MakeMyTrip renews ties with hospitality firm OYO after two years

In August 2016, the online travel agency said the firm removed OYO because of quality issues

More than two years after closing its doors on OYO, the country’s biggest online travel agency (OTA) MakeMyTrip is welcoming back the SoftBank-funded budget hospitality firm. MakeMyTrip’s move follows rival Yatra’s decision in October last year to renew ties with OYO. These about turns by leading OTAs is in response to the scale that OYO is building in the budget hotel space.

Rajesh Magow, Co-founder & CEO India, MakeMyTrip said, “With OYO’s evolution as a full-scale hospitality company, we are excited to offer their award-winning chain of hotels in the value economy and mid-market category through MakeMyTrip and Goibibo platforms”.

In an interaction in August 2016, Magow said the firm removed OYO because of quality issues. “They were becoming a competition in the budget space. They wanted to aggregate properties and then leverage our platform. It did not make sense for us,” he had said.

OYO has now more than doubled its hotel and room capacity over the past two years to emerge as a potential competitor to OTAs in terms of hotel nights sold. It has moved from a simple distributor model — where it sold the part inventory of a hotel as OYO Rooms, while the hotel sold individually on online travel agencies (OTAs) — to an exclusive model where all rooms are OYO-branded. Currently, about 70 per cent of OYO’s inventory (about 7,000 hotels) is exclusive and more rooms are being converted.

With an inventory of 70,000 exclusive rooms, OYO claims to have a run rate equivalent to an annualised volume of over 15 million room nights, while MakeMyTrip (along with Goibibo) may end up doing 22 million room nights, going by 10.9 million room nights sold in H1FY18. Its room nights grew 32 per cent in H1FY18, while OYO claims to have triple-digit growth year-on-year.

MakeMyTrip operates across segments, against OYO operating only in the budget category.