How to Start a Hotel Business Like OYO?

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If you’ve ever dreamt of how to start a hotel business like OYO, this is your chance to turn that dream into reality. Wondering about the factors to consider and the cost of starting a hotel? Don’t worry, we’ve got you covered! From finding a hotel business to running a hotel successfully like OYO which owns the world’s third largest hotel chain by room count, we’ll explore it all.

Yes, it’s possible! We’ll share some clever strategies to help you kick-start your venture as OYO Founder Ritesh Agarwal Did. Starting a hotel business requires careful planning and a solid marketing plan. We’ll dive into all the essential steps you need to take to get your hotel up and running smoothly like the brand. From setting up the infrastructure to managing operations, we’ll guide you through the entire process. So let’s get started.

First of first, let’s take a look at the reason on why to get inspired from OYO and start a hotel business like the world’s largest hotel chain by room count.

Why to Start a Hotel Business Like OYO?

OYO founder Ritesh Agarwal didn’t just search how to start a hotel business in India, he just got a simple hotel business idea and founded the company when he wasn’t even 20. 

Lesson to be learned: Sometimes, the best ideas come from within. To find a Hotel Business Idea, you don’t need to overcomplicate things by endlessly searching for the perfect blueprint.

OYO began its remarkable journey with a single hotel in 2013, in the vibrant city of Gurgaon. But today, OYO has spread its wings to over 800 cities, boasting an impressive portfolio of more than 23,000 hotels, 850,000 rooms, and 46,000 vacation homes. (source)

Lesson to be learned: Rome wasn’t built in a day.” OYO’s inspiring journey reminds us that every great endeavor starts with a small beginning. You can also start hotel business with just a single room.

The Word OYO stands for “On Your Own” but originally, they didn’t owned even a single hotel. 

Lesson to be learned: You don’t need to own hotel from the start to make a mark in the hospitality industry. You can even take it on lease.

Even today, despite being a $9 billion company, OYO has taken a unique approach. They haven’t tried to own all their hotels, but instead, they have become the fastest-growing chain of leased and franchised hotels, homes, and living spaces. (source)

Lesson to be learned: In a world where owning everything is given priority, OYO’s approach is a refreshing reminder that partnerships can drive real success in your hotel company as well.

OYO has gained a reputation for offering the most pocket-friendly rooms in the market. Despite the competitive pricing, recently Founder Ritesh Agarwal announced a surplus cash flow of Rs 90 crore in FY 23  which is an evidence of their success. (source)

Lesson to be learned: Affordability doesn’t have to mean sacrificing profitability. It is possible for you also to create a win-win situation for both customers and the business by cleverly managing costs and optimizing operations.

OYO’s founder Ritesh Agarwal secured the remarkable title of being the world’s youngest self-made billionaire, right after Kylie Jenner in February 2020.

Lesson to be learned: It is a real example that age is just a number when it comes to achieving success in Hospitality industry. 

In China, OYO has claimed the title of the largest single hotel brand, conquering a whopping 337 cities. Moreover, they boast an impressive room inventory of over 500,000 rooms spread across 10,000 hotels. (source)

Lesson to be learned: Don’t wait, Just Seize the opportunity. OYO recognized the untapped potential in the hotel industry of China, and without delaying, they just captured it. You can also discover this potential locally.

OYO isn’t just a hotel service provider, but it is a complete hospitality solution which has diversified its business and revenue streams. 

Lesson to be learned: OYO teaches us the power of innovation and adaptability. They constantly reinventing themselves to meet the evolving needs of their customers. So think about innovation before how to start a hotel business in India.

How to Start a Hotel Business Like OYO?

Let’s dive into the exciting journey of building your own hospitality empire like OYO. Follow the five fundamental hotel business principles that OYO followed to become a $9 billion dollar company – After all, you also want to learn how to start a hotel business.

Problem Identification

Before you can make any moves for your small hotel business plan, you need to identify the problems you aim to solve. Like OYO did. 

When the company’s founder Ritesh Agarwal (a travel lover) was a teenager, he often struggled to find an affordable hotel during his travels. 

How to start a hotel business
Photo Credit: gyanfry.com, how to start a hotel business like OYO

He identified the problem and tried to resolve it with his new company Oravel Stays Private limited – A listing platform where people could find an affordables stay nearby .

However, later the company was transformed to OYO rooms. 

That’s how you can also distinguish your business from the competition. Start with what’s lacking, what isn’t available or what isn’t being served to customers. 

Business Legalization

Oyo company was expanding and so do its legal requirements for hotel business. It was no longer a small firm, because it evolved as a Private Limited Indian – called Oyo Hotels And Homes Private Limited (OHAHPL).

After becoming a registered company, OYO was looking to partner with trusted individuals. But barely anyone would take the responsibility of their duty in the absence of business policy. 

OYO business rules and regulation
Photo Credit: gyanfry.com, how to start a hotel business like OYO

That’s why OYO decided its business policy and encouraged everyone in its team to strictly adhere to these policies. Absence/ignorance of these policies could have put the company/partners to some severe risk or legal troubles. 

Travel insurance policy, fraud policy, safety & security policy, code of conduct, time policy, child policy and visitors policy are all part of the business legalization process. 

Business Digitalization 

Technology is a major contributor that taught OYO how to run a hotel business successfully. To match the critical needs of hotel guests in the fast paced world, the company launched a dedicated website and mobile app online. 

People could use the website/app to navigate to affordable rooms near them and even locate OYO hotels. This way OYO was able to market its additional products on a digital interface.

how to start a hotel business in India
Photo Credit: gyanfry.com, how to start a hotel business like OYO

The hotel business started receiving pre-bookings for its room. OYO business was in full motion because the online presence of the brand was providing it exposure to a wider audience. 

In this age, OYO proved that digitalization is the chief answer of how to start a hotel business in India as it opens up new avenues to make money. 

Business Standardization

Getting business legalized, registered and digitalized wasn’t just enough for OYO. Company was providing affordable room and home stay to folks. 

But now, standardization was the next big challenge. To tackle this issue, OYO began including Wi-Fi, bedsheet, TV and many other daily use items in its room. 

how to start a business in india with no money
Photo Credit: gyanfry.com, how to start a hotel business like OYO

Company renovated its business model from an affordable hotel service chain to a standardized hotel service chain. 

Even today, each room and hotel that operates under OYO Hotels & Private Home Ltd maintains the similar business standard. In a nutshell, “Standardization” and “Affordability” were the two major factors that taught OYO how to start a hotel business.

Business Optimization

No OYO was confirmed on how to start a hotel business, but operating a business in over 800 cities, managing over 23,000 hotels, 850,000 rooms, and 46,000 vacation homes was tough.

This is when OYO’s focus was switched to business optimization. Over 1,300+ OYOpreneur which counts strong team of civil engineers and designers set out to revolutionize the business network.

how to start a hotel business in India without investment
Photo Credit: gyanfry.com, how to start a hotel business like OYO

With this, OYO applied state-of-the-art hotel-tech across its global properties. Their in-built CO-OYO app became a game-changer for hotel owners, empowering them to monitor their progress effortlessly.

Every hotel under OYO’s chain operates on the robust OYO Operating System, boasting tech-advanced products capable of conducting deep audits of over 300 rooms simultaneously. 

But OYO didn’t stop there. They introduced world-class pricing and revenue management techniques, causing a remarkable surge in hotel revenue within a mere two months of partnership. 

Initially, OYO’s founder Ritesh Agarwal could not hire such a big team of engineers and designers. But as his business grew, they were capable of optimizing their large-scale business operations with huge investment capital. 

How OYO Started Hotel Business with No Money? 

That’s surprising, the $9 billion valuation company began with cheap hotel business ideas! Well… 

Oyo began its journey as a “hotel aggregator”. As per this business model, OYO was leasing rooms and branding them as their own. 

In this way they entered the market, making a name for themselves.

And here, the cost of starting a hotel wasn’t a barrier for them. Limited capital was working fine for the company’s founder.

The aggregator business model refers to a type of business that acts as a middleman or intermediary between customers and suppliers. Aggregators typically provide a user-friendly platform or app that allows customers to search, compare, and book services or products offered by different suppliers. For example – Food delivery platforms like DoorDash, and hotel booking platforms like Booking.com. These aggregators bring together various drivers, restaurants, or hotels, respectively, and connect them with customers seeking their services.

The same way OYO through its website/app was acting as a middleman between customers and hotel owners.

So, is it true? Did OYO hotel business with no money?

Well, not exactly.

In the case of OYO, Ritesh Agarwal (the founder of OYO rooms) was making some investment from his own. For example: –

  1. Initially, OYO was leasing rooms – which was affordable in comparison to owning a property.
  2. Secondly, OYO was investing on its brand website/app – which was still affordable compared to purchasing a brand store. 
  3. Thirdly, OYO was investing on basic hotel room services – which were also not that expensive.

So, instead of asking how to start a hotel business with no money? You should ask how to start with little money.

Because every business require investment to set up and work.

You Can Also Read: Complete Oyo Case Study: Business Strategy, Success & Failure

But, they didn’t stay limited to the “Hotel Aggregator” business model. 

After establishing its name in the market, OYO embraced the franchise model, partnering with hotels and enticing them to operate under the Oyo brand.

Moreover, this bold move allowed Oyo to offer customers an even better experience. 

They strategically curated competitive prices for the rooms they provide under their brand’s name, giving customers more bang for their buck.

In short, OYO leveraged their brand name and created a win-win situation for both the hotels and the customers.

How You Can Start a Hotel Business with No Money?

OYO business model has definitely go you dreams of starting a hotel business, but what if you don’t have a penny to spare?

Fear not, in this delightful discussion on how to start a hotel business, we’ll explore how you can kickstart your hotel venture without breaking the bank.

Remember, where there’s a will, there’s always a way. Let’s dive in and unravel the secrets of launching a hotel business with no money.

Target A Niche Within the Niche

First rule of thumb is, work in a niche if you want to work with no money.

When you target a specific niche within the hotel industry, you can hit the bullseye and capture the attention of a focused audience. How you can do it?

  1. You can lease rooms like oyo and provide affordable hotel booking
  2. You can link with hotels and start providing massage services
  3. You can create website/application for small hotel

By catering to a niche, you can carve out your own little corner of the market. It’s like finding a hidden gem in a sea of options, giving you a unique advantage over your competitors.

Build a Business Plan

OYO company was very clear about its business plan. Intially, OYO opted for “Aggregator Business Model” which was easy to run and comparatively affordable.

Later, they switched to franchise model which was scalable and more profitable.

So lesson to be learned. Focus on what can be achieved in limited money and build a business plan accordingly.

Gather data, and inputs and switch to second plan or objective as soon as the right time is identified.

Know Your Competitors

Possible that the business plan you are aiming to work on has already been used by your competitor.

Therefore, understanding your competitors is a worthwhile practice.

But it has positive sides too.

By knowing what your competitors offer, you can identify gaps in the market and seize opportunities that others might have missed. It gives you valuable insights into their strategies and tactics.

Just like OYO hotels & rooms found that nobody was helping customers and hotel owners to settle for a great deal.

Standardized & Modify

Firstly, it’s crucial to understand that standardization in the hotel industry sets the foundation for consistency and reliability. When guests check into a hotel, they expect a certain level of quality and service, irrespective of the location.

However, it’s equally important to embrace modifications within the industry. The hospitality landscape is constantly evolving, and hotels must adapt to changing trends and customer preferences.

By modifying their offerings and services, hotels can stay relevant and cater to the unique needs of their guests.

So track what can be modified in your small hotel business idea, and standardize it.

Standardized practices provide a framework for efficient operations within hotels.

From room cleanliness to customer service protocols, standardized processes streamline operations, ensuring smooth and hassle-free experiences for both guests and staff. Inject creativity wherever it is possible.

Get Lessons from Entrepreneurs

Lastly, as we are heading towards the end of this discussion, mark this vital point in your to-do list.

Build a habit of learning from entrepreneurs.

Entrepreneurs have a knack for thinking outside the box. How did they spot untapped markets and bring innovative solutions to the table.

Learn and implement in your business model. You can even take help of our business case studies.

Wrapping Up

So, folks, it’s time to take a page out of the entrepreneur’s playbook. Let’s embrace Ritesh Agarwal’s fearlessness, creativity, resilience, and go-getter spirit. By learning from OYO’s exceptional business model, we can unlock our own potential and set ourselves on a path to greatness in the hotel sector. So, what are you waiting for? Let the entrepreneur within you shine bright!

FAQs

How much does it cost to start a hotel company?

It’s essential to note that the cost of starting a hotel company can vary greatly depending on various factors such as location, size, amenities, and target market. OYO founder Ritesh Agarwal at the age of 17 offered 15% stake in his company for just Rs 30 lakh to build a billion dollar empire. But, you can start anything from a few thousands if you have an innovative plan.

Is it profitable to open a hotel?

Let’s acknowledge that the hotel industry can be a real cash cow if done right. According to a report by CRISIL, the Indian hotel industry is set to jump from 24% pre-pandemic (fiscal 2020) to a staggering 34% this fiscal. That’s like a rocket blasting off into the profit stratosphere, leaving the challenges of the past in its wake.

How do I start a simple hotel?

let’s focus on the essentials. Keep it simple, they say, and that’s exactly what you need to do. Start by scouting for a suitable and affordable location if you want to get physically involved. Alternatively, you can launch a website and can act as an aggregator or a middleman between hotel owners and guest.

Is a small hotel profitable?

The demand for hotel services has soared, opening doors to endless possibilities. In a report released by the Hotel and Lodging Association, it was revealed that small hotels in the United States enjoyed an average profit margin of 7.7% in 2019. Such promising figures exemplify the potential for success within this dynamic industry.

How Much Does It Cost To Start a Hotel?

Building an economy or budget hotel in India comes with an estimated cost of ₹36.61 lakh. Now, hold on tight! Here comes the jaw-dropping revelation. When it comes to luxury hotels, the expenses multiply, reaching over five times the cost of economy hotels. Can you believe it? A luxurious key in India demands a staggering ₹194.54 lakh to bring to life.

Is It Hard To Start a Hotel?

Starting a hotel may seem like a daunting task. But , nothing worth having comes easy, right? Ritesh Agarwal was just 17 years old when he launched Oravel Stays Ltd and Oyo Rooms & Hotels when he was about to hit 20s. It’s all about determination and passion for what you love.

What are the legal requirements for starting a hotel business in India?

Fire Safety License. Food safety license. Health trade license. Insurance. and many other certificates are requisite. But it will still be determined by your business model. You may be not require to comply with every legal term until or unless your business falls into that category.

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Sahil Dhimaan
Sahil Dhimaan

Hi, Sahil Dhimaan this side. I'm a passionate about entrepreneurship, startup, business, online marketing, innovative tech and online business growth.