OYO Hotels, India’s largest and fastest-growing hotel chain, aims to break into Britain’s budget accommodation market and challenge AirBnB by launching over 700 signed rooms with 25 properties that are likely to go live by the first week of March.
Anurag Kamandula, the supply head of OYO revealed that out of the company's 25 properties, 23 of them are currently in London, the other in Glassgow and Blackpool. But at a time when Brexit seems to be driving every aspect of business forward, he talks about the potential of the market in Manchester.
“Manchester is going to be the third biggest market for us after London and Edinburgh looking at the increasing investment in the city both in terms of capital and human resources” he revealed.
OYO's first property went live on 12th July last year at 30 Townhouse Sussex. But the company is now focussing on the regions around London from Torquay to Portsmouth wherein they are looking to leave their footprint over at least 30-35 cities by the end of this year. Whitbread’s Premier Inn chain is the leader in Britain’s economy hotel industry. Other branded operators include private equity-backed Travelodge and Holiday Inn Express, a unit of Intercontinental Hotels Group, AirBnb and even Ibis group. But how does OYO penetrate an already saturated tourism market of London?
Artificial Intelligence helped increase revenue by 35%
“We've tried various routes of real-estate agents but we've realised that the personal touch is missing and that is why we have a team of Business Development Managers (BDMs) who are meeting on a one-to-one basis with these property managers,” he said.
Premier Inn reported turnover of £2.01 billion in its latest fiscal year, offering nearly 72,500 UK hotel rooms at the end of 2017. It aims to have 11 percent market share by 2020, up from 6 percent in 2010. Whereas Travelodge, offers about 40,000 UK rooms and reported revenue of 637 million pounds in 2017. Does this worry the millennial start-up group?
“We experimented with our first property OYO Townhouse 30 Sussex where we observed that we have at least increased the overall revenue by 35% and this is over a three month period. So let's say that the hotel was doing a business of roughly about £350,000, and now it has increased to somewhere around £450,000,” he explains.
The properties in London run at a great occupancy rate of 80-85% and so in a way the traditional budget hotels, according to Anurag, never had to re-invent themselves. But, he says that “OYO is figuring out if the pricing can be changed using our Artificial Intelligence algorithms and if we can increase the revenue for each of our hoteliers.” Anurag who has been a member of the OYO family for the last three years spoke about the manual system of revenue changes that London continues to follow. The property managers also act as revenue managers and London follows a manual system where if the former makes any changes then the whole cluster follows. While the company has still not decided the price points of their properties, Anurag talks about the use of AI and technology as the determining factors.
OYO Homes to be facilitated by AirBnB
“We follow two systems of pricing- consumer based pricing wherein we understand the price point's affordable to the consumer, we understand the signs of conversion and positive trails that are left behind on social media. The data team ensures that the price keeps moving and because we work with a lot of Online Travelling Agents (OTAs) such as booking.com, we understand how to better sell our product,” he said.
At a time when the British Pound hasn't regained its initial highs and different industries from food to pharmacy are reacting to fears of a no-deal Brexit and dipping their feet into stockpiling products, Anurag doesn't seem concerned about the elephant in the room. Regardless of the uncertainty around the subject Anurag thinks that it is not going to bring a downward trend in their business and tourism will continue to be a boom.
“We never thought that there would be an OYO which would be going at £160 when we initially started at £110. But we still have to figure out the price point for our properties. And at the same time we're also bringing in this concept of OYO Homes where AirBnB will become a facilitator for us,” he revealed. At present OYO has about 1000 signed rooms in the whole of Europe and apart from the UK they are now looking to expand in Eastern Europe as well.
