Oyo will eventually fix its technology, but it will take a protracted period. It begs the question: Why did the budget chain engage in such a hyper-fast expansion in recent years, and insist on building its own operating system when it was clearly so lacking.
Among the highest items on the wish lists of Oyo hotel owners and managers, according to a partner survey, is the ability to assert more direct control over room rates, and to have the flexibility to extend stays and process early checkouts in the Oyo operating system.
Previously, for example, hotel front desks had to fill out a ticket and make price-change requests for walk-in guests via chat, and hotel staff often didn’t get a timely response. That’s a tough way to run a hotel when guests are lined up in the lobby.
But in a town hall meeting with U.S. hotel partners Monday, the third virtual meeting with Oyo hotel owners in the past few months, CEO Ritesh Agarwal detailed a list of technology improvements that have been implemented, are being piloted, or are pending.
Agarwal said Oyo has automated the chain’s operating system to handle about 72 percent of requests for price changes. He added that the company has made “substantial improvements” to giving hoteliers the ability to make booking modifications, and to manage inventory such as blocking or unblocking rooms.
Some 30-40 properties, he said, are participating in a pilot to test more flexibility in changing room types.
If these features are standard in many reservation systems, they have been lacking in Oyo’s operating system, although Agarwal repeatedly said Monday that the company is working on these changes and is committed to bringing them to hotel partners. He asked hotel owners and managers on the call to send him their questions — even the difficult ones — using the Zoom chat, and he addressed many of these during the meeting.
Oyo, headquartered in India, built its own hotel operating system, which obviously has been lacking. Oyo’s initial business model, which has been tweaked, was to sign up hotels, and give them revenue guarantees in exchange of their handing over just about all pricing flexibility to the mothership. When Skift first spoke with Oyo partners in the U.S. in October 2019, that lack of rate flexibility and control, and other reservation system woes were some of their biggest complaints.
In a business updated presented to existing and prospective hotel partners, Oyo presented a chart showing that its U.S. revenue per available room in 2020 outperformed the North America hotel industry in 11 of the 12 months of the year.
Other performance stats that Oyo cited include:
- Revenue per available room in January 2021 was 90 percent of that a year earlier while industrywide that number was merely 51 percent of pre-Covid levels.
- Oyo said it added 350,000 “rooms” globally — many of these are rooms in vacation rentals, not hotel rooms — including 9,000 in the United States. Oyo stated several weeks ago that the pandemic chopped its room count by 16 percent, with China particularly hard hit.
- Oyo’s gross profit globally is surpassing January 2020 levels, and
- Average daily rates have increased 5 percent during the pandemic.
Softbank-backed Oyo engaged in a substantial restructuring in late 2019 and into 2020 even before the pandemic hit, and eventually trimmed additional staff worldwide.
Agarwal expressed optimism about a travel recovery within five to six months. “I believe we are in for a bumper summer season,” he said, adding that booking trends for upcoming stays are healthy in Europe despite persistent lockdowns, and that progress in vaccinations is a cause for hope.
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Photo credit: Oyo Las Vegas, as pictured in 2019. After cutting ties with many U.S. hotels during the pandemic, Oyo said it is adding rooms in the United States. Danielle Hyams / Skift