Ritesh Agarwal, the founder of Oyo, has seen success in bouncing back from struggles during the pandemic. The hotel business has rebounded strongly, with its vacation rental subsidiary in Europe also performing well. In a recent interview with Skift CEO Rafat Ali, Agarwal discussed various subjects including India’s surging economy, Oyo’s growing portfolio, and personal highs and lows from the past year. Agarwal reflects on the past three years as transformative for himself and the company, emphasizing the importance of focusing on what they do best and evolving their ambitions to be better every day.
Agarwal highlights the importance of balance in growing a business, using the analogy of a girl walking on a tightrope to represent the delicate balance of delivering great customer experiences, increasing revenue for property owners, providing inventory to distribution partners, and maintaining margins. He sets thresholds on consumer ratings, revenue for property owners, and EBITDA margins to ensure that Oyo is on track for success.
The impact of Covid on Oyo is seen as a blessing in disguise by Agarwal. The pandemic forced the company to focus on the most relevant markets such as India and Southeast Asia, leading to a redirection of efforts towards the core strengths of the business. Agarwal discusses Oyo’s expansion in the U.S., noting the success in providing online revenue to hotels that had not previously received it. The focus on digital demand creation and a digital-first approach has resulted in significant growth for Oyo in the U.S.
Looking towards the future, Agarwal sees opportunities for Oyo to upscale in India as the economy and customer preferences evolve. The company aims to provide higher-end experiences for customers while also improving returns for hotel owners. Agarwal emphasizes the need for balance in growth, ensuring that improvements in customer service, owner yields, and EBITDA margins are all maintained before expanding further.
Discussing Oyo’s footprint and portfolio in India, Agarwal highlights the company’s presence in over 10,000 hotels in a country with nearly 250,000 small hotels. He emphasizes the focus on upgrading experiences for customers and improving yields for hotel owners. Oyo’s strategy in India involves consistent growth while maintaining a focus on delivering value to customers, owners, and shareholders.
As Oyo continues to grow, Agarwal reflects on the company’s identity, seeing it primarily as a consumer brand focused on delivering quality experiences to customers, profit growth to hotel owners, and returns to shareholders. While the company has considered going public in the past, Agarwal emphasizes that their current focus is on generating earnings and improving profitability. Oyo’s emphasis on religious tourism is noted, with Agarwal citing the growth of infrastructure for pilgrimage destinations as an opportunity for the accommodation and travel industry.
