Is OYO Hotels the next WeWork of the hospitality industry?
— 8 experts shared their view
Funded by SoftBank, which also bankrolled WeWork, today OYO has a a valuation of $10 billion (more than Choice Hotels and Wyndham Hotels combined) and boasts being the fastest growing chain in the world with over 1 million rooms in its portfolio. Beneath the PR glitz some industry experts see major structural and business model flaws: overhyped tech stack that often fails, "novel" revenue management approach of pursuing occupancy at any cost by lowering rates in periods of peak demand without the approval by ownership, as well as lack of brand recognition among the traveling public, forcing Oyo to rely on third-part resellers like Airbnb, HotelBeds, OTAs, etc. Is Oyo Hotels and Homes a great success story or is it another example of a cash-burning startup that will crash the moment cash infusions dry up?
Multi-Property Revenue Manager
The growth of OYO is not a surprise. On one hand, strong demand for economy hotels for the Indian and Chinese middle class. And on the other the money. With big money, it is easy to develop. This physical expansion phase being mostly done, OYO needs now to focus on long term value and profitability. The challenge is there: can they keep the right level of service, create and maintain a good brand image, respect their promises to the guest? While keeping their investors happy?
Hospitality and finance are two different worlds. It is hard to focus on the service while focusing on the ROI and it is causing fights between operators and investors often leading to a decrease in quality.
Higher the risk, higher the reward. OYO can either be a great success or a great fiasco.