Room for change at OYO
Hospitality company OYO is upgrading its strategy from a franchise fee and commission business model to a shared risk bearing and profit mechanism.
Under the "OYO hotel 2.0" strategy, OYO will bear the risks resulting from fluctuations of operations and the changing of market situation together with signed hotels, and it will also increase investment on renovation of hotels and help them raise their occupancy rate.
The strategy based on big data analysis of hotel operations and a profit management model will be initiated nationwide from June 1, said Zhu Lei, OYO's chief revenue officer.
OYO has established a profit forecast platform based on big data analysis of hotel operations.
In China, there are more than 40 million rooms operated by nearly 1 million medium and small independent hotels with a market scale of nearly 1000 billion yuan. With a scale of fewer than 80 rooms, these hotels do not have a brand and lack operation and management experience. Their return rate is low.
Independent hotels in China face some common challenges such as aging decoration and facilities, high operational cost, the change of consumption habits of young generation and more fierce competition, while consumers often complain of the old facilities, unstandardized services and poor experiences at independent hotels, OYO said.
Its strategy aims to tackle these woes and lift living experiences.
OYO has operated more than 10,000 hotels in China with over 500,000 rooms since it operated its first outlet in Shenzhen, southern Guangdong Province, in late 2017, making it the biggest hotel operator of independent hotels in the country.
It has invested in 500 million yuan to renovate hotels and lift raise their capabilities.
"Technical solutions relying on cloud computing, big data and artificial intelligence have been used in the hospitality industry and OYO will increase investment in technologies to provide intelligent services to hotels and lift their operation efficiency," said Zhu.
OYO is expected to sign another 10,000 hotels within this year, and the 20,000 hotels plus the current ones will be in more than 1,500 cities.
OYO has inked a strategic cooperation with Shanghai-based online travel operator Ctrip in late May and the two will cooperate in fields like data exchange and operation, and brand promotion.