Rohit Kapoor, CEO, OYO India & South India feels that as a brand OYO is well-positioned to come out stronger post Covid. He also believes that the ‘Sanitised Stay’ promise and their tie-up with the established FMCG brand, Unilever, will drive more traffic to partner hotels like never before. According to Kapoor, their new Revenue Sharing model of business is borne out of the new economic reality and is being practised across geographies in the hotel industry. In an exclusive interaction with ETHospitalityWorld, Kapoor shares his thoughts on OYO’s way ahead, post pandemic
ETHospitalityWorld (ETHW): What is going to be OYO's India and South Asia strategy as countries start reopening slowly after the pandemic?
Rohit Kapoor (RK): We’ve seen a positive response from customers to our hotels reopening post the lockdown in India. Travellers continue to book OYO for their current and future accommodation needs. We have started operating in 20+ states and union territories. We have an occupancy increase across consumer segments, fastest in young millennials and SMEs and have reached 30% of the Pre-Covid occupancy levels in India.
We’ve trained 2,000+ Indian hotel partners under the ‘Sanitised Stays’ initiative which is driving 50% higher occupancy for compliant partners. We’ve recently partnered with Unilever to co-create Standard Operating Procedures for cleaning to maximise the positive effects of Unilever products. OYO properties where these operating procedures are used will display a tag on booking pages to show Unilever products have been used in cleaning services.
Leading by example, OYO’s senior leadership including Ritesh and myself also recently checked into various OYO hotels in Gurgaon, Ahmedabad, Hyderabad, Chandigarh, among others, to assure our guests that we are ready to welcome them to our safe and hygienic hotels.
ETHW: How optimistic are you on getting all the inventory that existed before the pandemic back in supply when the markets reopen?
RK: We have started seeing positive traction across states - guided largely by opening up of local restrictions on business. In the states where hotels have been allowed to operate, we are also beginning to see recovery trends across geographies with a significant jump in the share of direct demand, where global revenues from OTA have fallen 3X compared to direct.
In the states where restrictions continue, with time our collaboration with the government and the health care providers has increased multifold, having served 100K+ room nights under OYO Care our initiative for collaboration with healthcare providers and Mission Vande Bharat. More than 50% of our partners have joined the ‘OYO Secure’ model where our partners prepay before getting on board and work with us on a simplified deal structure.
This gives us confidence that once restrictions are loosened across markets and constraints around labour availability get better, the majority of our partners will solely and steadily start operating their hotels, although leisure destinations may take some more time than business destinations
What is the friction that you expect to emerge in a hotel partner-brand relationship as you try to push a new management agreement based on revenue share than the old minimum guarantee scheme?
At OYO, we are committed to ensuring that we deliver a sustainable business model that provides benefit to our asset owners as well as provides a high quality experience to our guests, even during tough times like in the present Covid environment. Today, almost 98% of our assets globally are on revenue sharing commercial models.
For the 2% of our hotels who were on minimum guarantee models in some form or shape, the change from MG to RS model is an economic reality of the post Covid world. This is happening across asset categories and geographies, in the industry, and we are no exception.
However, the revenue share arrangements will be fair and incentivise partners substantially to earn the right yield on assets. Our partners understand the industry reality and we are working with them to resolve issues as they may arise in some of them.
HospitalityWorld
Tags: OYO hotels
