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Revenue model of OYO Decoded-How does a hotel booking app like OYO make money?

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The revenue model of Oyo Rooms at the start of their business was that of hotel aggregation. Under this business model, Oyo will lease several hotel rooms under their own brand name. The company would then provide these hotel rooms to consumers at reduced rates, which they could book using the Oyo Rooms app on their cell phone or the company’s official website.

To broaden its market, the organization has moved away from the hotel aggregator model and toward the franchising model. Oyo Rooms does not possess or lease any property under this model. What they do is form relationships with hotels and ask them to sell hotel rooms at reduced rates to consumers under the Oyo brand name.

revenue model of oyo

Oyo began as a single hotel service in India initially as revenue model of oyo and has since grown to become one of the world’s largest hotel network brands.

Its origins have spread to 230 locations, with over 44,000 hotels and over 1.2 million seats. Oyo’s app-based booking feature helps consumers to book rooms in a matter of seconds. With its outstanding room facilities and amenities, Oyo has a similar amazing atmosphere in all of its spaces.

How OYO actually works?

In eight easy stages, here’s how the OYO Rooms app works:

  1. Users will book accommodation in three easy steps after completing short signup in the OYO mobile app. Simply choose the venue, the number of guests expected to visit, the budget, and the number of rooms required, and you’re ready to go.
  2. The app will then display a list of all hotels in the desired location that are within the customer’s budget. Users should use the expense and preferred utility filters.
  3. After making a reservation, you must pay for the bed.
  4. OYO also offers OYO townhouses, OYO Homes, Silverkeys, OYO Palette, and OYO Living, Studio Stays for business trips or special occasions.
  5. The OYO mobile app has a dynamic home screen that displays not only a list of hotels but also nearby restaurants and adventure sports, as well as the ability to book for it when booking your OYO place.
  6. Any OYO-listed hotels also have free cancellation under such conditions.
  7. OYO Wizard, a subscription model, is now available and provides special rewards, sales, and cashbook offers.
  8. Users may have feedback and recommendations inside the app after their visit.

Revenue Model of Oyo:

Following strategies that helped OYO become a profitable business

In India, all other hotel chains combined do not have half the number of hotel rooms that OYO does. OYO, a hotel chain, has grown to more than 330 cities around the world in just five years. OYO did not become successful overnight; it had to work hard to get to where it is now. Here are the tactics for getting profitable revenue model of oyo:

  • Customer Segments:

In 2019, Oyo served over 180 million clients. Oyo’s consumer divisions include:

  1. Adventure Travelers – All those who wish to fly individually (on a strict budget) or in a small group to various destinations. Backpackers are also known as backpackers.
  2. Leisure travelers are people who want to take a break from their stressful lives.
  3. Party travelers – Those traveling in big groups and seeking spacious and convenient lodging where they can host celebrations, family gatherings, marriages, and other activities.
  4. Business travelers – On its website, Oyo also has commercial locations where consumers can book office spaces and meeting rooms for their business needs.
  • Value Propositions:

Value Proposition – OYO

The one feature that distinguishes Oyo Rooms from its competitors is its standardized hospitality operation. This further aids the organization in improving consumer service. Customers’ experiences with Oyo rooms vary from those with Airbnb. Airbnb is a service that connects visitors or guests with the host of a location. However, in the case of revenue model of Oyo Rooms, the provider is entirely responsible for delivering all of the facilities and services that the consumers have been assured.

  • Oyo Room service:

It has released independent banners with exclusive offerings to refine its value propositions and provide us with the services like:

Oyo Townhouse: Millennial travelers can get smart resources for their smart needs by Oyo Townhouse. ‘Smart rooms’ are equipped with specially constructed beds, formulated toiletries, power outlets, and TVs with Netflix built, as well as 24-hour kitchen service. A smartphone device can be used to order smart menus.’

People can book rooms for their internships, work, or corporate stays via Oyo Studio Stays. They have the choice of renting rooms for single occupancy or twin sharing.

Oyo B Direct: It’s designed for company stays and offers streamlined repayment via GST-ready invoices.

Oyo Homes are professionally furnished private homes for vacationers.

Oyo Flagship: With its Oyo Flagship brand, Oyo rents whole buildings/apartments. These structures have both a homey feel and hotel warmth. Its special features include friendly employees, colorful decorations, theme-based spaces, and building walls with lovely quotes.

Oyo Silver Key is another proprietary service that offers residential, spacious, and multi-utility executive apartments to executives and corporate clients.

  • Customer Relationships:

customer relationship of oyo

Oyo remains in touch and interacts with its clients in a number of ways. It can be done by the hotel’s employees or through the Oyo smartphone app. Customers may still get assistance from the organization 24 hours a day, seven days a week on any questions they may have. Apart from that, Oyo is very active on social media and uses numerous marketing techniques to communicate with the public.

  • Cost Structure:

Oyo’s expense structure is as follows:

  1. Costs in developing and maintaining platforms (websites and apps).
  2. The cost of restoration and branding
  3. The price of IT infrastructure
  4. Costs in marketing and advertisements
  5. Salary charges for employees
  6. Commissions for Hotel Partners
  7. The burden of legal representation
  8. Other administration and operating costs
  • Oyo Room Revenue:

Oyo’s annual turnover was 1.8 billion dollars in 2018. Oyo earns money in a number of different ways. Per month, the organisation charges a 22 percent fee to the hotels in whom it has collaborated. A commission of 10 to 20% is often paid to the firm in the form of a reservation fee that a customer pays to book a hotel room. Customers can purchase memberships from Oyo Wizard for a price ranging from 500 to 3,000 rupees. Sponsors also have sponsorship, and in exchange, the organisation supports them on its software and website. Different businesses pay Oyo to have their advertising shown on the app and website.

Conclusion:

In the effective use of innovations, Oyo has really revolutionised the hotel industry. It has revolutionised living environments and elevated consumer interfaces to new heights. It has revolutionised the way people stay away from home thanks to its easy booking system, hassle-free renting experience, and affordable pricing by using affordable revenue model of oyo.

Its penetration into new markets is unstoppable, and it has firmly established itself as the most popular hotel network, providing both high quality and affordability.

 

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