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OYO Rooms: Making the Indian Budget Hotels Accessible

CASE STUDY, STRATEGIC MANAGEMENT
ET Cases, 11 Pages
AUTHOR(S) : Dr. Mayank Dhaundiyal, Assistant Professor, Bennett University

Case Preview

OYO Rooms: Making the Indian Budget Hotels Accessible

 

India’s very own Mark Zuckerberg (Mark); this is how Ritesh Agarwal (Ritesh), founder of OYO Rooms, is described by many people in India and abroad.1 Indeed there are striking similarities. Both Ritesh and Mark (founder of Facebook) started coding early on in their lives. Both of them dropped out of colleges to pursue their dreams. Both of them were able to spot a latent need in people’s daily lives and had the requisite skills to build a technology based solution to satisfy that need. And of course both of them became very successful very early in their lives.

Just to put things in perspective, Ritesh’s startup venture OYO (acronym for ‘On Your Own’) Rooms (OYO), which started with one hotel in Gurugram, Haryana in 2013 had, as of November 2016, grown to over 6,500 hotels in about 164 cities in India2 and had become the largest branded hotel network in India.3 Compare this to Indian Hotels Company Ltd. (IHCL), owned by the Taj Group4, which opened its first property in the year 1903 in Mumbai, India, and has 108 hotels in 63 locations in India5 as of October 2016.6 Although OYO differed from IHCL in many respects and also catered to a different consumer segment, what cannot be denied is that startups like OYO represent an emerging and rapidly growing challenge for established companies like IHCL. What is truly fascinating is that a college dropout is able to disrupt a fiercely competitive Indian budget hotel industry...........

 


 1 Rashmi Menon, “Meet OYO Rooms’ Ritesh Agarwal: The dropout who dined with Peter Thiel”, http://economictimes.indiatimes.com/magazines/panache/meet-oyo-rooms-ritesh-agarwal-the-dropout-who-dined-with-peter-thiel/articleshow/48536789.cms, August 19th 2015 (accessed date: September 29th 2016)
2 “OYO India’s Largest Branded Network of Hotels”, https://www.oyorooms.com/about?oyocorporate=&country=india (accessed date: November 2nd 2016)
3 Ibid.
4 “Indian Hotels”, http://www.tata.com/company/profile/Indian-Hotels (accessed date: November 2nd 2016)
5 Ibid.
6 Saritha Rai, “Why a 21-Year-Old is Building OYO as an Uber (and not an Airbnb) for Hotels in India”, http://www.forbes.com/sites/saritharai/2015/08/06/why-a-21-year-old-is-building-oyo-an-uber-and-not-an-airbnb-for-hotels-in-india/#7af435557350, August 6th 2015 (accessed date: September 15th 2016)

Teaching Note Preview

OYO Rooms: Making the Indian Budget Hotels Accessible

 

Synopsis

This case details the rapid rise of OYO Rooms that has become one of the key players in the fiercely competitive Indian hotel industry. OYO was founded by Ritesh Agarwal in 2013 in Gurugram, Haryana. Ritesh spotted the need for standardised budget accommodation early on and brought to the market a solution that made the standardised budget hotel rooms accessible to the large and burgeoning Indian middle class. OYO has thus unlocked a new set of customers, but largely on the basis of VC funding. Although this follows a similar pattern in the context of e-commerce companies that burn a lot of cash in order to gain suppliers as well as buyers, OYO will have to find sustainable alternate revenue streams if it wants to sustain its competitive advantage in the fiercely competitive Indian hotel industry.

This case provides students with an excellent opportunity to understand how a small player can enter a fiercely competitive industry with the help of a robust business model and generous funding. Given the very young age of its founder, OYO is an inspiration for millions of youngsters in India and abroad for creating more such ventures.

Pedagogical Objectives

  • • To illustrate how a new entrant with a great idea and sizeable VC funding can disrupt a fiercely competitive market.
  • • To illustrate the importance of a good strategy
  • • To explain how a product’s desirability, feasibility and viability matter.
  • • To detail the funding opportunities which are available to start-ups

 

Case Positioning and Setting

This case study would be useful for business students at the postgraduate as well as undergraduate level. This case is primarily meant for the strategic management course but can be used in other elective management courses, especially in the strategy and entrepreneurship areas................

$4.57
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Product code: STG-1-0039, STG-1-0039A

Abstract

This case details the rapid rise of OYO Rooms (OYO) that has become one of the key players in the fiercely competitive Indian hotel industry. OYO was founded by Ritesh Agarwal (Ritesh) in 2013 in Gurugram, Haryana. Ritesh spotted the need for standardised budget accommodation early on and brought to the market a solution that made the standardised budget hotel rooms accessible to the large and burgeoning Indian middle class. OYO has thus unlocked a new set of customers, but largely based on VC funding. Although it follows a similar pattern in the context of e-commerce companies that burn a lot of cash to gain suppliers as well as buyers, OYO will have to find sustainable revenue streams if it wants to sustain its competitive advantage. How OYO handles the existing as well as potential competition remains to be seen.

This case provides students with an excellent opportunity to understand how a small player can enter a fiercely competitive industry with the help of a robust business model and generous funding. Given the very young age of its founder, OYO is an inspiration for millions of youngsters in India and abroad for creating more such ventures.



Pedagogical Objectives

The objectives of this case are:

  • To illustrate how a new entrant with a great idea and sizeable VC funding can disrupt a fiercely competitive market
  • To illustrate the importance of a good strategy
  • To explain how a product’s desirability, feasibility and viability matter
  • To detail the funding opportunities which are available to start-ups

Case Positioning and Setting

This case study would be useful for business students at the postgraduate as well as undergraduate level. This case is primarily meant for the Strategic Management course but can be used in other elective management courses, specially in the Strategy and Entrepreneurship areas.



This Case Pack Includes:
- Abstract
- Case Study
- Teaching Note (**ONLY for Academicians)
$4.57
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