How Oyo Company, the third-largest hotel chain in the world, was founded in just five years by a seventeen-year-old lad from a middle-class family who had a tiny grocery store in Odisha How did they invest? Why did they reduce it to only 30% of the total? The Oyo company was valued at $10 billion in 2019 but only $2.7 billion in 2022. What is the rationale behind this decline? I'm going to mention that while we all know that he founded the firm, most of us are unaware that he was raised in a tiny middle-class family. At the age of 17, he possesses extensive understanding of the hotel industry in addition to his creative ideology.class family in Odisha, he planned to study in America after finishing his intermediate education, but financial constraints prevented him from doing so. Nitish has always had a strong interest in computer coding. Disappointed that his dream of studying in the US had not come true, Ritesh Agarwal visited numerous locations in India and learned about the concept. In India, inexpensive travel is really challenging.
The problem with this idea is that there are many hotels that offer rooms at low prices, but no one knows where to find them or how to book them. As a result, Oravel Stay Travels was born out of the desire of those who were drawn to the successful American Air B and B company's business model to establish a similar system in India. Station is an online resource for information and hotel bookings. In every Indian city, Agarwal has already made rooms and booking information available. It was begun and successfully operated by an American airline, and now Ritesh Agarwal has brought the concept to India. Since there is already proof of this Since he has stepped out to invest in the firm, the valuation of his company has increased, and his level of responsibility will rise naturally. Ritesh Agarwal stated at the same time that his company should not be restricted to an internet domain. Ritesh Agarwal finally switched the States to the Oyo firm in 2013. The majority of Indian hotels operate at a loss according to the business model. This is because certain hotels are not turning a profit. Additionally, they are not maintaining the installation of fundamental features like WiFi and an internal TV.
There are now online booking possibilities, and the company that offers this service charges hotel owners a 20 percent commission on room booking earnings. Within a few years of Oyo's founding, thousands of Indian hotels contracted and transacted business with the platform to such an extent that, in 2015, over one crore rooms were reserved on the website in a single month, with thousands of hotels in Malaysia. Oyo has since expanded to over 80 countries, including Japan and America, and has emerged as the largest hotel in the world. Who would have thought that a seventeen-year-old boy born in a remote By the time he was twenty years old, the region of Odisha had grown to the point that one of the biggest hotel companies in the world had been established, not just in India. Although the story we have seen thus far is really encouraging, let's now examine what is going on on the opposite side of the Oyo Company.
Before the Oyo Company arrived in India, no hotel would accommodate single travelers. Since it began offering rooms to anybody without any limits, a large number of people in India have been using oyo rooms for illicit operations like drug sales and gang rape as well as fraud. To give you a better idea, the Kerala police department detained 12 persons in one day who were selling trucks inside the oyo rooms during an operation to find drugs in these rooms. A man by the name of Kulwansingh paid 42,000 in the city of Ludhiana, Punjab, to reserve four rooms in the OU and four rooms in Oyo for his family. When he arrived in Oyo, the hotel administration ejected the family, claiming they had no affiliation with Oyo and that no reservation had been made there. Just 14,000 of the 42,000 that he requested for a refund over the phone with OYO customer service was given. It has made the decision to pay the fine and give the customer's money back right away. More than a few lakh people in India are dealing with this problem; they reserve rooms, but when they get to the hotel, they find something is wrong. This problem is not limited to Punjab.
No rooms are being offered by them. not just clients but In 2019, hotels also filed a deception complaint against the business's CEO, Ritesh Agarwal, and six board members when a hotel owner company in Bangalore failed to reply to the payment of over 35 lakhs. In fact, a number of Indian hotels terminated the company's contract, claiming that Oyo was engaging in dishonest business practices by overcharging for hotel reservations and keeping a larger percentage than stipulated in the contract—that is, twenty percent. The contract will be broken if a hotel violates it, but the oyo company won't take down the information about the hotel from its website and app; instead, it will put it as sold out, so as a result, when I looked at the investor profile of the company, I discovered that a lot of hotels were put on hold and that they were having a lot of trouble making reservations. On the one side, investors in the Oyo company are losing money as a result of this covert approach that the company has adopted.
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