RITESH AGARWAL’S OYO ROOMS VENTURES OUT INTO AGGREGATING A WAYWARD TERRITORY- THE BUDGET HOTELS SEGMENT.
Ritesh Agarwal is hardly 21 years of age but has major accomplishments under his belt. He was in the news again as Oyo Rooms, his firm landed an investment of $100 Million from Japan’s Soft Bank. A Thiel fellow, the only Indian to have made it to the elite program, he has been mentored by some of the top brains at the silicon valley including Elon Musk and Peter Thiel himself.
Starting off as Oravel Stays modeled after Airbnb, the firm later evolved into an aggregator of budget hotels and was rechristened as Oyo Rooms. Ritesh says that the idea came as a response to his horrid experiences at more than hundred budget hotels that he stayed in during his travels. Oyo today is seen as a company with immense possibilities and a Unicorn for investors while Ritesh as one of the best product developers we have. In an interview with Ritesh Agarwal, FWD Business gets a peek into the brain of one of the most enterprising young entrepreneurs in the country.
To most first time entrepreneurs, taking the plunge seems to be a problem, but you were of the opinion that even college could only slowed you down. How did the entrepreneurship bug grow in you? What was it that led you forward?
I heard the word entrepreneur for the first time while I was still in school so when other students used to say that they want to be an engineer or a doctor I always thought of becoming an entrepreneur. I used to take weekend trains to Delhi and sneak into entrepreneurship events and hear entrepreneurs talk about ideas for which they were so passionate about. It was extremely inspiring to hear them and this just strengthened my will of doing something on my own, not just a business but something long-lasting and impactful. Post moving to Delhi I used to travel every weekend, on whatever money I had saved doing internships. It was during this time that I stayed in more than 100 bed and breakfasts, guest houses and hotels. There used to be discrepancies in terms of bookings, no one used to take calls on reception, rude staff, nonfunctional washrooms and dirty linen. What took me ahead was the urge to solve this problem of predictability and trust deficiency that plagued the Indian hospitality industry.
There are a lot of competitors now, with a few having emerged from your own organization. How do you view this trend? Do you think there is market space for so many players and how do you manage to innovate to stay ahead?
We are humbled and also encouraged by the presence of other players in the industry and it brings merit to what we have created. It also broadens choices that the consumers have and even with such choices in place, OYO Rooms has emerged as a market leader. For us, we are our biggest competitors and continuous improvement/innovation is the mantra. Our streamlined processes and indigenous technology sets us apart from other players and also inspires us to do better every day.
The Thiel Fellowship, we are sure, must have paved way in a very large extent to Oyo hitting the big league. Could you elaborate on how the chance came across and the experience itself?
Being part of the Thiel Fellowship was one of the most amazing experiences I ever had. The initiative was started by Peter Theil who is the co-founder of PayPal where college dropouts, having an exceptional idea, are provided with mentorship and $100,000 to pursue the idea. I was the first Indian to graduate from the program and everything about it excited me. Imagine being mentored by Peter Thiel himself along with other visionaries (even today I reach out to them for advice). It was surely a life changing experience and the money helped in boosting OYO Rooms during its initial phase.
The company on its last evaluation was valued at $400 million. What surprises us is the fact that such a market space went unrecognized? What do you think is amiss in the way we look at the market opportunities?
I don’t think there is anything truly amiss. This year has definitely been good for the startup ecosystem in India. We have seen several new startups in the limelight and several categories/ opportunities being created. Any startup – big or small should not be afraid to innovate. I believe that innovation is a continuous experiment where you start, fail, learn and then evolve.
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How hard was it to step into the budget hotel segment, which largely thinks in the terms of making cut throat profits and not on delivering great service?
To be honest, it was hard during the initial days to make hoteliers adopt our proposition as they were completely new to it. The proposition was one of its kind and something that was never done before in the Indian hospitality industry. Our idea was to provide a comprehensive Stay Management Solution – introduce predictability for the customers and also to empower hotel owners – increase their overall profitability, give them access to technology and help them provide better services. We made sure that it was thoroughly tested in one city before we moved ahead with it across the country. New hotel partners are now quick and eager to adopt the model since they see definite value.
How do you plan to get into smaller cities of the country? Do you think the small time hoteliers in these cities would understand the immensity of what you are doing and willing to partner you?
Apart from being present in metro cities, OYO Rooms is also present in smaller Indian cities, leisure destinations and pilgrimage sites. The idea is to grow deep in all these cities. As mentioned earlier, hotel partners, even in the smallest of towns understand the value of our proposition and are keen to tie-up with us.
If you are counting on publicity and brand awareness to help you penetrate into those segments, how are you planning to go about it?
OYO Rooms’ biggest ambassadors are its customers and hotel partners; and we are grateful to them for propagating our value proposition to their peers. We have been advertising on various online channels including social media platforms, for quite some time now, and have seen good traction and feedback. In the recent months we have done radio, print ads, and more recently a TVC #AurKyaChahiye. It is the first 360-degree campaign which OYO Rooms has launched along with having an integrated marketing communication in place. All these factors create effective brand awareness for OYO Rooms in the market.
How hard is the operational part of Oyo, which is ensuring the hotels actually render the service that you promise and the guest does not have a horrid experience?
We monitor all the properties in our network through three means broadly – a comprehensive audit before signing up with OYO, daily operational audit and a daily feedback collection from our customers. All properties have to adhere to our 150-point standards checklist before they can become an OYO. This process is called transformation. Daily operations are monitored by our operations managers on-ground. An audit app helps them capture issues, if any. Customers are contacted by our customer service agents and detailed feedback is collected. All three facets are synced with our central system which helps us to redress issues and grievances in a streamlined manner.
What are your plans for the current financial year? Where would the funds generated after the latest round of funding by Softbank go?
We are aiming to end the year with 5000 hotels in our network, 50,000 plus rooms in more than 150 cities across India. We will be using the funds to invest in people, processes, technology and the best customer experience initiatives.
What about plans of going international? When would the first move happen?
We would like to first focus on being present in each and every corner of India and we are concentrating on achieving that. Once we have achieved that target, we shall think of venturing
out of the country.
Text: Varun Kannan Photos: Various Sources