Vizergy’s Director of Client Services, Ross McAlpine, weighs in on HospitalityNet’s latest world panel. Hear from him and a handful of other experts about whether or not they think OYO Hotels is the next WeWork of the hospitality industry.
“We should acknowledge Ritesh Agarwal’s achievement as a young entrepreneur who has built a successful global business in six years that other hotel chains have struggled to achieve in 50+ years. OYO is the fixer-upper of hotel chains. They do very fast, cheap makeovers to get the bare basics of a consistent brand and then get properties selling asap in order to receive their 25% commission which they need to pay back investors like Softbank who are underwriting much of the cost to renovate properties. The commission model makes OYO more like an OTA than a hotel chain, perhaps that’s what made it desirable to SoftBank in the first place.
The operational kinks will be worked out because budget hotel rooms have to offer a good guest experience, just like everyone else. That positive guest experience will be needed if they are to increase brand awareness and encourage loyalty to reach their growth targets. I expect an IPO within the next 2 years so it’ll be a race to expand the OYO business as they work towards that, although they deny that’s being planned at the moment.”
You can read the full world panel here.
