OYO, a hospitality unicorn gearing up for its IPO, has resumed operations of self-operated hotels after a pause of over two years.
Through its recently introduced ‘Prime Partner Program,’ OYO has outlined a proposition for its top-performing hotel operators, allowing them the opportunity to manage additional hotels and generate extra revenue, all without the burden of leasing risk or the overhead expenses associated with launching a new hotel.
OYO has expressed its proactive efforts in forging partnerships with real estate developers to locate suitable properties for these hotels.
In the initial stage of the program, the company has established collaborations with 30 realtors and initiated operations in more than 35 hotels situated in cities such as Delhi, Bengaluru, Hyderabad, Kolkata, Goa, Mumbai, and Chennai.
Under the new program, operators will receive personalized support from dedicated relationship managers, along with access to OYO’s extensive network comprising over 15,000 corporate accounts and more than 10,000 travel agents, as stated by the company.
The self-operated hotels will be labeled as ‘Managed by OYO’ on both the app and website. Additionally, the global hospitality major has announced its commitment to closely oversee the maintenance and customer reviews of these hotels.
As part of the program, hotel owners have the option to lease their property to a prominent organization through fixed rental terms, revenue-sharing agreements, or management contracts.
“The program recognises the evolving travel and hospitality landscape where hoteliers are looking at expansion and guests are seeking well-managed accommodations. By offering hoteliers and property owners the opportunity to participate in this program, OYO aims to create a win-win situation that benefits landlords, professional hotel operators as well as travellers,” Anuj Tejpal, chief merchant officer at OYO, said in the statement.
The majority of hotels participating in the ‘Prime Partner Program’ will be incorporated into the company’s upscale hotel offerings, including Townhouse, Townhouse Oak, and Collection O.
It is worth noting that earlier this year, there were reports indicating OYO’s interest in entering the expanding premium hospitality market in India, with plans to incorporate 1,800 additional premium properties into its platform by 2023.
Read More: OYO ramps up presence: Targets 35+ leisure markets with addition of 750 hotels in expansion plan
Shortly before the Covid-19 pandemic fully manifested in India, OYO discontinued its self-operated hotel business model, possibly influenced by pressure from SoftBank regarding profitability concerns.
Subsequently, the pandemic wreaked havoc on the global travel industry, leading OYO to scale back its operations in key growth regions such as the UK, Europe, Malaysia, Indonesia, and the US.
Nevertheless, OYO has re-entered these markets, emphasizing its focus on premium hotels and vacation homes.
OYO was on track to declare its first-ever profitable quarter in Q2 FY24. In a recent internal communication sent to the leadership team of the company, OYO’s founder and CEO Ritesh Agarwal stated that the startup is set to mark its “first profitable quarter” with a projected profit of INR 16 Cr in Q2.
The company disclosed a reduced loss of 38%, amounting to INR 1,286 Cr in FY23, with an operating revenue of INR 5,463 Cr.
Read More: IPO-bound OYO records a 34% decrease in net loss, reaching INR 1,286 Cr in FY23
Earlier this year, OYO, adjusting its plans, decreased its IPO size to $400-$600 Mn from the initially projected $1.2 Bn. The company proceeded to file its Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) through the confidential pre-filing route.