Ritesh Agarwal’s hotel room aggregation model is an original—and a winner. Here’s the story of Oyo.
Ritesh Agarwal was born in November 1993 in Cuttack, Odisha. He finished his schooling in his home state and then moved to Delhi to get a bachelor’s degree. What he did instead was drop out and not tell his parents about it, not knowing how they would react. Still 18 at the time, Agarwal decided to fulfil his childhood dream of becoming an entrepreneur. And thus started his gutsy journey to setting up Oyo, the company that is growing so rapidly, it has shaken India’s hospitality industry to the core. As things stand, Oyo is hurtling towards a billion-dollar evaluation, which will make it a rare Indian first start-up unicorn – a term reserved for companies with ten-figure valuations.
But before Oyo, there was Oravel.
Shortly after he dropped out, Agarwal, who comes from a Marwari business family, decided to make a dent in the hotel industry. He was selling SIM cards in his home town. Now, he had set himself a bigger target, and it came out of his own dissatisfying experiences with budget hotels. There was no set standard of service at these establishments, he felt. Unclean toilets, spotted sheets, stale food, no WiFi, no air-conditioning, just to list a few problems that plague them.
Straight out of college, Agarwal started Oravel, a website that worked on the AirBNB model and aggregated BNB facilities, private rooms and serviced apartments across India. It received a seed investment of Rs. 3,000,000 from VentureNursery. Later in 2012, Agarwal was selected for the 20 Under 20 Thiel Fellowship, from Peter Thiel, the founder of Paypal.
With a $100,000 grant from the Fellowship and the mentoring he received there, Agarwal now received the boost to turn Oravel into Oyo. In 2014, Oravel shut operations and Oyo began its dizzy ascent. In 2015, it had $125 million in investments from SoftBank, Greenoaks Capital, Sequoia Capital and Lightspeed India.
Agarwal’s plan? To provide branded, standardised and affordable services across India’s fragmented hotel market. It is an original idea. There’s no other business model like it in the world. Agarwal started aggregating hotel rooms under the Oyo Rooms brand. The rooms would provide clear signage, clean white sheets, complimentary breakfast, WiFi, clean washrooms, the option to pay by card, among a host of other services – all at affordable rates starting at Rs. 999.
By August 2015, Oyo had enlisted 15,000 rooms in 86 cities with plans to add 50,000 more rooms across 100 cities by the end of the year, as per a report in the Financial Express.
Just to put those numbers into perspective, Oyo is now the leading hotel room provider in India, leaping over the Taj Hotel group which boasts of an inventory of around 9,000 rooms. With India conquered, don’t think that Agarwal is resting on his laurels.
“Oyo Rooms aims to become the largest hotel network in the world,” it says in a presentation made to investors. Don’t be surprised if this boy from a tiny town from south Odisha pulls it off.
(Produced by Contagio Media. Photo via Oyo.)