OYO bets on long stay products as hospitality chain grapples with uncertainty during pandemic

OYO bets on long stay products as hospitality chain grapples with uncertainty during pandemic
Photo Credit: VCCircle
19 May, 2020

Amid the Covid-19 crisis, SoftBank-backed budget hospitality startup OYO on Tuesday said that long-term stays have an advantage over its other offerings, as customers would prefer to rent an entire property for themselves.

“Long stay as a product in hotels has legs, so we've already launched a long stay product. We feel that there is a definite advantage that our homes business will have, because some consumers will prefer taking entire homes for themselves in these times,” Rohit Kapoor, CEO for India and South Asia at OYO, told TechCircle. The company will know exactly how the play shapes up when the sector resumes functions, he said.

A long stay product offering could range from a weeks to months-long staycation, or long-term rentals at OYO properties.

Read: Coronavirus India LIVE Updates

“... my own sense is that we’re looking at a recovery starting in the next quarter... Coming back to pre-Covid levels, if you ask people, the range is anywhere between six months and 24 months. I’m more towards the six months side, than the 24 months side, but that’s just me. I don’t have any data or information which is more scientific than what all of you have right now,” the chief executive said, when asked about OYO’s return to normalcy, at an online press conference.

Separately, inbound enquiries for rooms and service resumption at OYO has gone up 30%-40% since May 3, Kapoor said. It may be noted that travel for leisure is not allowed as per the latest lockdown guidelines announced by the government.

“We have so much inbound demand right now, coming from companies who want to startup or keep their employees  next to their IT offices. You have factories opening up -- they’re asking for five hotels next to the factory to accommodate the staff. So I think we have to disassociate from the fact that hotels are all about leisure, fine dining and good things. It surely is about that. But that’s one part of the story. It is about keeping the basic economic activity going in the country. For us, the biggest request is -- give us the protocol, give us the guidelines. We have our own, we're happy to adopt more if that comes to the government, but slowly, let us operate,” Kapoor said.

As and when tourism services in India return to normalcy, the country will not see an unified approach across its geographies, Kapoor added.

“So there are these zones where demand pick up will be quick because the Covid-19 cases are low there. There are zones where nothing will happen for two months, maybe. So we’ll almost have to deal with India as 300-400 different micro-markets,” Kapoor said.

On the occupancy rates and performance of OYO’s real estate lines of business, which ranges from hotels to co-working and co-living spaces, the India business head said that the average occupancy is irrelevant during a pandemic.

“I have a very vast network. Today, if all the network is shut down by, almost, (sic) government guidelines, occupancy has no meaning... I have hotels which have opened at 40% occupancy because they had a certain demand coming in, to hotels which are running 100% (occupancy), which are next to a hospital,” Kapoor said.

Read: OYO cuts 25% salary for some employees; sends others on temporary leave

Commenting on China’s recuperation levels in the hospitality sector, Kapoor said that the market has shown faster-than-expected return in services.

“I don't handle China, but as part of the leadership team at OYO, I can confirm that China is leading the world in recovery, from a business standpoint… The budget segment is clearly leading the way... The luxury and premium segments are trailing, they've also come up, but significantly less than the budget segment,” Kapoor added.

The interaction was part of a press briefing where the Ritesh Agarwal-founded firm laid out the operations and safety measures it plans to undertake in 1,000 hotels in the next 10 days.

The company said it has introduced no-touch check-ins and check-outs, as well as social distancing code in other services at all its member hotels. It will also display a ‘sanitised stays’ tag to help customers identify a OYO-run hotel’s preparedness levels, it added. It aims to implement the measures in all of its 18,000 hotels in the country.