Oyo Rooms Case Study

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Introduction
Oyo Rooms is indubitably one of the oldest startup in the space which was started as Oravel in 2011 by the then 18-year-old Ritesh Agarwal. After graduating from the Peter Thiel Fellowhip program, Oravel pivoted to Oyo Rooms - a chain of branded budget hotels across several cities in India. Most recently, Oyo Rooms raised a massive $25 million round from Sequoia, Lightspeed and others. Oyo has been growing at a tremendous and unstoppable rate. However, OYO Rooms had to face a lot of challenges through their business venture making it such a desirable subject of interest.
The unfathomable growth of OYO
At the initial level, it was very difficult for OYO to step out alone with an idea and such a small team in the market. As their
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Having already established a huge customer base, cross-selling budget hotels was a cake-walk for them. This also meant that they had a long market presence, so they were trusted more by the customers. OYO does not brand the hotels under their name but OTA’s brand the hotels on their website thus hotels prefer them over OBA. Additionally, they had large capital at their disposal because they were already profitable companies and they used their positive cash flows to deal with the competitors.

Non-Standardized Rooms, Room Shifts, Unregulated Markets – Major Road Blocks for OYO
Standardization is a major issue faced by OYO. In the race of growth, customer satisfaction, quality of service and adherence to those quality of service is often compromised. This is the biggest problem faced by the customers. Maintaining the quality as per the defined and promised customer model. Due to lack of direct ownership of property, 100% commitment of all promises to the customer is a difficult task. Since OYO does not brand the hotel, the customer has very little info about the hotel and on reaching the hotel if one receives substandard or below expected service like shifting of rooms, it could result in the loss of a customer forever. Also, OYO often deals with non-branded hotels so professionalism level is low and thus it becomes challenging to satisfy
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The need of the hour was to conduct some kind of ground survey, reviewing the tie-up hotels from the very scratch. The audit team introduced a 3C (3 Crosses) scoring system that resulted in shutting down the handful of hotels that had close to 95% of complaints. And by handful we mean, close to 200 hotels. There were rigorous checks, one auditor for every 40 hotels and a mandatory check ever 3-4 days. Two main weapons of this scoring and auditing system were: Customer feedback and intelligent property audit mechanism. Each complaint had a different weight associated with it. Like, a shift of room had a high weightage. They bid a happy farewell to those hotels who had more than 20 crosses. They not only aimed at purging hotels from their list but also shook hands with those that met with their

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