Let’s start today’s story with a question.

What is the easiest and sure-shot way for a startup to enter the exalted “Unicorn” club consisting of companies valued at over a billion dollars?

Why, raise a billion dollars, of course.

According to reports, OYO Rooms, the SoftBank-backed hospitality startup, is poised to do exactly that in a new funding round of up to $1 billion that may value the company at a mind-boggling sum of over $4 billion.

If that isn’t enough, now that SoftBank has exited Flipkart and written off Snapdeal, OYO seems to have emerged as the behemoth’s favourite child in India. A considerable part of SoftBank’s recent earnings call was dedicated to OYO. Masayoshi Son, SoftBank’s mercurial founder, made the following statements on it (lightly paraphrased for easy reading):

  • OYO is a completely new type of hotel, a next-generation type of hotel management. It is not a travel agent but manages hotels comprehensively with its own management, IT, booking technology and quality control method. It’s like a franchise.
  • Taj Hotels is the biggest hotel chain in India with 15,000 rooms. In just two years, OYO grew the number of rooms from 1,000 to 100,000. By the end of the year, it will add 150,000 to 200,000, which will be 10x more than the Taj group’s rooms.
  • OYO started in China as well and in less than 12 months, 25,000 rooms were created every month.
  • The world’s biggest hotel chain in the world is the Marriott, and they added 8,000 net rooms in the last three months. In contrast, OYO grew 10x faster, adding 81,000 rooms in the same period —34,000 in India and 47,000 in China.
  • With OYO, the occupancy grew from 30% to 78%. So from a hotel owner’s perspective, the occupancy rate grew dramatically with OYO. In return, the profit will be shared with OYO and hotel owners.
  • OYO’s business and management are being more efficient through AI. They use heat maps with AI for demand prediction and to dynamically decide pricing. 43 million micro-optimisation takes place per day by looking at the weather, looking at day or week, looking at what kind of campaign is ongoing. Without AI, you can’t do such micro-optimisation.

Son also claimed that OYO is already profitable at a unit level, and would become profitable at the company level as it scales further. “The cost of acquisition and development are considered early proactive investments, but since the volumes are huge, growth margin should exceed such fixed costs. Once it exceeds, you will see a dramatic improvement in profitability, similar to what Google, Microsoft and Facebook have proven”.

AUTHOR

Sumanth Raghavendra

Sumanth is a serial entrepreneur with more than eighteen years experience in running startups. He is currently the founder of Deck App Technologies, a Bangalore-based startup attempting to re-imagine productivity software for the Post-PC era. Sumanth’s columns appear regularly in leading publications. He holds MBA degrees from the Indian Institute of Management, Bangalore and Thunderbird, The American Graduate School of International Management, USA.

View Full Profile

Subscribe to read this story

The Ken is the only business subscription you need. Questions?

 

Premium

  • 5 original and reported longform business stories every week
  • Access to ONLY India edition
  • Close to 250 exclusive stories every year
  • Full access to over 5 years of paywalled stories
  • Pick up to 5 premium subscriber newsletters
  • 4 original and reported longform business stories each week
  • Access to ONLY Southeast Asia edition
  • Close to 200 exclusive stories every year
  • Full access to all paywalled stories since March 2020
  • Pick up to 5 premium subscriber newsletters

Rs. 2,750 /year

$ 120 /year

India Edition
Subscribe Subscribe
Most Asked For

Borderless

  • 8 original and reported longform business stories each week
  • Access to both India and Southeast Asia editions
  • Close to 400 exclusive stories every year
  • Full access to over 5 years of paywalled stories across India and Southeast Asia
  • Unlimited access to all premium subscriber newsletters
  • Visual Stories

Rs. 4,200 /year

Subscribe
 

Echelon

  • 8 original and reported longform business stories each week
  • Access to both India and Southeast Asia editions
  • Close to 400 exclusive stories every year
  • Full access to over 5 years of paywalled stories across India and Southeast Asia
  • Unlimited access to all premium subscriber newsletters
  • Visual Stories
  • Bonus annual gift subscription
  • Priority access to all new products and features

Rs. 8,474 /year

Subscribe
Or

Questions?

What kind of subscription plans do you offer?

We have three types of subscriptions
- Premium which gives you access to either the India or the Southeast Asia edition.
- Borderless which gives you complete access to The Ken across both editions
- Echelon which gives you complete access to The Ken across both editions along with a bonus gift subscription

What do I get if I subscribe?

The Premium edition gives you access to stories in that edition along with any five subscriber-only newsletters of your choice.

The Borderless and Echelon subscription gives you complete access to The Ken across editions and unlimited access to as many newsletters as you like.

What topics do you usually write about?

We publish sharp, original and reported stories on technology, business and healthcare. Our stories are forward-looking, analytical and directional — supported by data, visualisations and infographics. We use language and narrative that is accessible to even lay readers. And we optimise for quality over quantity, every single time.

Our specialised subscriber-only newsletters are written by our expert, award-winning journalists and cover a range of topics across finance, retail, clean energy, cryptocurrency, ed-tech and many more.

How many newsletters do you have?

We are constantly adding specialised subscriber-only newsletters all the time. All of these are written by our team of award-winning journalists on a specialised topic.

You can see the list of newsletters that we publish over here.

Does a Premium subscription to your Indian edition get me access to the Southeast Asia edition? Or vice-versa?

Afraid not. Each edition is separate with its own subscription plan. The India edition publishes stories focused on India. The Southeast Asia edition is focused on Southeast Asia. We may occasionally cross-publish stories from one edition to the other.

We recommend the Borderless or the Echelon Plan which will give you access to stories across both editions.

Do you have a mobile app?

Yes! We have a top-rated mobile app on both iOS and Android which allows you to read on-the-go and has some amazing features like the ability to bookmark stories, save on your device, dark mode, and much more. It’s really the best way to read The Ken.

Is there a free trial?

You can sign up for a free account to experience The Ken and understand our products better. We’ll send you some free stories and newsletters occasionally, and you can access our archive of previously published free stories. You can stay on the free account as long as you’d like.

The vast majority of our stories, articles and newsletters can be accessed only by a paid subscription.

Do you offer any discounts?

Sorry, no. Our journalism is funded completely by our subscribers. We believe that quality journalism comes at a price, and readers trust and pay us so that we can remain independent.

Do you offer refunds?

No. We allow you to sample our journalism for free before signing up, and after you do, we stand by its quality. But we do not offer refunds.

I am facing some trouble purchasing a subscription. What can I do?

Just write to us at [email protected] with details. We’ll help you out.

I have a few more questions. How can I reach out to you?

Sure. Just email us at [email protected] or follow us on Twitter.