Ritesh Agarwal, a 21 year-old college dropout made headlines when OYO Rooms, his brainchild raised $100 million from Japan’s SoftBank last month. Prior to this, the company had raised $25 million from Lightspeed Ventures, Sequoia Capital, Greenoaks Capital and DSG Consumer Partners in March this year. Not only his age factor has brought him under the spotlight but also his story of how he dared to capture a marketplace and built a company on his own which he claims to be one of its kind. OYO Rooms, a Gurgaon-based technology-driven budget hotel aggregator, was launched in 2013 to improve customer experiences in hotel stays by providing standardised facilities to its customers. “OYO is an innovative model which came out of a personal pain point and there is no brand or form like this that exists anywhere on this earth,” says Ritesh Agarwal.
In 2011, an 18 year-old Ritesh decided to move to Delhi to follow his entrepreneurial dream and started Oravel Stays which, according to him, followed a model that was similar to the home sharing portal, AirBnB. He then managed to raise Rs 30 lakh from an accelerator called VentureNursery after running a three months programme. “While I was operating Oravel I stayed in more than 100 properties to realise that the problem is not in the discovery of these hotels but the problem is in the predictability of experiences that these hotels provide to their customers,” says Ritesh. And that’s what gave birth to OYO Rooms in 2013, where he wanted to improve customer experience in hotels in terms of making sure of basic requirements which includes signage, clean rooms, clean washrooms, Wi-Fi, acceptance of credit/debit cards etc.
“It was around that time that I was chosen for the Thiel Fellowship, which is given to entrepreneurs who are under 20 and are ready to skip college and start running their own ventures,” adds Ritesh. He was the first Indian to become a Thiel fellow and received $100,000 in grant, which he decided to invest in his developing OYO.
OYO today provides standardised budget hotels through its three tap booking app which amassed over 500,000 app downloads as of now. It works towards providing quality facilities to its customers which includes breakfast, spotless white bed linen, free Wi-Fi and beverage trays “These facilities are monitored frequently to ensure quality customer experiences. The cost of these budget rooms ranges from R999 to R1,500. Currently, OYO has over 15,000 rooms across 86 cities and plans to expand to 50,000 rooms across 100 cities by end of this year.
However, Ritesh does mention that the journey of capturing a whole new marketplace hasn’t been an easy one and he has had his share of ups and downs. “Initial days were tough, not only the investors but also convincing people around you to trust your brand was a challenge especially because I was extremely young. At one point of time I actually went broke when I was in Delhi and my family would tell me to come back home and that was never an
option for me though there were nights when I used to sleep on the stairwells,” says Ritesh.
According to Ritesh, he executed his idea well which aims at solving a bigger problem and that is what it takes to create a great company. “We will now focus mainly on three things, one is to continue expanding our supply, second one is that we would like to bring in the best talent in the country and the third one is building great customer initiatives by ways of which we can deliver great customer experiences and involve large investments,” adds Ritesh.
This year there is a sudden growth in the travel and hospitality segment with many startups trying their luck in this space with their innovative concepts to help people travel and explore better. This has definitely grabbed the attention of investors to invest on OYO like players after witnessing the potential of this vertical. Earlier this year OYO’s immediate competitor Stayzilla raised around $20 million from Nexus Venture Partners and Matrix Partners.
Similarly, Treebo, a Bengaluru-based hotel marketplace raised $6 million from Matrix and SAIF Partners. ZO Rooms raised $30 million from its investors including Tiger Global.