Abhinav Sinha is global chief operating officer for OYO, overseeing the
company’s efforts to grow its business around the world, which now stands at 43,000
hotels and 130,000 vacation homes in more than 800 cities, according to the company.
The India-based hospitality company raised
$7.4 million in a Series F round in January, which followed a massive $1.5 billion
round in late 2019.
We talked to Sinha about what the company has learned through the pandemic,
new tech products it has launched and its plans for future growth. The
conversation has been edited for brevity.
Looking back on the last 18 months, what are the most prominent learnings
from the COVID crisis?
If you look at a company in OYO’s stage, we were hit harder because we are a
growth company. We are not a 20-year-old company with all types of plans and
scenarios built. We were in a very aggressive growth stage. When you are in
expansion mode you always have opportunities to pause and really strengthen
your technology suite and upgrading capabilities, and that was an opportunity which
COVID provided.
The fact that 98% of our check-ins happen on our technology that sits at the
front desk... we were able to really double down on this tech to solve for a
much better experience for our partners. And also on the side of the customers,
while demand dried up significantly, new use cases emerged. Almost 3,000-plus
front-line medical professionals stayed with us in the United States, 2,000-plus
in the United Kingdom. About 73,000 Indians who got repatriated from different countries
landed in India and completed their quarantine at OYO hotels. So it was a massive
challenge to make sure we were open, and we were ready to serve with new
protocols and by bringing our partners and our employees together in this significant
crisis.
Has it been more about
challenges or opportunities?
At the macro level I would
say more opportunities than challenges. When the pandemic hit we of course were
not thinking about this. We were all about how can we support our partners.
We launched a product for
customers which was called “Sanitize before your eyes” where partners work with
us to really sanitize the rooms right before the customer checks in, in front
of the customers, which helped build a lot of confidence.
And we launched multiple
products to help our partners continue to grow their business. One of them in India
we call it “VaccinAid.” On our consumer app, our partners have the ability to
declare the vaccination status of their staff and customers can see if the
staff has been vaccinated. So if the staff has been vaccinated of course the customers
feel much higher sense of confidence and these hotels - about 200 hotels are already
there – we are already seeing 40%-plus levels in uplift in conversion when the
hotels are tagged as staff being vaccinated.
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Then [in recent months] we
are back on the growth strategy. We have been able to close deals, get them onto
our platform. That entire approach of really listening to them and
co-building solutions with them made us a preferred partner for a lot of small
and mid-economy hotels across the globe.
How many new properties have
you added in the last year?
We don’t talk about specific
numbers, but if you look at our vacation homes business, our supply will be
close to 30 to 40% higher than what we were before the pandemic. Our new supply
has been very healthy across the globe. Across each of the countries. India and
Southeast Asia specifically we continue to do very well, even during second
wave as we speak right now.
In the U.S., what is
your primary strategy bringing new properties to the OYO brand?
Our strategy for the U.S. is
absolutely to focus on smaller hotels in size. We realize there are certain
specific type of hotels where we believe we can significantly help them by
bringing our science of pricing, conversion and distribution and these are
typically less than 100 rooms in size, not located on the high street
locations.
It’s fair to say that yes the mix would be more than 50% independents.
But the strategy is more defined by locations and the type of hotels where we
can really create value and bring our suite of product and growing their
business for them.
In late 2019, OYO was working toward growing its vacation homes business in the
U.S. While we know that generally across
the travel industry the private rental sector did relatively well through the
pandemic, we haven’t heard much lately about OYO Vacation Homes. What is the
division’s current status and growth plan?
Our vacation homes business is a European business primarily. We continue to
do very well in that geography. We of course have plans of taking it international,
and I would say that COVID has maybe added a few months to our plans, but those
plans absolutely remain there.
From a focus perspective this is a business we understand very well now. We
treat hotels and vacation homes very similarly from a tech stack perspective. So
the capabilities that we look at that create value for hotels, a very similar set
of capabilities are actually creating value for homeowners. When we look at
dynamic pricing, very similar on both sides. And when we look at the science
regarding images, the science regarding ratings and reviews, a lot of this to
drive higher conversion, science behind distribution and inventory control. So
we basically take a very consolidated approach... and there are a lot of
synergies across these two businesses.
So you do have plans to grow OYO’s vacation homes business in the U.S.?
That’s absolutely right. To be honest we don’t have a firm timeline. We
still believe we are in the middle of a COVID wave, which most importantly
brings uncertainty. But as we emerge out of it and there is more clarity around
different markets... we will have a new timelines and ambitions of how we take
this business into different parts, not just the U.S.
Can you tell us more about
some of the technology solutions OYO has created in the last year and is that
development all done in-house?
We have a very strong data science
team, a very strong product team and a very strong team of engineers – all of
which is in-house and split across multiple locations.
On our consumer app, our partners have the ability to declare the vaccination status of their staff and customers can see if the staff has been vaccinated.
Abhinav Sinha - OYO
A couple more examples of significant
investments we made. We now have 85% of all customer queries answered by us through
our chatbot. It’s called the Yo chatbot. This reduces a lot of pressure on our merchants
– they get fewer calls from customers, they are able to focus more on their job
and they can plan their days better. This is a product that was launched in
2019 but at the end of day this is machine learning – you need to invest, you
need to keep making it better so from levels of about 30 to 40% of queries we
have taken it to now 85%, almost nearing 90%, resolved by the chat.
We also invested heavily in working
hand in hand with our partners to think about recovery. We have a very unique
product where we partner with our merchant hotel owners called Discover. This is
a product that sits in the consumer app and the merchant PMS system both. It allows
a hotel to win new customers. The merchant can go to the product, opt in with a
certain number of rooms every day, and these rooms are available for us to
distribute to new customers on the platform at deeply discounted prices. So it’s
like a program that Uber or Airbnb have used to attract new customers, which is
giving them first trial at a significant discount, but it is fully controlled
by the merchant and opted in by the merchant.
We’ve been doing it for about
five months. Already India and Indonesia – if you look at our two largest markets
by number of hotels – about 40%-plus hotels in both markets are already using this
program every day. We just launched this month in the U.K. and are in the process
of launching in the U.S.
What are OYO’s strategies as far as distribution and marketing?
It’s great to be at the forefront of distribution in the travel industry. In
Q4 last year OYO’s app in travel was globally the third most downloaded app
worldwide as per App Annie, after Booking.com and Airbnb... 90 million-plus downloads
and more than 50% of the demand globally comes through app. And a larger proportion
through the organic channels. Less than 13% of our business in a given month, and
less than 6 to 7% in India, comes from paid marketing.
For us the distribution strategy starts with what’s best for our partners, what’s
best for our merchants. On average, any hotel that joins OYO typically ends up
being visible on six to seven additional channels that are all online than when
it was not with us. And about 60% of the hotels we bring online in India are
coming online for the first time. This number is about 15% in the U.S. as well. But
this is mainly a developing economy phenomenon. Typically we end up increasing
the online business for a hotel on average, pre- versus post-joining OYO, between 1.5
to two times. And that has a significant impact on the bottom line because hotels
are primarily a fixed-cost business.
So third-party distribution... is an integral part of our strategy. Whether its
meta like Google or Tripadvisor or whether it is third-party online travel
agencies like Booking.com, Expedia, they are very, very good strategic partners
for us. We work very closely with them to increase the conversions, which is a
win-win for everyone. And on top of this we have our own suite, our own direct
demand suite where we have our consumer app and web and one of the core
ingredients across all of this is our pricing engine.
What is OYO's growth plan for
the next five years for OYO?
Our strategy for the next five years is basically
on two pillars. How do we continue to build great products for our merchants, which
drive ease in their operations and give them increasing revenues. And for
customers how do we give them a seamless, easy-to-use place to book and really
own their journey end-to-end. And we have seen consistently as long as we do
this, growth will happen.
Underlying this we are looking
at how do we reach out to new merchants. We have salespeople on the ground, and
they reach out with our proposition, meet the partners, extend the proposition
to them. We are also investing heavily in getting a lot of inbound leads... a
lot more partners are visiting our website and filling out forms and leaving queries
there. We are already live with self-signup and self-onboarding platform, where
you can go and not just create a lead but use that to leave all the data,
upload the photographs and with a few assisted steps you go live.
In our Homes business this is
already live... it’s now more than 100 rooms have already gone live with us
through this. The investments on the site are not just growing our partner base
but how do we make it really easy in a post-COVID world where partners do not want
to have too many meetings. The movement online is not just happening in e-commerce; we want to be the leaders in pioneering that movement on the hotels and home
side as well.
In my research I came across
some recent stories in Indian newspapers that OYO is looking to raise $600
million in debt financing – can you tell us more about that and the company’s general financial status?
Specifically on that we aren’t
able to share any details at this point in time. The overall situation is we
are very well placed. We are very healthy now. We are benefiting from the surge
that global travel is seeing. Being an Indian company, what happened in India
over the last couple of months was heart wrenching, but business-wise we are sitting
at a place where this whole term “revenge travel’ is real. Memorial Day in the
U.S., our business was significantly higher than what we saw in 2020, also in the
U.K., and India is starting to pick up.
We are excited about where we are sitting
financially. We are absolutely comfortable with the cash we have. Our approach
is more about being ready and making the most of the resurgence in travel that we
will see in the second half of this year and in 2022. We do believe travel will
come back much faster. And we believe the place we have in the industry will
give us some steady tailwinds. And it’s all hands on deck at this point to unlock
as much growth as we can from this new position.