OYO signs over 3,000 hotels to new strategy

Hospitality giant lures small and medium players with offer to raise occupancies and improve operations. Many more expected to join before end of 2019.

Hospitality company OYO has signed more than 3,000 hotels under its "OYO hotel 2.0" strategy and is trialling extra value-added services for signed hotels, it announced on Monday.

The announcement followed an upgrade of the Shanghai-based company’s strategy from a franchise fee and commission business model to a shared risk bearing and profit mechanism in late May.

Under the new strategy, the company will bear market and operating risks together with signed hotels, and it will also invest in the renovation of hotels and help them raise their occupancy rates and management efficiency.

In China, there are more than 40 million rooms operated by nearly 1 million medium and small independent hotels. With fewer than 80 rooms each, these hotels face fierce competition from chains, and many are further disadvantaged by aging decor and facilities, as well as a lack of professionals and technologies, said OYO.

To improve operations, the company has established a profit forecast platform which can analyze and make adjustments to prices based on occupancy rates, time of day and season.

The average occupancy rate of hotels included in the "OYO hotel 2.0" strategy has reached 80 percent, the company says.

It also announced that it is exploring extra services to revitalize the idle property resources of independent hotels.

One trial is a cafe inside a signed hotel in Xi'an, northwest Shaanxi Province, and more such cafes will be opened at suitable hotels based on visitor traffic and commercial analysis, it said.

OYO has operated 13,000 hotels in China with 590,000 rooms in more than 300 cities since 2017, making it the biggest operator of independent hotels in the country.

By the end of this year, more than 10,000 hotels are expected to be included in its "OYO hotel 2.0" strategy, the company said.

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