OYO Rooms founder Ritesh Agarwal talks entrepreneurialism, employment strategy and spotting a gap in the market with Pamela Whitby

The young, go-getting founder of a fast-emerging managed hotel market place has always been entrepreneurial. At 13 he was already doing a range of different odd jobs, one of which involved selling mobile SIM cards.

Since launching OYO Rooms in May 2013, following a pivot from an earlier model, the firm’s inventory has grown to over 4,500 rooms and it recently passed the one million room check-in mark. At the tender age of 23, Agarwal received a Forbesbadge of honour – he was named one of the American title’s 30-under-30 in the consumer technology space.

It was while researching a homegrown version of Airbnb that he stumbled on another gap in the market – that there was no set minimum standard of quality and service at non-branded hotels.In this exclusive interview, we hear insights from one of Asia’s youngest movers and shakers. 

E4T: You’re clearly a natural entrepreneur. When did you realise you had this edge?

RA: The entrepreneurial bug bit when I was quite young. From an early age I knew that I wanted to start a venture of my own – I wasn’t sure what that would be but the idea of solving problems and being able to create and build value fascinated me ever since I was a teenager. I enrolled into a college in Delhi but spent most of my time sneaking into entrepreneurship events and start-up mixers to hear successful entrepreneurs share their experiences! Hearing these inspiring stories strengthened my resolve to start out on my own, and build something enduring and impactful.

E4T:You started working at the age of 13. Do you think growing up in a complex place like India fuels entrepreneurialism?

RA: I believe that this generation of young adults has possibly had the greatest exposure or opportunity to be influenced by the recent start-up ecosystem in India. There was a cycle of companies that started up in the late 1990s only to be consumed in the dot.com bust; then there was a second wave built in the mid noughties. But if I understand you correctly, I suspect you are asking whether a country with complex problems and vast administrative and logistical challenges will automatically fuel entrepreneurialism. The answer to that is both yes and no. Some of the problems that entrepreneurs are trying to solve have been around for decades – and I think many have tried to address these previously. But a lot of the interest we are seeing in this industry is also a result of a more structured or supportive ecosystem locally and tremendous success stories internationally. There are inspirational global examples, global icons really (Tesla, Uber, Elon Musk, Mark Zuckerberg!) - and a lot of us have grown up wanting to emulate them and carve out a path of our own.

E4T: When and how did the idea for OYO rooms come about?

RA: When I was 17, I started Oravel to run on an Airbnb-like model for India. I started travelling across India to identify and enroll new properties. As a result, I ended up staying in more than 150 bed and breakfasts, guesthouses and hotels in different towns and cities. By the end of it, I concluded there was no set minimum standard of quality and service at non-branded hotels. If you were lucky you ended up having a good experience but you were more likely to endure poor quality bed linen and mattresses, lack of room and washroom hygiene or even rude and unsympathetic staff!  So the problem was not discoverability of these hotels, but rather the lack of a predictable experience. Little wonder that customers were wary of booking a hotel-room online or remotely!

The problem was not discoverability of these hotels, but rather the lack of a predictable experience

E4T: So you spotted a different gap in the market?

RA: Exactly. I pivoted the business from Oravel to OYO Rooms in May 2013. Our promise was to introduce predictability, affordability and accessibility when booking a hotel in India. We’ve made a lot of progress but it’s also just the tip of the iceberg. The Indian hospitality industry has immense potential, and there is so much to do. Each day, we are tirelessly working towards ensuring consistency in each and every aspect of a traveller’s stay at an OYO – and providing a delightful stay experience.

E4T: Who is your target audience right now and how many customers have you booked rooms for?

RA: Anyone and everyone who needs a place to stay, when out of home, is our target audience. We aim at delivering exceptional customer experience to all travellers, be they domestic or international tourists or corporate travellers. We’ve also witnessed some interesting use cases -- people locked out of their homes have landed at an OYO or when their electricity has been cut off. There are also those people who work late and don’t want to make the long commute home; they have used our services too. Over a million people have checked in to date, and since December we have clocked over a million booked room-nights a month.

E4T: On an under 30 note, did I read somewhere that all employees are under 25?

RA: Not all employees, but a lot of them are under 25. This wasn’t a planned strategy – it’s just that nearly one-third of our employee base is involved in direct customer-service through our call-centre and the median age in that function tends to be younger. The business leaders are mostly in their late 20s and 30s - again, not by design, but the tenure track for such roles requires professionals with sizeable industry experience. Organisation wide, our median age must be in the mid-to-late twenties range.

E4T: What is the business model - do hotels pay commission on each booking? What is that commission?

RA: Yes, we are a commission-based managed marketplace. The commission is a variable subject to various parameters – such as location and performance. We enter into a partnership with hotel owners, aggregate their inventory (mostly in the unbranded segment), get them visibly transformed (and standardised), brand them as OYO Rooms and make them available for purchase online and offline through our sales channels.

E4T: Do you see global firms like Airbnb as a threat? Are you an acquisition target?

RA: We have a robust business model catering to an underserved market in India and we are also looking at overseas opportunities. Last month, we launched in Malaysia. The OYO brand name is pretty strong and enjoys customer confidence and recall. We are not threatened by companies working in the same segment as we believe that competition helps expand the market both on the supply and demand side. Our focus is on our operational metrics, organisational agility and building tech solutions to solve problems and enable a great customer-experience.

We are not threatened by companies working in the same segment as we believe that competition helps expand the market both on the supply and demand side

E4T: What sort of skills do you need to make it India?

RA: In India, as anywhere else it requires passion, dedication and commitment to stay on course as a start-up founder. Given the pace of things here, you probably need a little more patience and people-skills. We have a Government that is committed to supporting the start-up ecosystem through funding, regulatory and logistical assistance. The Start Up India policy launched last month was a welcome step in this direction.

E4T: What are your top three business priorities for 2016?

RA: Strengthening processes to enhance customer experience, and enabling greater level of standardisation are definitely top of our priorities. We are also focused on operational excellence to achieve healthy unit economics.

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