MGMT 20143: Oyo Rooms Business Model Canvas Analysis Report

This report presents a detailed analysis of Oyo Rooms' business model, focusing on its application of the Business Model Canvas. The report begins with an executive summary and introduction, providing context on Oyo Rooms' establishment and operational model. It examines the nine building blocks of the business model, including customer segments (hosts and guests), key partners, value propositions (ease of booking and earning), key activities (marketing, IT operations), channels (website, apps, social media), revenue streams (service fees, commissions), cost structure (customer support, marketing), key resources (employees, technology), and customer relationships (easy booking, reviews). The interrelationships among these building blocks are then discussed, highlighting how they contribute to Oyo Rooms' success. The report identifies critical success factors, such as high-quality services and innovative hospitality, and acknowledges downside risks, including competition. Finally, it offers recommendations for improvement, such as enhancing promotional activities and increasing partnerships, concluding that Oyo Rooms is an online aggregator of budget hotels aiming to standardize quality and provide affordable stays.

Running head: BUSINESS MODEL CANVAS
Business Model Canvas
Name of the Student:
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Executive Summary
This paper has presented an analysis of the business model of Oyo Rooms that have the
biggest chain of hotels in its list. The various aspects of the company are examined in this
report in order to gain a clear insight of how the business is conducted and with what
resources. Furthermore, the diverse degrees of coordination among the different building
blocks of business model canvas are also discussed in this paper. The end of the paper has
listed out some recommendations for the part of the company after examining its case and
limitations.

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Table of Contents
1. Introduction...........................................................................................................................3
2. Business model.......................................................................................................................3
2.1. Building blocks...........................................................................................................3
2.2. Interrelationship..........................................................................................................6
2.3. Critical success factors................................................................................................6
2.4. Downside risks............................................................................................................7
2.5. Business model changes..............................................................................................7
3. Conclusion..............................................................................................................................7
4. Recommendations..................................................................................................................8
References:.................................................................................................................................9
Appendices...............................................................................................................................10
Appendix 1:..........................................................................................................................10

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1. Introduction
Oyo Rooms is considered to be the largest branded network of hotels, founded by
Ritesh Aggarwal in the year 2012 (Sharma et al. 2017). It is at present operating about 1200
hotels in 337 cities in Nepal, China, India, Indonesia, Malaysia and UAE. The term “Oyo”
stands for “On Your Own”. It started off its business operation by “building its business
model around the “aggregator business model” and it used to organise the partner with the
hotels, the lease rooms and then sell them under its own brand.” However, recently it changed
its business model from aggregation to franchise. Though the process is still same, the
company has changed its route to a whole new structure. This paper shall elaborate on
presenting a brief overview of the business model of the company.
2. Business model
The main objective of planning a business model is improving and enhancing the
experiences that are given to the customers and clients of the business. It is to mention that
Oyo rooms are online platform for hotel bookings (Milicevic, Sofronijevic and Milosavljevic
2016). It is claimed to be the biggest hotel chains. It books hotel rooms’ inventory, maintains
tem and then rents them to the end users at a take-up rate. As per the year 2014, the revenue
of the company was 76162.90 dollars.
2.1. Building blocks
a) Customer segments
The customer segments that Oyo Rooms target two types of market segment- a) the
host and b) the guests. The hosts are the people who own a house and want to earn extra
money from them or to meet new people. On the other hand, the guests are the millennial
who love to travel and want to stay comfortably at cheaper rates.

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b) Key partners
The key partners of Oyo Rooms are hosts, guests, business angels, photographers,
insurance companies, payment gateway etc. (Sharma et al. 2017). It is to mention that Oyo
Rooms acquired some luxury retreats international and sponsored Manor F1 Team as well. It
is also partnered with Tesla Motors for providing chargers at some host houses. It also
acquired NabeWise, a city which aggregates some curated information for some specific
locations.
c) Value proposition
a) Make it easier for the hosts to earn by means of renting their space at OYO Rooms
b) Make it easier for the guests to book homestays, restaurants and hotels with prices
that are less as compared to others.
c) Make it easier for both the hosts and guests to rent and book their spaces and hotels
through online marketplace platform and enjoy extraordinary new experiences.
d) Key activities
According to Benavides-Velasco, Quintana-Garcia and Marchante-Lara (2014),
“advertisement and promotion related activities are considered to be a significant part of the
high level of success that is gained by Oyo Rooms in the recent years”. Some of its key
activities of Oyo Rooms include marketing, IT operations, building a host network and
managing it, building travellers network and managing it and lastly, product management and
development.
e) Channels
“Development and formation of channels play a significant role in gaining high levels
of profits in the industry” (Wang, Chang and Shen 2015). Oyo Rooms reach its customer
segments through word of mouth promotion, the Oyo Rooms websites or other mobile

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applications like Android, iOS and Apple Watch. It also make use of digital marketing and
social media strategies like promoting the brand name through internet advertisements,
Instagram post, Facebook posts etc.
f) Revenue streams
It is to note that on every bookings, Oyo rooms charges its guests about six to twelve
percent guest service fee and to that of hosts, about three to five percent (Nandamuri, Rao and
Mishra 2020). With the same, the hosts also get the facility of offering “experiences” to the
guests for an extra charge of which Oyo Rooms take 20 percent as commission.
g) Cost structure
Some of the most important cost inherent in the business model of Oyo Rooms are
customer support, marketing, IT operations, technological set up and running costs, insurance
agreements and taxes. Apart from these, the company also pay salaries to its permanent
employees and to the freelance photographers. There are about fifteen Oyo offices all around
that provide 24*7 customer support. It provides some standardised hotel rooms with certain
features like television, air condition, complementary breakfasts and free Wi-Fi.
h) Key resources
It is to note that every company have some key resources that their value propositions
require. The key resources that are gained by Oyo Rooms are its efficient employees and
staffs that have the potential of influencing continuous development and growth of the
business based on the expectations and desires of the clients. For Oyo Rooms is their skilled
employees, local hosts’ properties, technology, insurance support, brand, platform, security
deposits etc. Oyo Rooms has more than 30 lakh lodging listings in about 65,000 different
cities and 191 different nations. All the costs of the lodge are set by the hosts. The pricing of
the product service of Oyo Rooms is determined by the hosts while taking into consideration

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the suggestions from the company. The other key resources include verified ID proofs, link of
social network accounts, cleaning and security deposit fees.
i) Customer relationships
“Advertising related activities can be effective for the organization to develop
relationships with the customers” (Dhar 2015). Oyo Rooms is aimed towards developing and
improving its customer relationship through ensuring that it is maintaining proper
communication with its customers. It does so with the help of allowing its customers easy
booking, home insurance to the hosts, allowing rating and review systems to ensure business
and service transparency, safety mechanisms on the basis of profile ratings and review
systems etc. Also, for the hosts, Oyo Rooms also offer free professional photography. With
the same, there are refer and earn offers and several types of promotional offers for the
customers.
2.2. Interrelationship
The above mentioned nine building blocks of Oyo Rooms are interconnected with one
another in terms of the products and services that the company provides to its customers. The
wide range of services right from fooding, lodging, travelling etc. are performed by Oyo
Rooms and all these are dependent on some effective advertisements and promotion that it
conducts. Each of these services influence the level of popularity and communication of the
firm. With the same, it is also to mention that the employees of the company as well as the
hosts who give their space to let the customers stay in are very passionate about their job role
and at the same time, they play key role in making the whole service and the company
popular world-wide.

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2.3. Critical success factors
The main success factor of Oyo Rooms lies in its high quality services and innovative
approach towards hospitality (Agrawal and Sharma 2014). The success that it has gained
within such a small duration of time has resulted in the formation of sustainable future
planning for the part of the company in order to make it competent of competing with the
other companies in the industry like airbnb, Yatra, Treebo, MakeMy Trip etc.
2.4. Downside risks
It is to mention that for Oyo Rooms, there is a presence of moderate downside risk as
there are several competitors present in the industry that provide similar products, services
and facilities and also, holds positive brand image like Oyo Rooms. Also, the new brands and
competitors in the business are launching at the same time and at more affordable price.
Furthermore, tracking each and every hotel is quite difficult.
2.5. Business model changes
The distribution channels that the company is using and the levels of communication
that Oyo Rooms presently have needs to be increased in order to reach more number of
customers (Rufai 2014). Along with this, the increasing awareness level among the people in
terms of the varied products, services and facilities also play a notable role in the process.
This is why, changes need to be made in terms of all these. Moreover, Oyo Rooms also
should increase its level of partnership by engaging with more partner companies and at the
same time, should develop efficient and effective relationship with them.
3. Conclusion
Hence, from the above analysis it is to conclude the Oyo Rooms is an “online
aggregator of budget hotels.” They partner with the hotels with an aim of standardization on
different measures in every room including complementary breakfasts, free Wifi, spotless

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white bed, television, branded toiletries etc. It provides rooms to the guests with standardised
price and quality and provide visitors with quality hotel room stays at diverse places around
the country. The company has also partnered with certain hotels and made them work with
them under their brand name.
4. Recommendations
Below are mentioned some recommendations for Oyo Rooms:
a) Oyo Rooms should make improvements in terms of promotional and advertisement
activities in order to reach more number of clients and customer base within lesser
time frame.
b) Oyo Rooms should increase the total number of associations and partners with some
key companies in the country it conducts its business. This will help it in building a
strong brand reputation.

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References:
Agrawal, T. and Sharma, J., 2014. Quality function deployment in higher education: A
literature review. International Journal of Service Science, Management, Engineering, and
Technology (IJSSMET), 5(1), pp.1-13.
Benavides-Velasco, C.A., Quintana-García, C. and Marchante-Lara, M., 2014. Total quality
management, corporate social responsibility and performance in the hotel
industry. International Journal of Hospitality Management, 41, pp.77-87.

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Dhar, R.L., 2015. Service quality and the training of employees: The mediating role of
organizational commitment. Tourism Management, 46, pp.419-430.
Milićević, V., Sofronijević, A. and Milosavljević, G., 2016. Contemporary Indian
management practices in the dynamic emerging market economy. Management: Journal of
Sustainable Business and Management Solutions in Emerging Economies, 21(78), pp.11-24.
Nandamuri, P.P., Rao, K.V.G. and Mishra, M.K., 2020. Sustainable Competitive Advantage
Through Business Model Innovation: The Indian Perspective. In Disruptive Technology:
Concepts, Methodologies, Tools, and Applications (pp. 191-213). IGI Global.
Rufai, I.A., 2014. The impact of communication technologies on the performance of SMEs in
a developing economy: Nigeria as a case study. The Electronic Journal of Information
Systems in Developing Countries, 65(1), pp.1-22.
Sharma, T.G., Jain, R., Kapoor, S., Gaur, V. and Roy, A., 2017. OYO Rooms: Providing
affordable hotel stays. Emerald Emerging Markets Case Studies.
Wang, C.H., Chang, C.H. and Shen, G.C., 2015. The effect of inbound open innovation on
firm performance: Evidence from high-tech industry. Technological Forecasting and Social
Change, 99, pp.222-230.

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Appendices
Appendix 1: Business model canvas of Oyo Rooms