OYO: From Budget Hotels to Global Disruption

Introduction

OYO Rooms, which is currently called OYO Hotels and Homes, is one of the most ambitious stories in the startup industry in India. The company was founded in 2013 and turned the uncontrollable budget hotel sector into a more normalised and technology-centric industry. Having offered clean rooms, trusted services, and low prices, OYO expanded its operations to more than 80 countries .

Founding Story

It started with the life of a Odisha teenager Ritesh Agarwal who had big dreams and went to Delhi. He opened Oravel Stays (2012) at the young age of 18 in the model of Airbnb, but quickly understood that India had travelers that sought reliability at cheap rates, rather than luxurious houses.

In 2013, Ritesh redefined the concept as OYO Rooms – a low-end hotel aggregation offering clean bedding, free Wi-Fi and free breakfast at under 999. This easy concept of standardizing the low-cost hotels formed the foundation of the rapid growth of OYO.

Business Model 

OYO collaborated with small hotels instead of purchasing them and rebranded them. It provided technology, standardized operations and marketing and received a commission on bookings. It rented whole properties in certain instances, and operated them directly.

This model worked because:

• The owners of hotels received better visibility and occupancy.
• Travelers were assured quality and cheaply.
• OYO created a tech-first travel and tourism platform that was able to grow at a rapid rate.

When at its highs, OYO advertised itself as having more than 1 million rooms around the world, making it one of the biggest hotel chains in the world.

Funding & Valuation Journey

The expansion of OYO was supported by huge amounts of venture capital, particularly, by the Softbank Vision Fund.

• Early rounds (2014 – 2016): Sequoia Capital and Lightspeed Ventures were supportive.
• OYO in 2018 in total raised SoftBank an amount of $1 billion, which pushed it near the valuation of 10 billion dollars by 2019.
• Others, such as other international investors such as Airbnb, Grab, and Microsoft, also invested in OYO, with confidence in its internationalization.

Nevertheless, the aggressive growth, particularly in China and the US, alongside the COVID-19 pandemic, caused it a major blow to its valuation and financial stability.

Global Expansion Journey

The playbook of OYO was straightforward, which was to grow rapidly, market share and commodify fragmented hotel spaces.

• India (2013 – 2015): Dominance built in metro and tier-2 cities.
• China (2018): It was made one of the largest hotel chains in China within 18 months.
• Europe (2019): Bought Acquired Leisure Group, a vacation rental operator.
• USA (2019): Made an entry into the competitive American market.
• Southeast Asia (2019): entered Indonesia, Vietnam and Malaysia.

Financial Performance

The figures of OYO give an account of its up and down ride.

• In 2017, there was approximately 120 million revenue, and manageable losses.
• Revenue also increased to almost 1 billion but losses grew to over 300 million by 2019 because of the expansion expenses.
• The pandemic in 2020 killed global travel, destroying the revenue and causing layoffs. The losses were almost on the edge of touching on the mark of 500 million.
• OYO has been focusing on cost-cutting, automation, and profitable markets, such as India and Europe since 2022, cutting on losses and shifting to breakeven.

OYO Ecosystem

Over time, OYO created an ecosystem beyond just budget rooms:

• OYO Rooms – Budget stays.
• OYO Townhouse – Premium stays for millennials and business travelers.
• OYO Life – Co-living and long-term rentals.
• OYO Vacation Homes – Holiday homes and short-term rentals (competing with Airbnb).
• OYO Wizard – Customer loyalty program.
• OYO OS & Co-OYO – Technology tools for hotel owners.

This ecosystem aimed to position OYO as a full-stack travel & hospitality company rather than just an aggregator.

Challenges & Controversies

With its meteoric rise came serious challenges:

• Over-expansion: Scaling too quickly caused operational inefficiencies.
• Hotel Partner Disputes: Complaints of delayed payments and strict contracts.
• COVID-19: The pandemic nearly collapsed OYO’s global operations.
• Reputation Issues: Customer complaints about inconsistent service.
• Layoffs & Restructuring: Thousands of employees were let go worldwide.

Lessons for Entrepreneurs

OYO’s journey offers powerful business lessons:

• Solve a genuine problem – Affordable, standardized hotels solved a pain point for Indian travelers.
• Technology is a multiplier  – OYO’s tech platform allows it to manage thousands of rooms.
• Scale carefully – Hypergrowth without stability can cause major setbacks.
• Be adaptable  – OYO pivoted toward co-living and vacation rentals during the pandemic.
• Brand trust matters – Rapid growth should not compromise customer experience.

Conclusion

OYO Rooms is more than just a hotel startup, it’s a story of dreaming big, scaling fast, stumbling hard, and learning to rebuild . From a teenage founder’s vision to a global hospitality disruptor, OYO has reshaped how millions of people book budget stays.

For entrepreneurs, it’s a reminder that innovation and ambition can create global giants , but sustainable growth and customer trust are what ensure long-term survival.

Want to learn from more startup success stories like OYO? Read More Case Studies and discover how founders turned ideas into global businesses.