'Will Adapt New Operating Model Focused Around Safety Post-Covid': OYO Hotels CEO Ritesh Agarwal

The hospitality industry has been hit hard by the coronavirus pandemic and the consequent lockdown. In the first quarter of 2020,  the hotels’ sector in India witnessed a decline of more than 65 per cent in occupancy levels as compared to the same period in the previous year, according to a report by JLL India. 

Amid the crisis, one of India's largest hotel chains OYO too has announced new measures to adapt to the "new normal" in a post-pandemic world. In an interview with Outlook’s Lachmi Deb Roy, Founder and Group CEO of OYO Hotels and Homes Ritesh Agarwal said that as people begin travelling again, they would prefer independent boutique hotels or private vacation homes where they can plan get-togethers with friends and family. Excerpts from interview:

The hospitality industry is the worst affected, what is the situation going to be like post-pandemic?

As COVID-19 continues to impact the business and forces businesses to rethink, our teams have come together to plan for business continuity and recovery measures. We are building OYO to be the preferred hospitality brand for consumers in the new post-COVID reality.

Hygiene is going to be a key consumer question post-COVID. Our sanitised stay offerings and commitment towards ensuring minimal contact-based check-in is an important step. Customers will now look for both affordability and flexibility as uncertainty around the ability to travel will remain there for some time.

OYO Wowcher, our recently launched customer-centric initiative, focuses on this and offers double its value for the customers and has flexibility in the duration of redemption. With a reduction in non-essential work travel and the expected downturn in the economy in the near future, more corporates will look at budget accommodation options that are safe and sanitised. We can also expect domestic travel to boom as restrictions continue on international travel across most destinations. Pilgrimages, road trips to closer destinations will gain momentum. As people begin travelling again, there will also be a growing preference for staycations where travellers would prefer independent boutique hotels or even private vacation homes where they can plan get-togethers with friends and family.

You started OYO when you were just 19 years old to make available bookings for budget rooms in hotels. Like any startup, it has faced its own ups and downs. How difficult is the present time as compared to the pre-pandemic period?

COVID-19 is unlike any other challenge the world has faced, affecting people from every socio-economic background and causing a disruption in operations and processes across industries. Financial stress on individuals, government and industries is immense. Internally, we worked hard to minimize the financial impact by reducing controllable costs across the board.

For now, our goal is to ensure long-term sustenance of our business, which is critical for the industry’s recovery as well. We are also focusing on adapting the business to operate in a new normal in a post-pandemic environment.

How different is your concept of hospitality and how are you coping with the situation?

OYO operates an asset-light chain of predictable, easy to book, low-cost accommodations globally while enabling its 43,000+ hotel and homeowners to get improved quality and revenue. We are an asset-light transformative platform that converts sub-standard unbranded hotels / unutilized vacation homes into quality living spaces, with easy to book, hassle-free check-in experience. Today OYO enables its 43,000+ hotels and homeowners to get improved quality and revenue (up to 2.5x jump in RevPar, up to 30 per cent increase in occupancy).

Given the current scenario, it is hard to pre-empt a due-course of action. However, OYO is in a unique place to observe changes globally and derive a plan of action to operate in the current situation.

While there will be changes in customer needs and given the highly uncertain timing of recovery, our focus is to adapt and retool with a new operating model focused on safety and hygiene. We are working with our partners to understand their concerns and give them necessary guidance and financial support through tie-ups with banks/ NBFCs. We are optimistic that the budget and economy segment will bounce back faster with individuals and corporations tightening purse strings, while domestic travel in India will be a big gainer given the current circumstances.

Can you give some statistics in terms of revenue as to how it has affected OYO? As of now how many OYO rooms are vacant?

OYO much like the industry has also been impacted during this crisis. Our occupancy rates and therefore, revenue has reduced by 50-60 per cent. We are also seeing trends of around 75 per cent drop in occupancies in established hotel chains globally. As we get ready to open our hotels on June 8 in India with sanitised stays, we’ll be in a better position to evaluate our road to revenue recovery. We are likely to see a slow but sure recovery, especially since we’re in the affordable segment.

The fact that you don't own any hotel rooms, how do you ensure a safe experience for the consumers?

At OYO, we are responsible for end-to-end customer experience with the support of our hotel partners. The COVID-19 pandemic has created fundamental shifts in consumer behaviour, especially related to travel and hospitality. Higher hygiene standards, minimal contact service and enhanced credibility top the list of consumer requirements while planning travel after the lockdown. We recently launched the Sanitised Stays initiative where we are training our partners to offer a minimal touch experience to consumers during check-in/check-out, room service and also give consumers visibility of the sanitisation level of a property of the same on our online platforms. Our hotels will go through regular background audit checks for sanitisation, hygiene, and protective equipment. We will be training 1000 hotel partners over the next few days under this program. I would like personally thank our asset owners who have come together with us to boost sanitised stays across properties to welcome our guests.