Skift Take

Who has ever built a portfolio of half a million rooms in six years? Oyo, that’s who. And founder and CEO Ritesh Agarwal, who will be speaking at the first Skift Forum Asia on May 27, says his journey has just begun.

Hundreds of the travel industry’s most forward-thinking executives will gather for our first Skift Forum Asia in Singapore on May 27. In just a few years, Skift’s Forums — the largest creative business gatherings in the global travel industry — have become what media, speakers, and attendees have called the “TED Talks of travel.”

Focusing on top marketers, strategists, and technologists in the APAC region who are defining the future of travel, Skift Forum Asia 2019 will take place at Equarius Hotel in Singapore.The Forum will feature speakers including CEOs and top executives from AirAsia, Booking.com, Genting Cruise Lines, Jumeirah, Oyo, Rakuten, and many more. The following is part of a series of posts highlighting the speakers and touching on issues of concern in Asia and beyond.

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Oyo is hard to ignore. Airbnb’s investment in the company, the latest in a series of Oyo developments, puts the budget hotel chain in the spotlight again as a company to watch, not just for its meteoric growth but its potential to continue to disrupt the industry.

Founder Ritesh Agarwal believes that by 2023, Oyo will become the largest hotel chain in the world. It is already India’s largest hotel chain, is one of the top five hotel groups in China, and is among top 10 global chains.

Agarwal will speak at the inaugural Skift Forum Asia on May 27 in Singapore. Hundreds of the travel industry’s most forward-thinking executives gather at Skift Forums, which have been called the “TED Talks of travel” by media, speakers and attendees.

The theme of the first-ever Skift Asia Forum is “The future of travel is being tested in Asia.” One does not need to look further than Oyo’s Agarwal to see the truth in that statement.

You wouldn’t want to miss hearing from the horse’s mouth what Agarwal has to say about Airbnb’s investment in Oyo, how Oyo products and distribution are evolving, the next expansion areas for Oyo, how it overcomes issues such as delivering consistent quality, transparency, low margins, to become “the most preferred and trusted hotel brand in the world,” and a lot more.

Here’s an edited preview of Agarwal discussing the importance of making a difference to the industry.

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Skift: Did you set out with the mission of becoming the largest hotel chain in the world?

Ritesh Agarwal: As entrepreneurs, when we all start our journey, none of us actually have any large commercial goals. The goals are very mission-oriented. I want to make a difference. I want to do something new, have that sparkle in the eyes to make a difference. It is very important to keep that hunger, that excitement, that sparkle, not just in yourself, but everyone around you every day in the process of becoming a real company in the years to come.

Skift: What’s the huge difference that you are making?

Agarwal: Oyo Hotels starts with one asset and a very simple premise: That 95 percent of buildings in the world have fewer than 100 rooms, and hotel chains across the world do not understand how to brand, franchise, and lease assets with fewer than 100 rooms. We are the only company that understands how to do that right.

We are able to deliver to the small asset owners equal or better returns than the big hotel owner with the big flag.

We started with an asset that had 25 percent occupancy and this went to 75 percent occupancy. Today over 17,000 assets with over 500,000 rooms in over 500 cities feel the same difference we’ve made.

We are still a young company wanting to make a difference to this world. So we are continuing to learn with every passing day.

Skift: Why do think that no other chain is able to do it better than you?

Agarwal: The flags actually add very little value to the franchisees. Few are willing to put skin in the game. We invest in capital expenditure along with sending a general manager to every Oyo hotel to make sure we deliver a consistent quality experience. If you don’t put skin in the game, it’s hard for you to have control.

Secondly, none of those flags have strong technology systems. Oyo employs over 1,200 software engineers worldwide, the highest number compared with any chain in the world.

Every Oyo hotel works on the Oyo operating system, giving them a cutting-edge advantage with sophisticated features, including express check-in, check-out. It further allows online procurement and inventory management. It offers apps for, say, housekeeping — staff gets an update of the room number where he or she should go and clean and, once done, can mark the room as clean from the app.

It also has solutions for multiple hotel management aspects like expense management, staff training and engagement along with performance review and incentives for the hotel staff. All these facets come together to deliver technology-driven efficiency for our hotels.

Third is our pricing. Every day worldwide, we do over 150 million changes to our pricing. We have probably just five people running that, of which two are probably data scientists. In comparison, every hotel has one revenue manager. Imagine, for 500 hotels we would need 500 revenue managers.

The fourth, and the most important, is this: The big flags go to assets which already run at a high occupancy on their own. So they don’t add significant value. We go to assets which operate at 25 percent occupancy, so for them the value increase is tremendous.

Skift: How do you do keep the sparkle in people?

Agarwal: At Oyo Hotels, I call myself the chief clarity officer. Which means that my job is to share what to do and what not to do. More important is, what not to do than what to do. So setting out the principles which enables everybody to decide how they can run their jobs. That makes it very easy for people to focus, and that focus has the output of commercial benefit.

Skift: What are the challenges of growing from nothing to becoming the world’s largest hotel chain by 2023?

Agarwal: The single biggest challenge companies face, and from the our own learnings in our little journey so far, is how to bring in strong leaders who share the common purpose. I have been lucky, for example, that we have a leader like Aditya [Ghosh, who joined last November as CEO of India and South Asia], who can lead and drive the business successfully. Aditya was CEO and president of IndiGo, India’s largest airline, and he managed over 23,000 people. Airlines are a hard business, so he has the ability to manage the complexities of our business in India.

It’s the same in China and Indonesia. We have strong leaders.

For me, your people’s success is your success. I’m happy to share with you that in the history of Oyo, we have never lost a single C-level leader ever. Anybody who comes in at the c-level leadership only stays. Nobody leaves.

Come See Ritesh Agarwal at Skift Forum Asia

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Tags: airbnb, oyo, sfa2019, singapore

Photo credit: Ritesh Agarwal. Oyo Hotels and Homes

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