It’s raining doubts on Oyo Hotels & Homes, a far cry from the awe that was poured on its founder and CEO Ritesh Agarwal when he came in six years ago brandishing the simple belief that “everyone deserves a beautiful living space.” Can Oyo fix its apparent shortfalls?
Not a month goes by now without another negative report on Oyo, including an in-depth piece below by Skift Executive Editor Dennis Schaal, who exposed the hardships some owners in the United States face since signing on with the chain.
What’s more, a damning report last week by Nikkei Asian Review on how a massive shortfall in Oyo’s expansion goal in Japan has snowballed into a nasty labor dispute reflects the toxic mix and the price Oyo is paying for pursuing superfast growth.
Cracks in the model have appeared. Can they be patched?
The low-cost hotel giant is a real business, as Skift Senior Research Analyst Seth Borko’s deep dive into Oyo’s financials and strategy below — a required reading — shows. One thing Agarwal also has going for him is the talent around him, such as Aditya Ghosh, Oyo’s CEO for India & South Asia, who formerly steered India’s low-cost carrier IndiGo to become the country’s only profitable airline. The fact that none of his senior executives have left Oyo since joining says something of Agarwal.
While Agarwal has many doubters and enemies, he also has many fans who admire what he is trying to do. The space Agarwal is in is daunting. “He is entering an interesting field, the below 30 rooms, which is vastly inoperable, with agility and a blank sheet,” Accor’s head honcho Sébastien Bazin told Skift recently, when asked if he was ever interested in acquiring a stake in Oyo. “He’s different. I love to spend time with him as what he’s building is intriguing.”
I agree. Agarwal started with a compelling idea: Everyone deserves a beautiful living space. But that simple belief, the one he started his company with, is proving not so simple to execute on a massive and global scale.
Skift Stories and More Expert Insights
Budget Chain Oyo Can Be a Nightmare for U.S. Hotel Operators Despite Its Hype: Oyo has a hype machine to rival any brand. But beneath all of the disruption, some hotel owners complain its technology is unstable and lacks functionality, leaving them to clean up the mess. Growth for growth’s sake may seem great for a unicorn-like valuation, but the hotel chain will need to grapple with flaws in its business model that can’t keep pace.
An In-Depth Look at Hotel Chain Oyo’s Financials and Strategy: New Skift Research: Oyo promises a new type of hotel company. It’s an asset-light brand that seeks to connect the global long tail of mom-and-pop hotels through its tech and distribution platform. But can it live up to the hype? Skift Research dives deep into Oyo’s business strategy and financial performance.
Watch Out, Japan! Switzerland Luring More Asians for Winter Holidays: Asia’s snow holiday market keeps growing, and Switzerland, a first mover in this opportunity, is benefiting. Japan, however, remains the most popular winter holiday destination for Asians by far.
Jet Lag App Timeshifter Makes Moves on Asia’s Hotels, Airlines: Timeshifter, brandishing NASA-approved science, wants to revolutionize how the travel industry helps guests fight jet lag. The science has won consumers over — and is a no-brainer for airlines. But in Asia’s cutthroat hotel business, how it can integrate the app into different branded programs is perhaps a different science.
Financial Help for Hong Kong Travel Advisors Comes With a Sigh of Relief: Hong Kong’s travel sector needs all the help it can get at the moment, and a new government scheme will be met with gratitude by travel advisors in particular.
Why Are Airline Websites So Bad at Inspiring Travel? Airlines have a problem: They are pretty good at selling flights, but they fail again and again when it comes to inspiring travel and selling related products, from hotels to vacation packages and bottles of booze. AirAsia.com CEO Tony Fernandes should read this.
Asia Editor Raini Hamdi [[email protected]] curates the Skift Asia Weekly newsletter. Skift emails the newsletter every Wednesday.
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Photo credit: Oyo CEO Ritesh Agarwal. Cracks are starting to appear in the business model of the low-cost hotel giant as it ambitiously scales worldwide. Oyo Hotels & Homes