Oyo plans to double premium hotels in India this year

Its premium hotel brands include hotels such as Townhouse Oak, Oyo Townhouse, Collection O and Capital O.

Oyo plans to add approximately 1800 premium hotels this year. Oyo’s focus on premium hotels started in the last quarter of 2022 when it added over 400 new premium hotels between October to December.

“We are a very small part of the market. I think 4-5% of the Indian market in terms of unbranded accommodation. So, our view is that all those hotels deserve to get upgraded to give a better room, a better washroom and a better check-in experience. Our job is to keep improving that and compound it over the years,” said Oyo founder Ritesh Agarwal at The Economic Times Global Business Summit last week.

“We are not interested in doing new businesses, new geographies, but I think in our core markets, in our core business, we want to continue bringing in the best services to our customers and maybe premiumise more. Our segment called Oyo Townhouse has been doing very well. Consumers are increasingly saying they want to upgrade from that Rs 1000-2000 segment to Rs 2000-2500 segment so we are increasingly getting them more of our Townhouse products which hopefully will do well,” he added.

Oyo said its expansion plan will focus on key business cities such as Bangalore, Hyderabad and Chennai in South India, Delhi and Noida in North India, Kolkata in East India and Mumbai in West India.

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The company said hotel owners will ‘benefit’ from ‘specially curated services’ such as ‘enhanced’ exposure of the hotel to potential guests with the help of Oyo’s network of over 15000 corporate accounts and more than 10000 travel agents across India and payment flexibility. This is over and above the customers that come through Oyo’s App, website and all the key Online Travel Agents (OTAs).

The surge in domestic leisure travel, transient travel, pent-up demand from meetings, incentives and weddings segment, and gradual recovery in business travel and foreign tourist arrivals (FTAs has led to an uptick in demand for the premium segment in the last few months.

A report by credit rating agency ICRA says that India’s hotel room supply pipeline is expected to grow at 5-year CAGR of 3.5-4% adding approximately 15,000 rooms to the pan India premium inventory of approximately 94,000 rooms in financial year 2023.

As per the findings of the report, pan-India premium hotel occupancy is expected to be 68-70% for FY23. Service industry is anticipated to lead the demand for business travel in the first quarter of the year 2023.

Increase in air travel is also leading to higher demand for premium hotels. Directorate General of Civil Aviation (DGCA) shows that India’s domestic air traffic rose 95.72% year-on-year (YoY) to 125.42 lakh passengers in January this year as compared with 64.08 lakh passengers in the corresponding period last year.

Anuj Tejpal, chief merchant Officer, Oyo said the company is seeing a clear trend of people’s willingness to spend more on experiences.

“Therefore, hotels are now offering additional services and amenities to enhance the travel experience and make it more convenient for guests. Our expansion plan focusing on the growth of premium hotels is aligned with this trend,” he added.