Skift Take
OYO Rooms founder believes that the future of travel is brands becoming their own distributors, which is, of course, every brand's dream. It may turn out to be true for super brands in isolated cases but it would be a very fragmented and unsatisfying user experience. There is a lot of convergence going on but the mammoth online travel agency sector isn't checking out anytime soon.
Founded in 2013 and flush with $126 million in funding, OYO Rooms has taken the notoriously haphazard budget hotel sector in India and built the country's largest branded hotel network by implementing standards for everything from air-conditioning to the thread count of sheets.
Ritesh Agarwal, OYO Rooms' 22-year-old founder and CEO, talks about Uber a lot and feels a kinship with some of the disruptive aspects of the on-demand ride service. There are several parallels he sees between the two companies but Agarwal especially admires how Uber has largely become its own distributor through the Uber app.
"Today the brands and distributors are fighting with each other, but in the next five or 10 years, companies are going to be created that are going to be Internet-first and also brands," Agarwal tells Skift.
"... Hopefully, in the next five or 10 years, there'll be many more products across the travel segment, hotels, airlines etc. where the distributors and the brands are the same thing," he adds.
Agarwal's vision of the unification of brands and distribution -- and that's a dynamic that Agarwal believes OYO Rooms can execute -- comes in the context of brands and distributors fighting with one another. In fact, Agarwal's comments follow the moves by online travel agencies MakeMyTrip, Goibibo and Yatra to delist OYO Rooms in October in a fight over market shares and margins.
The competitive heat is intensifying in the India hotel and online sector as MakeMyTrip has launched its own budget-hotel brand, Value+ hotels, and there is speculation that OYO Rooms is poised to acquire a competitor, Zo Rooms.
Skift spoke with Agarwal about the evolution of OYO Rooms and his vision for the future of distribution.
Skift: Can you tell me more about your business model and what it means for the hospitality industry in India?
Ritesh Agarwal: There's a lot of unbranded supply out there. Our belief was for all of this unbranded supply, there was consistent quality of experience that are extremely important to be able to drive the hotel. We started with just one hotel. Today, we partner with more than 4,000 hotels in India across 160 cities. We book a million room nights a month and continue to be a fast-growing business in India. I think because the model is we go to an unbranded hotel, we tell them that we want to work together to standardize the facility and the total experience. If you do that, you get a lot of business. The hotel owner invests in t
