OYO is both Amazon and Uber of the hospitality world: Ritesh Agarwal

Interview with Founder and CEO, OYO Rooms

OYO Rooms, the largest aggregator of hotel rooms in India, is like the Uber and Amazon of the hospitality sector, says the 23-year-old founder and chief executive of the chain, Ritesh Agarwal. The college dropout who had started his first company, Oravel Stays, modelled on international listing and lodging site Airbnb at age 17, tells Nivedita Mookerji on the sidelines of Surge2016, a start-up event in Bengaluru, that OYO would be the biggest hotel brand qualitatively by the end of this year. Edited excerpts:

You have announced that this year, OYO will be focused on enhancing the service quality and customer satisfaction. Is it in response to negative feedback?

This was always part of the plan, to offer quality in the service we offer. You must realise we are a one and a half years old and there's huge learning we have to go through. We built the network and now are at 50,000 rooms across 4,500 properties in 170 cities of India. We have to optimise now, keeping in mind customer satisfaction. However, we have got high ratings on sites such as Trip Advisor; and, data show more than 50 per cent of our subscriber base in Gurgaon are repeat customers. We are giving a commitment to improving our services. In addition, we are starting a new service tailored for the corporate sector, to manage their choice of hotels on our platform.

Is OYO blacklisting a lot of hotels, which were slipping in service quality?

It's a small percentage of the total hotels on our platform that we are blacklisting. At the same time, we are awarding a large number of hotels which have delivered by giving them more business.

Is it a concern that some online travel operators such as MakeMyTrip have kept OYO out of their platforms?

It is not a concern because our mobile and web reach is much more. Also, people relate to OYO as a hotel brand, while MakeMyTrip is seen as a travel entity. Around 90 per cent of our customers come through direct transaction on web and mobile.

When are you going beyond budget category and launching a service for the upmarket segment?

It is a project in the works.

At the Startup India event in Delhi last month, Prime Minister Narendra Modi said he wished he had the idea to open a hotel chain like yours. Did it feel good?

It was very generous of the PM, but it also puts a lot of responsibility on me.

At the same event, OYO was referred to as bigger than the Taj group of hotels. Your comment?

Mathematically speaking, yes. We partner 50,000-plus rooms. I leave it to you to make the comparisons…

What's the latest number on your bookings per month?

Last month, we booked close to a million room nights. We've chalked out a one-year plan and another for five years. In five years, we want to touch 10-15 mn room nights a month. In the next one year, we could grow four to five times.

Coming to a question that you have been dodging, what's with the Oyo-Zo deal? The announcement that OYO has bought Zo in an all-stock deal came from your investor SoftBank. Is the deal on or off?

At this time, we can't talk about it.

That means the deal is on and you can talk later, right?

We'll let you know on that one (laughs).

Are you looking at further buys?

We continue to talk about partnerships. I'm interested in small companies which are tech-heavy that can give better guest experience.

You refer to your business being different from others as you don't have international players breathing down your neck. Were you talking about the likes of Uber and Amazon?

Yes, exactly. We are lucky that we are both Uber and Amazon of the Indian hospitality world. We created this business without emulating anybody.

Are you not in some ways trying to be the Airbnb of India? You started with that model in your earlier avatar…

We are different in segment and value proposition.

When are you planning to turn a unicorn (company with billion-dollar valuation)?

I have a long time before me. I don't have a timeline for that and I really don't care.

If you are at $400 million now, it won't take you that long to touch the $1-billion valuation. Maybe by 2017?

It can be anything - 2016, 2017 or 2018. What I can tell you is that we will execute our plans to be the largest and densest hotel brand of India by the end of this year. Valuation will go up if the markets are good…

Largest brand in what way?

Qualitatively, we will aim to be the largest in terms of people desiring to stay at OYO.

Do you believe in profitability?

We are already operationally profitable in some cities. I do believe in profitability, but one should not keep the cash in the bank. I believe in the philosophy of Amazon- making money and investing in new formats.