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The OYO business model has revolutionised the global hospitality industry. By standardising budget accommodations and offering technology-driven solutions to small hotels, OYO (“On Your Own”) has created a unique system that benefits both hotel owners and customers. In this article, we’ll break down how OYO works, how it earns money, and why it became one of India’s most influential startups.
What is OYO?
- Founded in 2013 by Ritesh Agarwal.
- Operates in over 80 countries.
- Manages over 157,000 hotels and 3.2 million rooms globally.
- Focuses on budget and mid-range hotels.
OYO’s mission is to make affordable, standardised, and quality stays available to everyone, everywhere.
Core Components of the OYO Business Model
1. Franchise-Based Aggregator Model
OYO doesn’t own hotels; instead, it partners with small hotel owners and franchises them under the OYO brand.
Key elements:
- Partner hotels maintain ownership.
- OYO offers branding, tech, a booking engine, and operational support.
- A revenue-sharing agreement is established (typically 15-30% commission).
2. Standardisation of Services
One of OYO’s biggest innovations is providing a consistent experience for guests.
OYO standardises:
- Room quality (bed linens, cleanliness, AC, Wi-Fi).
- Check-in/check-out process.
- Pricing transparency.
- Staff behaviour and training.
3. Technology Integration
OYO is a tech-driven platform. Its proprietary tools help hotel owners operate efficiently.
OYO OS Tools Include:
| Feature | Benefit |
|---|---|
| OYO Co-OYO | Revenue and inventory management. |
| OYO Captain | Local ground support for partners. |
| OYO App | Real-time booking and customer engagement. |
4. Revenue Generation Model
OYO earns revenue through several streams:
- Commission on each booking (15-30%).
- Service Fees for managing operations, customer service.
- Subscription fees for technology support.
- Advertisement & Promotions through the OYO app and website.
Note: As of 2023, OYO reported $1.2 billion in revenue, with India as its strongest market.
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How OYO Benefits Hotel Owners
| Benefits | Description |
| Increased Occupancy | OYO’s marketing boosts visibility. |
| Brand Trust | OYO’s branding attracts customers. |
| Tech Support | Easy management of bookings, payments. |
| Revenue Growth | Optimized pricing improves profit. |
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How OYO Benefits Travellers
- Affordable, clean rooms.
- 24×7 customer service.
- Easy booking via app.
- Loyalty rewards and offers.
- Assured amenities.
OYO’s Expansion Strategy
Key Strategies:
- Rapid onboarding of properties.
- Entering Tier-2 and Tier-3 cities.
- International markets (China, UAE, Europe).
- Leveraging local teams for smoother operations.
OYO’s goal is to create the world’s largest chain of trusted and affordable hotels.
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Challenges in the OYO Business Model
Despite success, OYO has faced several issues:
- Partner dissatisfaction over profit-sharing.
- Operational inconsistencies.
- Legal and compliance issues in certain countries.
- Customer complaints on quality.
OYO continues to invest in improving operations and partner relationships to overcome these.
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Conclusion
The OYO business model is a powerful example of innovation in the hospitality sector. By combining technology, standardisation, and a scalable franchise model, OYO has empowered both hoteliers and travellers. While the journey has had its ups and downs, OYO continues to adapt and expand, aiming to make quality stays accessible to all.
Frequently Asked Questions (FAQs)
1. What is the OYO business model?
OYO follows a franchise-based aggregator model, partnering with small hotels and offering tech, branding, and operational support in exchange for commission.
2. How does OYO make money?
OYO earns via commissions (15-30%), service fees, tech subscriptions, and advertisements.
3. Is OYO profitable?
OYO is working towards profitability. As of 2023, it showed significant revenue growth and cost optimisation.
4. How does OYO benefit hotel owners?
OYO increases visibility, improves occupancy, and offers technology to streamline operations.
5. Do all OYO rooms look the same?
Not exactly, but they maintain a standard in cleanliness, linen quality, Wi-Fi, and basic amenities.
6. What is OYO Co-OYO?
It’s a dashboard for hotel partners to manage pricing, inventory, and bookings.
7. Can individuals start an OYO franchise?
Yes, hotel owners can apply online to become OYO partners.
8. Does OYO operate internationally?
Yes, OYO is present in more than 80 countries.
9. What is OYO Captain?
OYO Captains are local representatives who help partner hotels with onboarding and issue resolution.
10. How is OYO different from Airbnb?
Airbnb focuses on home-sharing; OYO standardises and franchises budget hotel rooms.
