Analyzing the Business Model and Challenges of OYO

Introduction

The OYO business aspect and business model is being demonstrated properly. The issues and various risks that are being faced by the OYO in their business are also being demonstrated here properly. OYO is a budget hotel and is working to expand their business locally and globally. Earlier performance and gains of their business are being shown in this paper. A pure market and business analysis is being proceeded here so that can benefit the business properly. The swot analysis defines the strength, weakness, opportunities and risk for OYO. Finally the action and strategy plans that are to be initiated by OYO are being defined here properly.

Business background

OYO rooms are budget hotels that gain a good name in a short period of time. It was a startup in the year 2011 and was introduced as a virtual hospitality brand. Booking the hotels and inventories online are the special offers that are provided by OYO rooms. A great business journey was experienced by them from a single room to 23000 plus hotels and rooms (UR and Padmarajan, 2020). It has a dream to become the world's most trusted brand in terms of hotel bookings. The idea of staying at home is being changed by these OYO rooms and is renowned as the second largest hotel in India. OYO room’s penetration into the national and international market is being described in this paper. Several new niches for business are seen to be created for the OYO rooms here and are focused on creating a budget hotel category. From starting a budget hotel and now serving as a cloud kitchen, OYO had a pleasant journey regarding their business.

Business problems

OYO rooms are having a lot of risk and challenges for their business aspects. The first challenge is the safety and security regarding the service of customers. Many of the cases of harassment and unfair use of the OYO rooms have been seen in the last few years. As the ties have been cut and thus OYO had to see a great downfall in the business because it contributed around 18% of business value in partnerships (Idoko and Kasim, 2018). Various of the illegal practices were filed by OYO, some of them were unlicensed hotels, service issues and bribing and various others. Cases are also seen regarding charging extra pennies from the customer and were a fraud one for the OYO. OYO was separated from different networks such as Vodafone and many others and thus paved a milestone for their connections in business. Several of the investors stepped back from helping OYO in their business aspect. The complaint of unpaid dues of their partners is one of the problems for OYO rooms (POPOOLA and ALAMU, 2017). In the US a protest was held by the hoteliers in the OYOs entering the business. This created a negative impact on their business and market value globally.

Past performance

It is a company that gained a good name and fame in a short time. A unique business model is being represented by OYO for their economic values. An annual gain of around $400 dollars was received and around 15 million bookings were done by using OYO.

The annual sale of the OYO upto year of 2018 is being printed in this case. A 15% increment in the business is being seen to be initiated here possibly (Kumar, 2019). Net Take Rate is being demonstrated over her in this case for the business of OYO and revenue gained by them. These are the positive take rates that are involved in the financial statement of OYO. This graph shows that the revenue increases every year starting from 2015 to 2018. The NPS scores for OYO were seen to be increasing from years. An analysis of profit and loss can be seen over in this case easily for the business orientation. An increment in this NPS score can be seen over in this case to be from 16% to 40%. The OYO skills institute, captain and scoring mechanism are present that helped OYO to gain a good name and fame in their business (Ageconsearch.umn, 2020).

Organizational environment

The organizational environment of OYO is an ethical one and thus gives a good phase for business to the customers and the employees available. The organizational environment is composed of around 1200 employees that helps each other in a proper manner so as to enhance the business properly. Hotel rooms and services that are presented by OYO is a helpful one for the business purpose here. The terms and conditions are available that are an ethical and helpful one for the business and market aspect present. A proper tools and technology is being implemented here in the business environment of OYO.

Market and business analysis

The business model of OYO is being presented by an aggregated business model and is seen to be charging in a few years. OYO gained a new business structure for their organization. The focus is on quality of service, customer satisfaction and various others that can attract the customers towards them. Company made its brand equity and the founders tried to focus on the franchise business model to be adopted. OYO had prepared 90% of revenue from the hotel and the franchise model that are presented over here. Hotel inventories are being provided here by the OYO rooms in lease. Attracting a large number of customers and clients for their organizations is an important aspect that can be seen in this case of OYO. Introduction of applications and websites can be a helpful one for the business aspect of OYO here (Ageconsearch.umn, 2020).

Business model

OYO focuses on a proper business model so that they can attract a good customer base available. Booking through websites and applications are seen to be one of the useful aspects for the business here. A franchise business operation is being proposed by OYO. Maintaining a brand equity and 100% revenue in the hotel can be a useful one for their business model to be applied (Devang et al. 2017). They do have a good partnership model that is oriented to the business available. Hotel rooms and services provided here are seen to be important aspects for the business here. Providing discounts and other additional benefits are seen to be an important aspect for the business here. A predetermined price and commission based revenue system is being initiated by OYO here in this case. A variation in the commission and advantages are present here in this case of OYO. A good revenue model is being proceeded with the help of around 1200 employees and other staff. A huge amount is being invested on their campaigns, and several of the ads that are present in this scenario. Digital marketing and e-commerce websites are used for the earning methods and spending around a huge amount of money helps in gaining a good business aspect here. A business model involves orientation of new application and social media advertisements so that it can gain a good business aspect here. An introduction of Oyo Township or flagship is a good aspect for the business here for OYO.

Strength

New innovations are the best options for them to get a good customer attraction here. Most of the root ideas of OYO rooms are conceptualized and an innovative one for the business here. It has policies to maintain a strong market value and spirit of innovations. A Subsidizing method is being introduced by them so that they can make the services an affordable one for the customers. An exponential growth and increase of business in a short time is the strongest part of the business here. A growth example that can be seen here is related to Gurgaon where around 17000 and plus hotels are being oriented under OYO rooms (Arora, 2019). It is being standardized under OYO franchise and most of the rooms are under partnership that helps them to earn a good profit.

Weakness

Co branding is one of the milestones for their business. All hotels or restaurants provided by OYO are not owned by them instead OYO works as an online platform to provide a good business aspect here. A common window for transactions is OYO here for the customers and as well as for the clients. OYO are still not able to justify their service and the quality related to it. Reliability is not seen to be maintained by OYO and thus they require time to show reliability. The margins along other organizations are required to be initiated properly in OYO so that they can initiate the partnership business properly.

Opportunity

OYO represents a booming demand for the customers and clients that are available. Supply and demand balance can be preceded so that good business opportunities can be gained by the OYO rooms here. A scope for OYO is present here so that outsourcing the business can be proceeded easily. Budget accommodation can also bring a good business opportunity for them (Joshi, 2017). An option for minimal spending and a decent lodge or other demands are highly required by the customers. Business travel must be initiated by them so that a good economic value can be earned by them.

Threat

A tough competition in the market due to availability of a large number of such websites like ibibo, trivago or make my trip. The safety concerns and number of harassment cases are high and thus required to be looked out properly. Safety at any point of time is not assured by OYO here.

future strategies

There are following strategies to be initiated in OYO rooms:

Asset light: A strategy is being made for the start ups. They generally take the hotels on lease and invest an amount on these hotels for the business purpose (Ansari et al 2017). Partnering with the other organisations helps in gaining a good business aspect without investing a lot of money on building the hotels.

Responsibility: Customer responsibility is being maintained here in the case by OYO rooms. The end to end responsibility of customers is being looked after by the OYO rooms properly. OYO spends a lot of money on their service and looks for the customer available.

Predictability: OYO is focusing on gaining the data and information for the servicers that they are providing and the feedback of those customers that have experienced it. Thus the prediction can be formed by OYO in order to make changes or repeat those methods that are found to be beneficial for the customers available.

Using technology: A user friendly mobile application is being one of the useful aspects for the people using it (Shobana and Rajalakshmi, 2020). With this application the users can book their rooms and hotels within a few minutes and also they are not required to face any problems related to the payment. A dedicated team is being presented here in this case of OYO so that a good business aspect can be introduced here in this case.

Action plan

OYO rooms have a good action plan for the incorporation of innovative and proper ideology for the business. OYO rooms' futures are being oriented properly by the help of those action plans that are initiated here in this case. They are oriented to produce a budget oriented business and in this way they are focused on the action plan that is necessary to be implemented here. A proper terms and conditions are available for the scenario for the OYO rooms here. Limitations of liability are also presented and guidance are followed for the implementation of an action plan in OYO (UR and Padmarajan, 2020). Expansion of business and marketing plan is essential here in this case for OYO. It aimed for around 1 million of rooms to be booked for their business.

A good action plan is incorporated by OYO as seen in the following:

Content marketing

Valuable and related information are generally provided to the customers here so that a target audience can be attracted easily. This is one of the useful methods in which the potential customer can be gained easily. A right message is being presented in this section for the customers.

Social media marketing

Advertisement by the use of social media sites can be a helpful one in the business aspect here. A direct demand of around 98% could be seen through the travel agents or through the social media aspect (Joshi, 2017). The online value proposition is being represented in this case by the help of this social media platform. Human need and communication is a powerful method that can be implied easily for co creation of business through various of the customer engagement techniques.

Target

Segmentation or targeting is one of the important aspects seen in this part. Multi demographic segment is being presented in this case easily. Customer groups are being differentiated in this demographic step properly. A strategy was formulated by OYO rooms to penetrate through the business and marketing aspect seen here in this case. A targeted audience is being focused for the business and marketing purpose.

Hiring technological people

They are hiring the technological employee so that they can work based on the future aspect. New and varied technological aspects are also to be installed by them. Smarter space and menus are to be installed here in this case by OYO.

They went from offline to online selling methodology for getting a good business aspect. The travel agent and mediaries got a good benefit from this part and for their business easily. First mobile PMS is initiated by them that leads to check in and checkout properly. Several of the partner hotels are present for the business aspect. Transformation and remodeling the infrastructure and business can be preceded by the help of tools and technology here in OYO.

Partnership

A good partnership model is being demonstrated by the OYO rooms so that they can get a good partnership model for the customers to get good comfort and good quality hotel rooms. They generally have partnered hotels that are under their names. They are oriented in providing many services to the visitors. They also focused on leasing the rooms to the customers on the monthly basis. OYO rooms are running the place instead of hotel owners and staff. Smarter rooms are seen to be applied and introduced by them so that can be helpful and impressive to the customers. Releasing the different aspects can be helpful one here such as OYO Townhouse in order to provide a proper hospitality to the customer available (Ambiguousit.com, 2020).

Conclusion

Instead of those milestones and risks OYO had gained a good business aspect in the market. OYO had crossed its limitation and served across globally for their business. OYO proved to be one of the gifted startups that can be seen in India. It had gained a good name in a short time. They faced great issues and milestones for their business aspect here. But still they tried for their business phase to gain a good name and value in the market.

Reference list

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Journals

UR, H.K. and Padmarajan, A., 2020. A Study on the Role of Technology in Emerging Business Models in the Hospitality Industry with Special Reference to OYO Rooms. Our Heritage, 68(43), pp.342-348.

Kumar, N., 2019. Analysis of mobile applications in tourism promotion: A Study of Amritsar. Our Heritage, 67(10), pp.1417-1429.

Arora, S., 2019. Customer Behaviour-Online Travel Industry in India.

TRIROJ, P. and Chapman, W., 2019. Supply Chain Management Perspectives on the Development Gap in the Heritage Tourism Industry, Using Rajasthan in India as the Case Study (Doctoral dissertation, Silpakorn University).

Joshi, M., 2017. Invention, innovation and innovative practices: A reason to study in a VUCA perspective. Journal of Entrepreneurship, Business and Economics, ISSN, pp.2345-4695.

Devang, A., Kruse, C., Parker, A. and Siren, P., 2017. The next wave of business models in Asia. MIT Sloan Management Review, 58(2), p.35.

Ansari, M.K., Jain, G. and Kaur, J., 2017. A Study on Impact of ICT on the marketing strategy of Indian tourism industry. International Journal of Research-Granthaalayah, 5(5), pp.382-390.

Shobana, T. and Rajalakshmi, M., 2020. Blue Ocean and Red Ocean Strategy-An Understanding with Reference To Service Industry in India. Our Heritage, 68(30), pp.10483-10488.