Is OYO Hotels the next WeWork of the hospitality industry?
— 8 experts shared their view
view details of this viewpoint
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?
Founder at Ghost Works
We will certainly find out how resilient the brand is during the next recession! That being said, there's a big difference between building out massive square footage in pricey urban cores and rolling up existing hotels under one brand umbrella. The cost structure isn't exactly analogous here. What is concerning is all of these alt lodging brands seemingly masquerading as tech companies rather than focusing on the core principles that drive most hospitality companies. The valuations of many of these emerging brands don't match reality. And that's the most concerning to me — we will surely see a shakeout in the not-to-distant future!