Ritesh Agarwal, founder and CEO (Group) of OYO Hotels & Homes, takes Global Franchise on his journey from traveling on a shoestring budget to founding and being at the helm of an Indian franchise that is disrupting the global hospitality market
How did Oravel Stays lead you on to OYO Hotels & Homes?
RA: I started my entrepreneurial journey with a platform for listing diverse accommodations like small assets and vacation homes. We had a significant amount of assets in the early days, and since those owners became friends, I started spending time staying with them while I was between school and university. During such trips, I discovered the disconnect between demand and supply of quality living spaces.
While I was traveling on a shoestring budget and had to lodge in some of the not-so-great guest houses, I realized that I was looking at the wrong end of the rope. The problem wasn’t the lack of availability of budget hospitality options, it was that the majority of mid-market and economy hotels, whether branded or unbranded, lacked the minimum baseline standards of quality and service delivery. This meant that the solution wasn’t merely aggregating hotels on a website, it was to upgrade the experience and take responsibility for fixing it.
I wanted to fix this problem by using design, technology and talent. That’s how OYO was launched in 2013, with the promise of delivering chic well-designed stay experiences. OYO today is the world’s second-largest and fastest-growing chain of hotels, homes, managed living and workspaces.
What was the most valuable lesson you learned from Peter Thiel?
RA: The Thiel Fellowship is a school of learning like no other. I was the first resident Asian to be selected and graduated from the Thiel Fellowship and was mentored by Peter Theil himself along with other visionaries. I learned so much from spending time with a number of U.S.-based startups, famed Silicon Valley entrepreneurs, investors, thinkers, and visionaries. The mentorship I received and the quality of ideas I was exposed to were easily on par with the best business schools. I got to learn everything while actually pursuing my dream.
Learning by doing, that’s what Peter Thiel wanted each of us to focus on. Building and scaling a disruptive startup, while simultaneously pursuing the fellowship program, were two intertwined journeys that were also life-defining experiences for me.
The most important learning, however, was understanding how to think big and scale a business, and the importance of believing in my ability to create an impact. As entrepreneurs, we are wired to take risks, we are eternal optimists and I learned how to channelize this in the right direction. After returning, I single-mindedly focused on building OYO Hotels & Homes with a mission to upgrade all forms of real estate and deliver quality experiences. I am humbled to see the impact we’ve made in such a short span of time – OYO Hotels & Homes is today India and South Asia’s largest, China’s and the world’s second largest, and the fastest-growing chain of leased and franchised hotels, homes and living spaces.
SOME OF MY BIGGEST LEARNINGS FROM PETER THIEL WERE:
• Start small, nail it and then make it big
• Be humble, be focused and have grit
• Focus on your organization’s culture, recruit only the best
• Look for details and keep the big picture in sight
• Stay agile, but always remember your mission
• Set processes early on and challenge the status quo
• Work with investors you respect
• Gun for a great product, everything else will follow
What excites you most about the world of franchising?
RA: Like most other hotel chains, OYO in India and our early markets in Southeast Asia and the Middle East started with franchise- and lease-based agreements with real estate owners. However, in markets like the U.S., we are now working with real estate owners through consulting and revenue management contracts. Talking specifically about the franchising model in our early markets, the most exciting thing about it is that it gave us the ability to offer affordable, accessible and standardized stay experiences at scale. The model enables us to have uniform standards across all the properties in order to provide a quality customer experience.
Why did you choose to make the business a 100 per cent inventory-exclusive franchise in 2016?
RA: Since its launch, OYO has brought about a change in the budget hotel segment, giving Indian consumers that were earlier subjected to exploitation by touts, poor quality customer service and unhygienic living spaces, the opportunity to experience standardized hospitality at affordable prices. Our business model has evolved since then.
In 2015, we realized that in order to provide a consistently high end-to-end customer experience, it was not sufficient to just aggregate hotels. We decided to pivot our business model to a full inventory, full stack hotel chain that leases and franchises hotels in India just like all the other hotel chains worldwide. It meant making structural changes to our operations and making competency-based investments across the company. Deploying superior technology was one of the key aspects.
We started investing heavily in strengthening our capabilities both in the form of technology, talent and network while creating an ecosystem of efficiency through which we were able to deliver higher yields for our asset owners.
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