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Finally, somebody talks about the problems with OYO's business model. I personally think it's a WeWork in the making for sure. If I had Softbank shares, this ar
by r_singh 7y ago
Finally, somebody talks about the problems with OYO's business model. I personally think it's a WeWork in the making for sure. If I had Softbank shares, this article would be enough to make me sell.
Meanwhile, here in India, journalists just can't seem to write about anything except the OYO's greatest achievement, i.e. raising a few billion dollars.
It should've been common sense by now, that raising huge sums, is actually a liability. Sure, it's an achievement for a founder to convince investors to give them a huge sum for their experiment, but most people are just looking at it as an end in itself (as if the company has succeeded already).
P.S - Just to reiterate OYO's founder's tendency to overpay. A friend of mine leased a hotel to OYO in Mumbai at a 30% higher price than what they would get for it otherwise (~$30,000/mo). And they're still paying the mount, even though rents are down another ~25% due to a slowdown.
Update: OYO's been getting negative news, mostly because of retaliation from hotels in India. Not because of making silly acquisitions, etc.
- sha_r_roh 7y agoInteresting, the most common narrative in most circles is how OYO is cheating its hotel partners left, right and centre. Basically, the OYO model is quite simple. Small hotels should upgrade their facilities and services to be in line with OYO standards (this upgradation is financed by the hotel owners). With this new OYO branding, it provides new customers to hotels. Better services would mean more customers and a higher revenue, right? But this ends up killing the hotel's regular supply lines and traditional channels. The real issue for hotel owners though is that while upfront OYO promises monthly payments higher than their current revenue, this seldom happens. Also apparently OYO is always late in paying dues and adding unsubstantiated penalties. Most news is littered with such examples. https://inc42.com/buzz/sikkim-hoteliers-protest-against-oyo-as-unpaid-dues-mount-employees-held-hostage/ https://inc42.com/buzz/sikkim-hoteliers-protest-against-oyo-... https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/as-softbanks-oyo-booms-some-indian-hotels-cry-foul-and-check-out/articleshow/71477016.cms https://economictimes.indiatimes.com/small-biz/startups/news...
- r_singh 7y agoYou're right, that was/is a phase. The FHRAI (federation of hotels and restaurant association of India) complained against some of OYO's business practices in July this year and it made a lot of news (mostly changing policies with regards to commission and also delaying commission) to the Competition Commission of India. Currently, OYO is making news for 4 reasons: * Protests from hotels (so called OYOpreneurs) * OYO founder's buyback funded by debt against shares and Sequoia, Lightspeed exit * OYO growing a lot and acquiring companies worldwide * Possibility of OYO being a WeWork in the making