service Experience

Oberoi Leela Marrio

Luxury Carlson Holiday InnStarwood

Accor Best Western Kamats

Target consumer behaviour

poilt for choice

5% lower than similarly-spaced hotel rooms

FM- reliable service, comfortable and predictable stay

Reach- 153 cities

Addressing Pain Points

innovation, alliances transform rules of the game

understand, tech enable, fullfill pain points, intelligently

integration, easy on-the-go options, superior UX

wallet- one tap payment, fast, smooth check-in/out

accessible food options

Multiple choice Check facilities Check rooms

Inventory discoverable and bookable onl

Multiple choice Check facilities

Check out location, rates, rooms, facilities before book

Check in/out, order room service and other services on t

OYO Rooms- WYSIWYG

Online and offline marketing channels