>SoftBank Group, directly and through its Vision Fund, is heavily invested in both.<p>This is the worst case scenario. Every company that Softbank tries to unload becomes a liability because of the association.<p>On the topic of the actual business, I think there's a really basic question people need to ask themselves when they look at these business models: In 10 years time does the industry you're in look different?<p>Because that seems to be the fundamental problem here, Oyo's business model is basically that in 10 years time nothing about Hotels will have changed. Well what does that mean? It means we know how much the end company will be worth because it'll just be some multiple of a basket of other similar companies that exist today. So here's the question: Why are they claiming to be more valuable than InterContinental Hotels Group whilst having 1/75th of the revenue?<p>Now onto the financial engineering - overvaluing your company, borrowing using shares as collateral and then investing that money back into the company. That is a feedback loop, if you can't pay back the loan the shares are worthless and so these loans are entirely unsecured. If that's happening at scale, that is exactly the sort of behaviour that will cause a bubble and it will burst. Someone really should do some proper reporting on that - find out how common it is and particularly if it extends outside of Softbank.
Oyo is en route to failure, and it will be another setback in India’s startup ecosystem after the Housing.com fiasco.<p>The initial idea of guaranteeing basic amenities (clean bed/bath linen, WiFi, breakfast) through strict quality control and staff training was great, but they failed to deliver.<p>Instead of improving and growing their first product, they launched new products and entered new geographies - most likely to inflate valuation.<p>The founder itself has had a questionable behavior (ref: <a href="https://www.livemint.com/Companies/7CN7u5d4i3bfYgBAZLdLpM/Will-the-real-Ritesh-Agarwal-please-stand-up.html" rel="nofollow">https://www.livemint.com/Companies/7CN7u5d4i3bfYgBAZLdLpM/Wi...</a>)
> For its core India business for the financial year 2018, Oyo reported revenues of just $61 million and a loss of $53 million.<p>How on earth does this translate into a $10 billion valuation? For comparison, Hyatt's market cap is $7.9B, and they made $296M profit on $1,215M in revenue in <i>Q3</i>:<p><a href="https://s2.q4cdn.com/278413729/files/doc_financials/2019/q3/FINAL-Q3-2019-Earnings-Release.pdf" rel="nofollow">https://s2.q4cdn.com/278413729/files/doc_financials/2019/q3/...</a>
I was in Houston recently and was surprised to seen an Oyo-branded hotel, as I hadn't realized they'd expanded beyond being an aggregator.<p>What do you know? 100% of Yelp reviews are 1-star: <a href="https://www.yelp.com/biz/oyo-hotel-houston-galleria-west-houston-3" rel="nofollow">https://www.yelp.com/biz/oyo-hotel-houston-galleria-west-hou...</a><p>To be honest that actually makes them worse than WeWork at some level. WeWork may have an awful business model but at least its brand is (generally) known for consistent quality. [1]<p>[1] <a href="https://twitter.com/jasonlk/status/1161659165619523584" rel="nofollow">https://twitter.com/jasonlk/status/1161659165619523584</a>
This went viral some times back in Indian social-media<p>How Oyo completely ruined my first wedding anniversary: <a href="https://oyo-ruined-my-anniversary.com/" rel="nofollow">https://oyo-ruined-my-anniversary.com/</a>
Oyo are aggressively expanding. When I was in Nepal earlier this year they had OYO branded hotels everywhere. Since then they seem to have started taking over the super-budget hotels in London. I assume it's mostly the same hotels, but they've been paid to slap an OYO sign on the front.<p>It's hard to see what actual additional value they bring though. They're not really a stamp of quality, and they're not generally opening new hotels, just rebranding existing ones. Booking websites are hardly a new thing - booking.com and hotels.com are pretty entrenched, and have the advantage that they index every hotel not just ones which agreed to put up the OYO sign. Maybe OYO will take a cut of the booking.com market (which from what I've heard is incredibly profitable), but by building an OYO brand with a reputation for budget low quality, they're moving in the wrong direction to do that.
Oyo ventured into Nepal quite recently. From my viewpoint I see rooms often can be charged by the hour on some of their signage, not just daily rates. That's the type of visitor they are looking to attract.
I made the mistake of booking one of these OYO rooms in London recently. Seriously shocking they'd even try to claim it as a hotel, dingy bedsit maybe a better description. Would never book with them again.
Startups sacrificing profit on customer acquisition is understandable. But it is a huge red flag when they start losing both.
<a href="https://oyo-ruined-my-anniversary.com/" rel="nofollow">https://oyo-ruined-my-anniversary.com/</a>
As a consumer, the OYO brand means nothing to me because anecdotally it's clear that they only claim to enforce standards but in reality it's an illusion.<p>In the absence of that assurance, what am I getting from OYO?<p>If I want a hotel room I will browse listings on the various aggregators that have them and go with the best find for my budget. Unlike Hyatt or Four Seasons or Taj, where you can treat the brand as an indicator of some standard, it doesn't exist in a meaningful way for OYO, even for a far lower standard. It's all over the place.<p>If anything I'd be suspicious of OYO immediately.<p>I'm unsure if my experience is the norm or the exception. If there's a huge segment of people who associate the OYO brand with trust, then their model would appear to be working quite well.
Franchising, and buying up small hotels to form a hotel chain are both very old business models. So it seems to me that neither their original (basically franchising) nor current business model is innovative. What exactly does Oyo bring to the table? Seems even worse than WeWork.
Quite interested in this subject.
1. Oyo are trying to scale incredibly quickly, always tough and in this investment climate, better get their forecasts correct and spend it quickly!
2. They are trying to scale globally, but adding software management of revenue and booking under their control is dangerous to owners especially if they have terms that include %'s take of increased revenue. This may mean booking at any price regardless in quiet periods and then there is a staff cost vs margin call. Quality will suffer.
4. The whole approach appears to be based on brand signage and not guest experience and is a budget business, so its a bottom feeding brand.
5. This budget position in Europe is often based on doing deals in older premises (quite few local to me). These are not modern eco-friendly, but high maintenance, unlike the new brands of accommodation which can also be budget and brilliant.<p>In in all its seems that the approach may end up with a negative brand connotation as is developing on their Facebook reviews page and the knock on effect will ensure poor returns.A Softbank recurring nightmare.
Oyo is yet another company that shouldn't exist. In India, in an event at the beginning of this year (2019), it said it has a new initiative where it would share hotel guest information with the police and the government in real time. [1] [2] This kind of facilitation of mass surveillance while also enabling harassment is one of the most damaging ways to run a business and contribute negatively to a country.<p>[1]: <a href="https://www.medianama.com/2019/01/223-oyo-real-time-data-sharing-system/" rel="nofollow">https://www.medianama.com/2019/01/223-oyo-real-time-data-sha...</a><p>[2]: <a href="https://www.huffingtonpost.in/entry/why-oyo-sharing-check-in-details-with-the-govt-should-worry-you_in_5c3ee9d9e4b0922a21da1990" rel="nofollow">https://www.huffingtonpost.in/entry/why-oyo-sharing-check-in...</a>