Oyo's new focus on customer support could help, but its relaxation of brand standards in the budget sector could have big reputational risks.
When hotels previously signed up with Oyo, they’d have to make significant renovations to comply with the budget hotel company’s brand standards, but Oyo is now easing those requirements.
“Oyo has started offering hotels the flexibility of not having to invest heavily in redoing the hotel to match stringent brand guidelines, something that other budget hotel chains insist on,” the company said Wednesday in an announcement about its expansion in the U.S. “It has been focusing instead on standardizing service-led components such as customer support and booking experience.”
That’s a significant change to Oyo’s business model. Previously the company helped hoteliers renovate their properties to meet the company’s brand standards, but now Oyo is letting that slide as a way to better compete against budget hotel franchisers and operators.
During the pandemic, Oyo deemphasized its business in the U.S. and China in favor of focus on its core markets, India, Southeast Asia, and Europe.
Even before the start of the pandemic, Oyo had problems with its U.S. operations and laid off 360 workers in the U.S., roughly one-third of its stateside workforce.
But on Wednesday the company laid out its U.S. expansion plans.
Oyo said its roster of U.S. hotels climbed 23 percent year over year in 2022, and it plans to add more than 100 hotels in the U.S. this year, which would be double its growth in 2022.
Oyo said its focus would be on signing up hotels in Oregon, Washington, Oklahoma, Georgia, Florida, and Texas, its fastest-growing state.
Recent additions include Plaza on the Pike by Oyo in Atlantic City, New Jersey; Oyo Hotel Renton Bellevue, Seattle, Washington; Tulsa Square Hotel by Oyo in Tulsa, Oklahoma, and Oyo Hotel Hermiston, Hermiston, Oregon.
The loosening of the brand standards comes with significant risks. Hotels where rooms don’t meet certain minimum benchmarks could damage Oyo’s reputation.
Oyo hopes to go public in India sometime in 2023.
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Photo credit: Pictured is an Oyo property in Las Vegas in 2020. The company is keen to expand in the U.S. Danielle Hyams / Skift