Every new year invites a new challenge; and for me, that has involved a transition from OYO’s Indonesia business to become the Head of UK. The opportunity to take the UK business to the next level is very exciting for me.
Earlier in 2020, OYO set out very clear global objectives of delivering sustainable growth, operational and customer excellence and profitability. These goals are outlined in more detail here. Setting ourselves on the path to achieve these objectives has involved some very tough decisions and the need to review the way in which our UK business was structured. Inevitably, the recent changes have led to a lot of questions, which I wanted to address directly:
Q: What is the latest update on the OYO UK business?
Our first full year in operation saw over 200 hotels come under the OYO brand across all four UK territories, with a commitment to investing £40m in this market. OYO now has a presence in 100+ cities, rural areas and coastal resorts and our guests have a large and varied choice of affordable and characterful OYOs including country manor houses, B&Bs, traditional inns and modern apart-hotels.
We have exceeded £50m realised revenue since establishing itself in the UK in late 2018 and in the last three months alone, we’ve welcomed more than 200,000 guests to our hotels. As our portfolio grows, an increasing number of guests are also booking their stays via the OYO app and website – an indication of the growing brand awareness and loyalty amongst UK (and global) travellers.
In January and February 2020, owing to the various initiatives, supply will grow more than 15% and revenue by 7.5%, after taking into consideration seasonality. Our direct channels – OYO App & Website – have started contributing more than 10% occupancy at select hotels, making OYO direct channels the second largest contributor in terms of revenue.
Below are graphs that showcase the value OYO UK has created for its partners
1. Increase of 37% Booking.com Room Nights for OYO Hotels on a year-on-year basis.
2. This uplift in Room Night Production resulted in a 24% jump in online revenue for these hotels on a year-on-year basis. The below chart shows performance across the UK portfolio, with the left-hand axis signifying revenue in millions from Booking.com.
3. Across OYO’s London hotels in December 2019 (low season) on Expedia, there was an 18% year-on-year increase in room nights and a 24% year-on-year increase in hotel revenue.
4. Looking at all of OYO’s hotels outside London on Expedia, rooms nights more than doubled and hotel revenue increased by 67% year-on-year in December 2019.
5. The number of room nights booked via OYO’s direct booking channels have increased exponentially since OYO’s direct booking channels were launched in spring 2019.
6. In January 2020, 16% of properties across the OYO portfolio had more than 10% of occupancy coming from OYO’s direct booking channels
Q: Can you share details on the UK restructure?
Here in the UK, we entered into a consultation period in January during which a proposed restructure was discussed and honed over the course of several weeks based on the feedback provided by impacted colleagues. The ultimate outcome was to achieve the aforementioned goals keeping in mind the UK market and context.
As a result of the agreed proposal, some roles within the UK workforce were made redundant. This was understandably a difficult time for all involved, but we have done all we can to ensure those leaving the business received as much assistance and support as possible throughout the process. We are providing access to personal and career counsellors and also hosted a recruitment day at our London headquarters to help departing colleagues find new roles within the hospitality, travel and technology industries.
Now, this process has been finalised, I am confident we have the right structure and organisation in place to see us through the next exciting phase in our growth. I thank all of our colleagues and partners for their patience and professionalism over the last few weeks.
Q: Is OYO changing its commitment to the UK market?
There is no change in our commitment to the UK. The UK was the first market that OYO entered outside Asia and we still see a huge opportunity in the long-tail of small, independently owned hotels here.
On the contrary, with the help of the new structure, we aim to maximise the potential of our existing partners and service them better while still being focused on new additions to our portfolio. Our motivated and enthusiastic business development team are continuing to seek and sign new partnerships – albeit with a more selective approach – as we concentrate on properties that will deliver an excellent customer experience and where OYO can add real value through its revenue management expertise, technological innovation and in other areas. We are already seeing the benefits of our new approach, with new signings in February promising to deliver the most value-addition to the entire network.
Overall, we remain very excited about our future in the UK and we will continue to invest in the right areas of the business.
Q: How will these changes impact hotel partners?
We recognise that we cannot achieve our objectives without the continued trust, support and partnership of our hotel owners. Their feedback has been carefully considered in this new approach which seeks to support them more effectively and efficiently in the areas that matter the most to them. We recently did a focused group discussion with some of our select partners to walk them through the changes and get their feedback. The feedback was quite positive and is being taken into consideration to better the structure. We have also dedicated a team to only focus on these improvement areas.
With the onset of the new year, we have already initiated efforts to introduce features that will help drive better performance as well as transparent and regular engagement. Some examples of the efforts that are ongoing include weekly revenue management reports, 24×7 chat support launch, new demand generation effort via OYO’s direct channels, and advanced revenue optimisation tools in the form of a cancellation prediction engine.
Additionally, in the short term, we are implementing an active outreach programme to share more about our way forward, as well as to pen down any improvement areas which we will promise to respond to in a certain time frame.
We’re happy to share that in the UK, we have a retention rate of 97% amongst owners who have spent six months or more with OYO. Our numbers will look even better in a few months.
Q: How do you respond to the recent global media scrutiny?
Recent media articles contain many claims that we strongly refute. Again, we believe in transparency and in the UK, are committing to share more updates first hand to show the change we are creating. Again, we believe in transparency and in the UK, are committing to share more updates first hand to show the change we are creating. I’m greatly encouraged by the partners, stakeholders and customers who continue to support OYO based on their own experiences and recognise that media reports don’t necessarily present the full picture. In the face of scrutiny, our performance and our portfolio are growing month-on-month and we’re proud to be building one of the leading hospitality companies in the UK. “Headlines, in a way, are what mislead you because bad news is a headline, and gradual improvement is not” – Bill Gates
2019 was a year where we grew our portfolio in the UK, expanded into new territories, and experimented with new products. 2020 is the year when we will continue to build upon the foundation that was created in 2019 while bearing in mind the learnings. The journey has just begun. As we say at OYO, it’s still Day Zero. We will continue to do what’s right, grow and create change.