In an exclusive conversation with BW HOTELIER, Rohit Kapoor, CEO of OYO India & South Asia, talks about the company’s performance, footprint, partner dealings and much more.

From lockdown to survival, how has OYO remodeled itself amid the pandemic?

We used the lockdown period to strengthen our relationships with our partners and customers, as well as keeping focus on cash and cost management. We are currently working on enabling a large number of partners and consumers to recover completely to pre-COVID levels and grow the network on the back of the improved products and experiences. To enable this we continue to make significant investments in our technology capabilities.

Customer Experience:

* Our wide range of offerings suit the needs of every traveller. Over the last several months, we launched a number of marquee and industry-first initiatives for customers, such as Contactless Check-in which essentially lets you check into a OYO hotel from anywhere eliminating the physical touchpoints completely.

* Sanitised Before Your Eyes (SBYE) has been appreciated as a novel and high-confidence consumer proposition during these times.

* We launched Yo! Help , a 24*7 real-time chat assistant for guests with a valid booking across its hotels and homes globally. Nearly 85 per cent of all consumers queries have started to get closed via this tool itself.

Partner Engagement:

* Reconciliation & Simplification of deal structures: Nearly 60 per cent of our properties are onboarded on simplified deals - Crystal Deal - with a brief, 3-line reconciliation, an industry first in many ways.

* Weekly payments: Weekly payout modules have helped partners with their working capital needs and provided a boost to owners during the pandemic.

* Generating demand in the COVID world: We worked to ensure that our partners experience strong demand even during the pandemic. During the COVID, we have served our partners with newer sources of revenue, such as quarantine demand, stays for first responders, government channels, etc. OYO Direct demand sources are contributing to 90 per cent+ of demand at a hotel, outstripping the contribution by online travel agents catering to a hotel.

* Technology to improve access and ease: Access to partners has been a clear priority for us across the country. Over 70 per cent of our partners are now connected to us directly via our partner facing app - ‘CO-OYO’.

* Pricing: We have been focused to provide greater flexibility in the hands of our partners. Our partner self-serve pricing tool - Tariff Manager - has seen 85 per cent adoption among partners where in the partners can contribute to managing local peaks and dips in an effective manner.

* Based on these initiatives, our partner NPS has improved substantially over the last 2-3 quarters, by several multiples.

Cost and Cash Management

* We invested in structural technology led changes to ensure cost structures don't go up with growth and we are seeing substantial operating leverage as a result.

* Our entire network is on revenue sharing model with very low CapEx Investments.

* Overall, structural investments, variabilization of costs and operating leverage are delivering a margin accretive recovery.

* Based on remodeling in several parts and efficient management of every dollar spent in business, our gross margins are back to more than 100 per cent in India as we have restructured the business for profitability.

The overall hospitality, travel and tourism market has been in distress and under a lot of pressure given this unprecedented lockdown and sector aggregators, despite their asset-light model, have seen adversities which have very few parallels. Without deep pockets or otherwise, this exposes you to bare knuckles financial trauma which in the short-medium or long term will have a telling effect on your and your partner hotel prospects. How do you plan to come out of this and support your partners who at best have inverted pockets?

We have extended every possible support to our asset owners/partners across India and other markets so they can sustain through this pandemic. We are working with them to open supply in a planned manner, closely tracking the demand-supply equilibrium. As demand picks up in parts, our partners are experiencing strong demand, e.g. our Townhouse brand has already recovered to 85 per cent of occupancy of pre-COVID levels.

At the same time, we are engaging with partners to keep a regular check on the market pulse. We engaged significantly through OYO Sambandh - a large scale partner outreach program, we connected with over 2100 partners where relationships had been challenged. We have organized 60+ webinars which were attended by over 4,000 of our asset partners where we have discussed their queries and concerns. As mentioned earlier, we have also invested heavily in improving partner on-boarding through launch of a simplified deal - Crystal - as well as on reconciliation to be more frequent, resolving working capital challenges for partners to some extent. We also spoke to the topmost stakeholders of the ecosystem on behalf of our partners. We have introduced the OYO Samvaad series where our partners can dialogue with key representative in travel and tourism.

What was OYO’s footprint pre-pandemic and what is it now?

In terms of the footprint, while we still have scale, we are currently working towards achieving 85 per cent of pre-COVID levels of supply in the country towards the end of 2020. The supply momentum is building up for hotels and homes business in India. Asset owners in India continue to choose OYO as their preferred choice as we continue to add 15,000-18,000 rooms per month in India. Also, more than 50 per cent supply of our franchise hotels have come back to pre-COVID level occupancies and for OYO TownHouse it is now ~85 per cent.

What is OYO doing to maintain transparency in their dealings with hotels?

From our discussion with partners in India, we received a good share of feedback. Some of it led us to offer a revised deal with a simplified OYO share proposition. We launched the self-help section & support ticket center within our partner-facing app - Co-OYO to provide easy access to any kind of support material to our partners, and enable them to reach out to OYO in case of a query and get real-time ticket visibility. We also launched an easier to understand reconciliation statement and have moved to weekly payments. This ensures transparency in our day-to-day operations. Today in India, over 80 per cent of the properties have opted to be on OYO Secure - a prepaid wallet based system, which is also a feature that our partners love and rate high among our partner surveys.

Recently, the company mentioned that it plans to focus on existing markets with no expansion plans. Can you shed some light on the same?

While I would not be the right person to comment on this, what I can say is that our primary focus globally is to become one of the most reliable value hotel providers and vacation home management company. While the direction is to focus on the core markets like India, we will continue to track the results and impact of COVID very closely but definitely continue to grow in the post covid world.

The year 2020 has been difficult for everyone. Kindly share the OYO’s performance in terms of occupancy and RevPAR across India and globally?

Since I lead OYO’s business in India and South Asia, I will be able to share details specific to this Geography. At OYO, we have managed to reach ~45 per cent of pre-COVID occupancy levels. Our used room nights have grown steadily 30+ per cent m-o-m since bottoming out in May. Some of the brands are performing much better with OYO TownHouse operating at 85 per cent of pre-COVID occupancy levels. Also, you may find it interesting that throughout COVID our ARRs have remained steadily between 90-100 per cent of pre-COVID range, whereas market data will tell you chains dropped them between 50-80 per cent. This is a testament to the fact that we’re in the right direction, slowly yet steadily rising above the challenges with a strong recovery over the last few months.

According to you, how is the Indian market different from other countries for the revival phase?

COVID-19 has given impetus to domestic travel and the Hon. PM’s vision of #DekhoApnaDesh. As per industry reports and discussions organised by travel and hospitality players, India is better positioned for faster revival compared to other markets considering the strong domestic market in its region. There is less dependence on inbound tourism in India and hence the budget hospitality segment is bound to recover soon. India continues to leverage the region’s enormous cultural assets and religious heritage to revive intra-regional tourism flows. On a related note, this helps OYO also experience faster recovery as COVID situation improves since a large part of our business is dependent on domestic travelers.

With the current change in market dynamics, what are the top trends that you have noticed among the travelers?

As per trends in our bookings, most of our hotel bookings currently are led by millennials, small and midsize businesses. Among those who are travelling with us or willing to travel per our internal survey, over 70 per cent highlight safety and sanitization being the top priority. In fact, 81 per cent of consumers said that they would opt for rooms that have been sanitised before their own eyes as opposed to opting for an unused room that has been sanitised before. These feedbacks ed us to introduce industry first initiatives like Contactless Check-in and Sanitized Before Your Eyes (SBYE).

Interestingly, more families are travelling and are staying at our long-term rental offering OYO Home. This could be because of the flexibility that work-from-anywhere as well virtual schooling offers consumers a flexibility to operate from such properties. So families now do not have to wait to plan family vacations only during school breaks/holidays and are open to booking longer home- and hotel-stays so long as there is good internet connectivity.

Geography specific: Travel is coming back slowly, and we are seeing an uptick in leisure travel with Jaipur, Kochi, Visakhapatnam, Agra, and Goa becoming the most frequently visited destinations. We've also observed that some cities like Shimla, Manali, Munnar, Ooty and Gangtok that didn't enjoy high demand compared to other tourist hotspots during pre-COVID days are now increasingly showing positive signs of rising bookings since September 2020.

Leisure travel trends: According to a recent survey we conducted, a majority of our leisure destination bookings are made by group travellers, followed by solo and business travellers. Amongst these, group travellers and business travellers consider safety as their topmost priority, whereas, solo travellers are more cautious about affordability.

How do you think the sector will recover in India post-Covid?

As per industry reports and discussions organised by STR, India is better positioned for faster revival compared to other markets considering the strong domestic market in its region. There is less dependence on inbound tourism in India and hence the budget hospitality segment is bound to recover soon.

We are cautiously optimistic about the market at the moment as we have seen small but significant green shoots. Daily Active users on the OYO platform have seen a 1.5X increase as compared to lockdown levels, as users have started to search for options that they want to book. Our conversion numbers are back to pre-COVID levels, which reflects the confidence coming back into travelers across segments.

While the timing of complete recovery is highly uncertain as the pandemic is still not subsided, but the confidence in the industry is not on a shaky ground. Look at the listed stocks of hospitality chains in the country - most have recovered above 70 per cent of pre-COVID stock prices. Some are actually trading above their pre-COVID levels indicating that the markets are believing in pent up demand for the sector in short-term and strong fundamentals to recover in mid-term.