Oyo changes business model from aggregation to franchise

HYDERABAD: Soft Bank-backed hospitality startup Oyo on Friday said it has changed its business model from aggregation to franchise, or operating hotels under the Oyo brand.

The hotels that were part of the aggregation model have converted into franchises. The shift was mainly to reduce operational costs and improve serviceability, the company said.

“In the last two years, we have evolved our business to 100% exclusive franchise, manage or operating. We do not anymore do aggregation and have become a full-scale hospitality company,” Oyo founder Ritesh Agarwal told reporters in Hyderabad on the sidelines of the launch of its engineering centre in the city. This is Oyo’s second technology development centre in India after the one in Gurgaon. Agarwal said the change was to rationalise the cost of resources deployed at partner hotels.

“Having one Oyo captain at hotels where we have five to 15 rooms or so pushes up the operational cost. However, with the same number of resources at a fully-operated hotel, we are able to keep the cost under control and it also improves serviceability,” said Agarwal.