Anish Nahar

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OYO Rooms: India’s largest budget hotel brand built in less than 3 years!
Anish Nahar
Last modified on December 6, 2015 at 3:29 pm
Learn how OYO is disrupting India's budget hotel industry and growing at breakneck speed!

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On December 13, 2015, Anish Nahar commented on SpaceX: The Quest for Affordable Space Travel through Reusable Rocketry :

Loved your article, Ian! I am a big fan of Elon (and would happily swipe the floor to work for him). It was very interesting to note that you mentioned ‘engineering-driven’ culture and flat organization structure as the core operating model. We always think of operating model as a set of processes, but interesting to note on how culture directly affect the outcome for a company.

On December 13, 2015, Anish Nahar commented on OYO Rooms: India’s largest budget hotel brand built in less than 3 years! :

I think OYO is still focussed on India as the market is huge (~1mn potential hotels). Many have started copying the model in their respective country. I recently came across zenrooms.com, which is a Rocket Internet company, doing very similar for South-East Asia.

On December 9, 2015, Anish Nahar commented on Tencent’s Growth Through Accelerated Innovation Processes :

Thank you for shading light on this amazing but relatively less know company! It was very interesting to read about the innovation that they have done even before leading western companies.

My question is what else they (more generally the Chinese companies) need to do to be the global leaders in their field and not just in China?

On December 9, 2015, Anish Nahar commented on BorrowLenses.com – Smooth Bokeh starting at $50 :

Interesting business model! It is sort of an asset leasing model where they have to manage both sides of the marketplace very closely. It is interesting that with so many SKUs they are still able to manage the inventory. Getting the existing retailer on their platform seems like a very interesting play. What do you think is their main competitive advantage that would keep the competition at bay?

On December 9, 2015, Anish Nahar commented on Blue Apron: Bringing economical exotic meal experiences to door-step :

Thanks for the Article, Kartik. Can you answer couple of questions:
1. How does the unit economics work? If the average meal cost is $10, how would they make money post delivery?
2. When customers are seeking convenience, why do they not order the food directly but rather, prepare the food at home? Is it mostly cost-driven?
3. Will they ever get economies of scale with 800+ recipes?

On December 7, 2015, Anish commented on OYO Rooms: India’s largest budget hotel brand built in less than 3 years! :

I don’t know the specifics for Airbnb but my guess is they have minimal on-ground personnel to do the quality checks etc. Airbnb would be a big competitor to the budget hotels and hence, it makes the case for OYO even stronger for these partner hotels to sign up with OYO. Standing alone they can’t fight with Airbnb, but joining forces with OYO and building a nation-wise brand certainly helps their cause. Also, I think India market is sufficiently large enough for both OYO & Airbnb to make a large business. (There are ~1mn budget hotels that OYO can partner with)

On December 7, 2015, Anish commented on OYO Rooms: India’s largest budget hotel brand built in less than 3 years! :

For the ‘better’ quality hotel on their platform, they brand them as “OYO Premium” and charge higher tariff/night from customers. Since, they are branded as premium, customer are also aware that these hotels will be better and pricier. Also, within OYO branded hotel, they charge differential pricing depending on competition, location, supply-demand etc.

The risk of losing hotel is minimal since the thesis of OYO is that customers are coming because of OYO platform. If the hotel is not listed as OYO, customers can’t book through their mobile app. Is is very similar to Uber – where a stand-alone driver can’t do much as customers won’t be able to reach the driver without Uber.

Hence, this model works best in the budget hotel category and not for premium hotels, as budget hotels lack the infrastructure to build their own brand to attract customers and drive utilization.

On December 7, 2015, Anish commented on OYO Rooms: India’s largest budget hotel brand built in less than 3 years! :

I agree with you Marco that growth is a double-edged sword – too fast a growth with little emphasis on quality would certainly set you up for failure. For OYO particularly, I think they invest a lot of resources on doing regular audits and keeping in touch with the partner hotels. If you look at their website, the majority of job openings are in either business development or in area managers.

Going forward, they will have to keep a sharp focus on maintaining this quality and keep their customers happy.

On December 6, 2015, Anish commented on OYO Rooms: India’s largest budget hotel brand built in less than 3 years! :

Rex, those are all very relevant questions and I am sure company is thinking about them all. My take on them would be:
(a) OYO has a war chest of $125mn+ which would prevent competitors to start a price war against OYO.
(b) OYO’s is already 4x the nearest competitor, ZO Rooms, in terms of number of rooms and is scaling even faster.
(c) I believe, this industry has massive network effects and is a winner takes all kind of market. Customers would come to you if you have room inventory and hotels would sign up on your platform if you have more customers.
(d) Hotels can’t be on multiple platforms unlike taxi market as they put up signage and would have some backend integration including OYO branded toiletries etc. Thus, if you are able to capture a hotel, it is very difficult to replace you.