India’s Air BnB just raised Rs 150cr and there’s more to come!

Twenty one year old Ritesh Agarwal is on cloud nine. His company, OYO Rooms has recently raised Rs 150 crore funding from its investors, Lightspeed, Sequoia, Greenoaks Capital and DSG Consumer Partners.

“This would be one of our largest capital raises for us,” said Agarwal.

Founded in 2013, OYO Rooms revolves around the concept of making budget hotel experience customer friendly. This segment has remained fragmented and disorganized for long time. “When I was 18, I travelled across the country and stayed at more than 100 budget hotels. This journey led me to realize how difficult it was to get a pleasant and reliable consumer experience in these hotels. So, in a quest to make affordable ‘real’, I started OYO Rooms. Our vision is to offer the ‘OYO Rooms experience’ to every business, leisure and pilgrim traveler across 100 cities through a network of 10,000 hotels,” he averred.

He further added, “We act like the Ola (Ola cabs) for hotels where we go to fragmented segment of private hotels. We tie up with them and brand them as OYO Rooms. Thus, these budget hotels can deliver the customers a much better experience. We call ourselves a branded budget hotel website.”

Explaining the business model of the company, Agarwal noted that company facilitates technology enabled hotels in the country. “We have built a very high quality, compatibility playbook wherein by entering information about the hotel, the owner’s background and other such details, we can check our compatibility with these hotels. This process helps us select only those hotels that we feel are best for our consumers in terms of location, customer experience, infrastructure among others,” he stated.

The company has a robust technology system in place. OYO Rooms have an hotel manager application which allows the company to know about a customer’s check-ins and check outs of the hotel. “So, we have an app through which I can know what time did a customer check-in and what time he ordered for room service. Besides, we also ensure that the entire process of check-outs is simplified as our technology enables us to send the invoice directly to the customer’s mobile. All this has helped us increase the occupancy rate of the hotel to nearly 85%,” elaborated Agarwal.

The company also carries out audits of its properties on regular basis through another application to ensure that the standard of customer experience is maintained. The application enables the firm to see the condition of a room in real time. And if there are more than three negative customer feedbacks about a hotel, the firm shuts it down temporarily.

Talking about the challenges in this business, Agarwal recalled that the biggest difficulty was getting hotels onboard. “We realized that the key things that hotel owners really care about are – occupancy, pilferage and customer experience. So, once they understand how OYO caters to these needs, they come onboard,” he said.

Image: Official website of the company