OYO of the hotel’s rooms and organised these

OYO Rooms

            Founded by Ritesh
Agarwal Oyo rooms is a hotel aggregator  headquartered in Gurugram, Hariyana. The
company was launched in the year 2012 with the name Oravel stays. Initially it
provided a website which listed and enabled people to book low cost
accommodations. This followed a marketplace type business model which was
similar to Airbnb.

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company then changed its business model to hotel aggregation to become Oyo
rooms in the beginning of the year 2013. The aim of the company is to provide
standardised services in all the hotels present in its network at an affordable
cost. The company started its network with a single property in January 2013
and is reported to have formed a network of over 8000 properties by the end of

initial strategy of the company was they entered into a contract with the
hotels according to which the company hired a portion of the hotel’s rooms and
organised these rooms under the brand Oyo rooms. The service provided by the
hotels to these rooms was supposed to follow the brand standards which were set
by Oyo. In order to maintain the standard throughout all its partners the
company assists the hotels by providing them with the necessary training in
service and the supplies required. These registered rooms were supposed to be
provided for the customers who had made their bookings via the Oyo rooms
website or the mobile app.

launched its official mobile app in the android platform on April, 2015. In
addition to booking the app also provides the user with the facilities to order
room service during the stay period, early morning check in etc. In 2016 the
company started a programme called as Oyo Flagship following which the company
started to lease entire properties such as hotels and guest houses. This led
the company to hire its own staff in these properties thus enabling them to
control the day to day operations. In June 2016 Oyo launched its own online
marketplace called Oyo Bazar. The main aim of this brand is to provide a one
stop shop for procurement of supplies which are essential for the seamless day
to day operation of hotels.  In January
2017, Oyo launched the Townhouse, a brand which was entirely operated by the
company. By the end of 2017 the company has its townhouse services in eleven
major cities in India.


OYO rooms before

rooms ears its revenues through a take up rate basis where the company charges
a commission to the partners of the firm when it is bringing customers. The net
take up rate is calculated as


the company initially started up with a negative net take up rate it managed to
bring up the take up rate to positive in the last quarter of the financial year
2016 and it has been steadily increasing in the following quarters. In addition
to this the quarterly realised revenue of the company which has seen a steady increase
has reached a value which equals almost twelve times in the past two years.

the financial year 2014-15 Oyo suffered a loss of INR 21 crores which almost
increased 25 times to INR 496 crores  in  the
next financial year with an annual income of INR 32 crores according to
business research platform Tofler. This was mainly due to increasing expenses
and investment into the firm. However in the financial year. However Oyo was
able to prune the losses by 35 percent resulting in a loss of INR 325 Crores.




Impact of GST on
Oyo rooms

          Oyo rooms has
been focussing on budget hotel rooms within the price range of INR 1000- 2500
and hence they attract a tax rate of 12%. Even though this is lower than the
previous taxation in several states in states where there was an absence of
luxury tax have seen a considerable increase on the tax to be paid. It was also
mentioned by the government that the government does not consider the discount
provided by the hotel aggregators which meant that the tax which is levied is
based on the actual price of the service and not the price paid by the customer.

            Another major issue faced by the
company was tax collection at source (TCS). GST classified the online travel
aggregators as e-commerce operators which meant that they would have to deduct
tax collection at source. As the company had to work with multiple travel
aggregators they faced some difficulty on deciding on how TCS was supposed to
be levied.

            Despite these initial complications
faced Oyo rooms have been working hard and have adapted to the new GST regime.
The company has taken several steps to give a hassle free experience to its
customers and partners. Unlike several other travel aggregators who are charging
IGST Oyo rooms have registered to GSTN in 28 states across the country and are
able to charge SGST thus providing a considerable tax advantage. This can be
seen as an advantage to the small and medium scale enterprises when they need
to make hotel arrangements for their employees.

            The company used its efficient
vendor network to its advantage by providing a single vendor registration
facility to its partners. Thus when a company is getting registered with Oyo
not only they get access to its comprehensive vendor network but also they need
not face the hassle of registering to new vendors in the future as the company
would take care of all its future bookings. This facility will encourage
several properties to partner with Oyo as it greatly simplifies bookkeeping. 


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