The Rise of OYO: From Budget Rooms to a Global Hospitality Giant

OYO, short for “On Your Own,” is one of India’s most iconic startup success stories. Founded in 2013 by Ritesh Agarwal, OYO began with a simple idea—to provide standardized, affordable, and quality accommodation to travelers across India. Over the years, it has grown into a global brand, disrupting the traditional hotel industry and transforming the way people book budget stays.

The Genesis of OYO

Ritesh Agarwal, a college dropout and a tech enthusiast from Odisha, launched his first startup “Oravel Stays” in 2012. Oravel was initially a platform similar to Airbnb, designed to help users book budget accommodations. However, Ritesh soon realized that while India had many budget hotels and guesthouses, they lacked consistency, cleanliness, and customer trust.

This insight led to the transformation of Oravel into OYO Rooms in 2013. The goal was not just to aggregate hotel listings, but to partner with small hotels, standardize their services, and rebrand them under the OYO name—ensuring quality and uniformity across all properties.

The OYO Business Model

OYO adopted an asset-light franchise model. It did not build or own hotels; instead, it partnered with existing small and medium hotels and offered them technology, branding, and operational support. In return, OYO charged a commission on each booking made through its platform.

Its unique value proposition was:

• Standardized amenities like Wi-Fi, clean linen, AC, and hygienic washrooms

• Affordable pricing with transparent online booking

• An app-based interface for both customers and hotel partners

By leveraging technology, data analytics, and operations support, OYO helped budget hotel owners increase occupancy rates and revenue.

Meteoric Growth

OYO’s model quickly gained popularity. By 2015, it had expanded across 100 Indian cities and raised multiple rounds of funding from marquee investors like SoftBank, Sequoia Capital, and Lightspeed Venture Partners. Its Series D funding from SoftBank marked a major milestone, propelling OYO into the limelight as one of India’s fastest-growing startups.

In 2018, OYO went global—launching operations in China, Malaysia, Nepal, the UAE, and the UK. It continued to scale aggressively, and by 2019, it was present in over 80 countries including the US and Europe, with 43,000+ hotels and 1 million rooms under management or franchise.

Innovations & Tech-Driven Operations

OYO built a powerful technology stack including:

• OYO OS – a full-stack property management system for hotel partners

• Krypton App – used by on-ground audit teams for real-time quality checks

• OTA integrations – seamless listings on platforms like Booking.com, MakeMyTrip, and Goibibo

Additionally, OYO introduced verticals like:

• OYO Life: long-term co-living rental homes for students and professionals

• OYO Vacation Homes: targeting family travelers and tourists

• OYO Workspaces: shared working spaces

Its tech-first approach allowed it to scale rapidly while ensuring customer experience across thousands of properties.

Challenges and Criticism

Despite its meteoric rise, OYO faced several challenges:

1. Quality Control: Rapid expansion sometimes came at the cost of service quality. Many customers reported inconsistent experiences at different OYO properties.

2. Hotelier Backlash: Several hotel partners accused OYO of changing revenue-sharing terms, delayed payments, and lack of transparency.

3. COVID-19 Impact: The global pandemic in 2020 brought the travel industry to a standstill. OYO had to lay off thousands of employees, shut operations in several regions, and rework its expansion plans.

4. Over-valuation & Financial Losses: Critics argued that OYO expanded too quickly and burned a lot of investor capital without sustainable profits. At its peak, OYO’s valuation crossed $10 billion, but financial disclosures revealed massive losses and cash burn.

The Road to Reinvention

Post-pandemic, OYO took a more conservative and strategic path. It:

• Focused on profitable markets like India, Europe, and Southeast Asia

• Enhanced partner relationships and improved payout structures

• Strengthened its tech stack for efficient hotel onboarding and automation

• Explored new business segments like wedding venues and boutique properties

OYO also filed for its Initial Public Offering (IPO) in India, aiming to become a publicly listed company. While its IPO was delayed due to market conditions, it signaled OYO’s intent to build a more transparent and sustainable business.

Impact on the Hospitality Sector

OYO democratized travel for the Indian middle class. It:

• Empowered small hotel owners by giving them digital tools and branding

• Created jobs in hospitality, customer service, and operations

• Brought budget hospitality into the mainstream

• Inspired a wave of hospitality-tech startups across emerging markets

OYO’s journey from a startup in Gurgaon to a global hospitality disruptor is a testament to entrepreneurial vision and risk-taking. While it has faced its fair share of criticism and challenges, OYO remains one of India’s most recognizable startup brands. With a renewed focus on profitability, customer satisfaction, and sustainable expansion, the next chapter of OYO’s story may be more grounded—but just as impactful.