OYO gearing up for a bigger play in corporate executive accommodation space

The managed apartment chain hopes to use its learnings from the homestay space to its new corporate executive accommodation business

With the acquisition of Novascotia Boutique Homes, a Chennai-based serviced apartment company in March 2018, Oyo is gearing up for a bigger play in the corporate executive accommodation space. The budget hospitality firm last year entered into the serviced apartment space with its own brand SilverKey. As Oyo integrates Novascotia’s 350 furnished accommodations with SilverKey, the company is looking to benefit from its prior experience in managing end-to-end consumer needs with its other offerings — Home and Townhouse. If Home has given Oyo expertise in redesigning apartments to offer a standard experience to clients, its townhouses have equipped it with skills in housekeeping. The company believes such experience puts it in a sweet spot to provide corporates a unique staying experience through SilverKey and an unrivaled ability to scale-up business fast. 

 In the corporate space, Oyo sees a large segment that is looking for large, home-like yet private spaces with amenities such as reading spaces and workout areas. “Senior- to mid-level executives and trainees look for stay options for one to two weeks. To serve them, the industry needs standardised offerings which again call for a different kind of supply set,” says Maninder Gulati, chief strategy officer, Oyo. 

Gulati points out a lot of small serviced apartment players have tried putting together such spaces but they struggle to scale up. Even the largest player in this space would have a total of 2,500 rooms. Oyo hopes to change the scene with its experience in unlocking the supply market — by transforming properties and branding and distributing them through online and offline channels.

According to Santhosh Kumar, vice-chairman, Anarock Property Consultants, “The success of a serviced apartments business lies in scale, meaning that there should be a sufficient number of units operating under a brand, having them fitted out in a manner emulating hotel rooms in terms of self-sufficiency, and management through a professional property management agency.” 

A key determinant of occupancy of a serviced apartment is the location of the property. Serviced apartments work best in business-oriented cities, and the best locations are in and around the city’s central business district and secondary business district areas.

Oyo’s SilverKey spaces are available in five cities — Chennai, Hyderabad, Cochin, Trivandrum and Coimbatore. It aims to expand to 12 cities by the end of 2018 covering Gurugram, Delhi, Noida, Mumbai, Pune, Bangalore and Kolkata. At present, there are more than 6 billion unused supplies in top six cities and the company is looking to tap these to add 5,000 plus rooms to its directory by December this year. 

Maninder Gulati, Chief Strategy Officer, Oyo

It is worth noting here that there is a lot of inventory in the serviced apartments space, the sector is neither well-regulated nor standardised. Hence, guests would have had a wide bandwidth of experiences and varying satisfaction levels. Kumar observes that branded serviced apartment chains tend to do better than individual or small-time operators as they have a better understanding of this business and deploy the right kind of resources to make them work. 

Take a 30-room Oyo Townhouse. It would deploy 10 people for all the services it offers. 

Gulati says, “Being a full-stack hospitality player, we are going to use our capabilities in creating supply infrastructure, technology, and running operations to service clients in the SilverKey properties. Guest fulfillment will be driven by technology.”

The serviced apartments concept works well in the metros and larger tier II cities, where starred hotels are overpriced. Often, the executive traffic of multi-national and domestic companies is too erratic to justify a standalone company guest house. Also, the needs of such business occupants are very different from those of the regular leisure hotel occupants. Serviced apartments, which invariably offer a suitable two to four star service and facilitation level, are the natural choice.

Clearly, pricing is the key to winning serviced apartments business. Properties under SilverKey are priced between Rs 1,600 to Rs 3,000 per night. Cognizant, TCS, and E&Y are among its clients at the moment.