China hotel chain expands into Indonesia

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OYO chain of hotels and homes is seeing exponential growth in Indonesia in less than three months of its operations in the country. Launched in October 2018 with a string of over 30 full-inventory – franchised and operated – exclusive hotels and over 1000 rooms in three cities in Indonesia – Jakarta, Surabaya and Palembang, today OYO Hotels is already operating 150 hotels across 16 cities, and has seen a 5x jump in growth. OYO Hotels is charting a strong growth trajectory for itself in the country by adding 70 hotels every month to its chain and is looking at ending 2019 with its presence in 100 cities across Indonesia. The company has been rapidly expanding through the Indonesian market at a pace that’s outstripping previous benchmarks. Backed by strong local talent and execution, the company continues to proves its strong commitment towards adding value to Indonesia’s hospitality industry. the world’s fastest growing

Commenting on the strategy for Indonesia, Ritesh Agarwal, Founder & Group CEO, OYO Hotels and Homes said: We believe that our secret to success in Indonesia is the way we have built our business in the country. It was never about expanding into this new country with a distinct multi-national identity or way of working. We entered Indonesia with the mindset of an Indonesian company that saw an opportunity to emulate OYO’s successful business model in India to create something unique and relevant for Indonesia, and the results are visible. Each and every aspect of our operations in Indonesia is highly localized. This localization had helped us in customizing our offering from the point of view of a traveler in the country and what was lacking from his/her experience earlier when OYO was not around. Through this approach, we have been able to create a unique and authentic local company led by best local talent in the country and backed with the knowledge and know-how of the parent brand, that promises good quality affordable accommodations in more and more cities in Indonesia. It is still Day 0 for us, we are definitely betting big on Indonesia. We intend to invest over $100 million in this high growth market and plan to expand our presence to the top 100 cities in Indonesia, including Yogyakarta, Bandung, Surabaya that we recently entered and breaking into Bali over the next 11 months.”

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 Indonesia’s hotel market is characterized by a demand-supply imbalance of quality living spaces and OYO, since the launch in the country, has utilized its tech, operations, onboarding and transformational capabilities while creating an equilibrium between these factors. The country’s hospitality sector has displayed a sustainable and positive growth supported by higher travelling trend among Indonesians and the availability of more and more affordable transportation options in the market, especially budget airlines. OYO itself has noted rising trend of smart travellers in the country. When travelling for leisure or business purposes, they critically research for high quality, yet affordable accommodation options. This is where OYO Hotels plays an important role by fulfilling the demands through the technology led hospitality model.

Rishabh Gupta, Country Head, Indonesia, OYO Hotels and Homes explained: “Since the very beginning, we are very persistent in bringing the best OYO experience to Indonesian and global travellers. Our growth in the past two months has been exemplary in every form, and reflects great market response to our presence in the country. With technology as an enabler and our capabilities in onboarding, transforming and operating hotels, we are successfully adding 70 hotels every month to our chain. We’ve received an overwhelming response to our offerings as over 70% of our hotels currently enjoy an 8+ rating across various booking platforms. Our execution and operational excellence is backed by the efforts of a local and strong team constituting of over 400 Indonesians with thorough understanding of the country’s hospitality landscape and customer value proposition. We have a dedicated team of 70 civil engineers who are capable of transforming hotels in merely 20 days and bringing them up to the OYO standards ensuring a quality-driven experience for our guests. With the total investment of USD 100 million committed to this market, we have aggressive growth plans for 2019. We aim to expand OYO’s Hotels to more than 100 cities in Indonesia. While at it, we are happy to confirm that we are focused on driving organic growth for our business in the country, while developing and driving local synergies in the form of fruitful partnerships that will help with capacity building.’’

Ibu Lidya, Asset Owner, OYO Sarkawi Residence, Indonesia, said: “I manachised my asset with OYO Hotels four months back when I was struggling with 28% occupancy. OYO Hotels renovated my property beautifully, and now we are at 92% occupancy, regularly. The General Manager appointed by OYO has been a great support, and we are considering buying a new asset for OYO Hotels.”

Epril Purwadi, Corp. Hotel Development Manager, Adhi Persada,a partner with OYO since August 30, 2018, said, “We own multiple projects across Indonesia. Most of our properties are apartments and we have a plan to run a serviced apartment business across our properties. We started with one of our projects in Bekasi. Earlier the property had a negative contribution margin as our occupancy was below 40%. We went live with OYO on 30th Aug and within one month the occupancy has jumped to 80%+. The OYO team has helped us with capabilities around revenue management, cash collection management, operational expense management, enabling us to deliver on a 30+% GOP. We are extremely happy with OYO’s performance and have already signed an MOU for 500+ rooms with OYO across our various projects in Indonesia.”

Sigit Roestanto, Acting President Director of HK Realtindo, commented, seeing the trend of digital technology today is an important element that can be counted to increase product marketing, even for property products. “In this way HKR seeks to maximize the role of digital technology that is easily accessible and widely used by the public to expand the target market for property businesses, we are optimistic that working with OYO Hotels can help increase profits and corporate occupancy.”

How is OYO turning into a local favorite?

What’s working:

  • Building a strong local team from ground-up, constituting of over 400 Indonesians with thorough understanding of the country’s hospitality landscape and customer value proposition.
  • Minimal team members and leaders from brand’s home country.
  • Dedicated team of 70 civil engineers who are capable of transforming hotels in merely 20 days and bringing them up to the OYO standards ensuring a quality-driven experience for guests.
  • Promise of quality accommodations at affordable price points everytime – OYO branded, comfortably furnished rooms, include modern amenities and complimentary breakfast, spotless linen, free WiFi, television and 24/7 support with rates starting as low as IDR 149,000  per night and averaging at IDR 230,000 per night.
  • Word of mouth referrals over paid advertising led promotions
  • It is interesting to note is that the last 3 city launches in January alone of Yogyakarta, Bandung and Surabaya have happened in less than two weeks of each other.
  • In both Yogyakarta and Bandung, OYO already has 15 hotels each and over 40 OYOpreneurs (employees) each within 45 and 60 days of operations respectively.
  • In Surabaya, OYO has seen extraordinary uptick with over 27 franchised and leased hotels, over 900 exclusive rooms and 40 OYOpreneurs.

With the result that:

  • OYO is currently, adding over 70 hotels every month
  • Over 70% of OYO hotels currently enjoy an 8+ rating across various booking platforms.
  • Recent successes of the brand in other Asian countries like Malaysia and China are resulting in existing users using the OYO app in Indonesia

Previously, OYO has managed to create a uniquely Chinese identity for its local Chinese business with the result that we are now present in over 280 cities in China and have over 5000 hotels and over 260,000 rooms.