CT Cares Ep 3: OYO States Travel Business Will Revive By December 2020

by Kamiya Jani
CT Cares Ep 3: OYO States Travel Business Will Revive By December 2020

If there is one budget hotel chain that has taken over the world, it would have to be OYO hotels. But like most other businesses, this one too has been impacted by the coronavirus pandemic. In a bid to learn more about travel trends, the hospitality industry, and how things are stacking up for the hotel industry in India, we spoke to the India and South Asia CEO of OYO, Rohit Kapoor.

1. The world has sealed its international borders, compounded by a nationwide lockdown. This has been an unprecedented phase in the history of the hospitality industry. Was this ever a part of your contingency plan?

No, never, never! Nobody planned for this. That’s the short answer.

2. If you can give us a sense of the number of hotels you own, operate and in how many countries?

We’re present in several countries around the world, from India, China, Southeast Asia, US and major parts of Europe. We have about 43,000 asset partners around the world. In India, we have close to 18,000 asset partners, who own one or multiple assets with us. So yeah, it’s a fairly large network that we manage.

3. What has been the impact of the pandemic in terms of revenue, losses and unemployment levels?

The impact has been quite severe on the industry. It has affected players across the board, from large players to small. Having said that, I think with the hotels opening up on 8th June as per the Ministry Of Home Affairs, it is a sigh of relief. Especially, for the smaller players who’ve been bearing the brunt of hotels being completely shut down and not being able to operate in India. So slowly, we are seeing a lot of queries coming in, saying we’re opening up back on June 8, so we need X support or Y support so we are in touch with all the partners.

Gradually, from June 8, 2020 onwards, it’ll take about a few weeks for the entire inventory to open up. So I’m seeing progress there. Interestingly, on the consumer side, the call, volumes and inquiries have gone up. That’s an interesting phenomena. While the hotels are closed, a lot of people have been calling and saying what’s happening. When are you opening? Is that hotel open or is this city open? So those queries have gone up two-three times in the last few weeks.

4. Okay, clearly comes across as a sigh of relief. Do you think people are confident enough to travel?

Look, I think the concerns that anybody has in this environment are very natural. You and me have those concerns, anybody has concerns in this environment. I think it’ll depend a lot on the operating processes, which most hotels have. On June 8, which is the first day of opening, my leadership team and I are going to check into an OYO and stay there. So, we will take the first step ourselves and that is a signal to others that you’re welcome.

It is a come back story. There are two factors; one is increasing comfort with traveling and lodging and second, how much money you have in the purse.

“I don’t think we’ll be back to pre-COVID levels anytime immediately but over a period of six to twelve months, I am very confident.”

This is a resilient sector, the urge to travel is just innate in human beings. This is not something which you can keep back inside you for a long period of time. So the moment you are comfortable with the surroundings, the moment you are comfortable with the standard hotel, you come back.

Also Read: Air Travel Is Still The Safest Way To Travel: Vistara CCO

5. Could you shed some light on the roll out plan on how you intend on opening up OYO?

We have put together a very detailed SOP for all our partners on how to run a hotel on a minimal touch basis. This involves protocols around reception areas, kitchens, in-room dining, check in-check out, all the standard modules of operating our camp. And it’s not just enough to put the SOP together because that’s the easy part. We’ve been training our partners since May. Our goal is by June 15th or 20th, we train about 15,000 asset partners as well as their staff members with a lot of videos and promotional material, which they can understand. Second, is going beyond, we have also come up with something called sanitized stays, which if a hotel adheres to a higher level of standards of sanization, there’s a check-list.

“We give the hotel a sanitized tag and it comes on our app as well. As a consumer, you can go to the app and say while all hotels follow minimum SOP, this hotel also has a sanitized tag. So if I’m looking for an additional degree of assurance, I will choose that hotel.”

6. Has there been any discussion around offloading any of the properties that you operate at this point of time?

Offloading is not the answer. We have been working with some partners, a small number in terms of changing the way our business contracts work with them, which is more from a fixed model to a rev-share model, which is going to be the future. But 90% of partners anywhere are on an asset share or a rev-share model with us.

The partners business has been hit for the last two and a half months. So all our efforts will include providing a lot of support in different ways; not just training but even discounts or support in terms of financing from banks, etc. So there’s a bunch of initiatives which we have taken for our partners. Now the interesting part is that a lot of partners themselves are very curious about how to operate in the new world. We have never seen so much attention to this aspect ever before.

7. OYO has announced ESOPs worth Rs 130 cr for employees who are sent on leave without pay. That’s a big move. If you can elaborate on what exactly does this mean?

We did not lay off people during COVID, we actually put them on something called a ‘leave with limited benefits’. We covered some pay coming for the first two months along with their entire medical healthcare insurance. We also created a fund so that anybody impacted by COVID for self or for their immediate family could get relief from our side. For employees with children, we made sure that the school fees were paid by us.

So our point here was to help the staff and not actually have them leave the company. Now some may choose to do that in this period and want to do other things. That’s fine. But our job was to make sure that we support them and show our gratitude and also share a part of our success with them. It’s a very important move I think.

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8. OYO has also started to offer its buildings and rooms as quarantine as well as self-isolation camps. That’s a really good thought. How did that materialize?

When the government came out with guidelines saying you can operate hotels with isolation and self-quarantine, we looked at international examples and saw that hotels are the best used case for this. We created a team which is literally pulling the best of the best people in the company together. It started with a small experiment actually and it really scaled up because we found traction in so many places. We are working with more than eight state governments. We are also working with more than 20 Hospital chains. We are also working with multiple companies, which are looking to house those working for essential services next to hospitals or other places.

9. What about relief from the government side; any measures announced for the hospitality sector?

First of all, I appreciate everyone’s job in these times. Nobody has an easy job, including the government and none of us too. Everybody has to make decisions which are not going to be popular with everyone but having said that, this industry is definitely in a lot of trouble. Any initiative from government’s side will be directed towards the smaller hoteliers, who are really under stress; whether it is terms of soft loans or deferment of payment of loans interest, electricity subsidies or anything which can help them tide over for the next few months.

10. So is that the trend that you would see? Do you see domestic travel picking up a lot more given that Prime Minister Modi is also going for vocal for local.

We’ve been talking about ‘Dekho Apna Desh’ for a long time right? 2020 second half and 2021 will see that really happen. There are structural reasons and also its just hard to travel internationally because there are so many variables.

Tourism as an instinct does not go away. So the entire demand will get funneled back into India.

“So through ‘Dekho Apna Desh’, it is the opportune time for us to double down and support the tourism industry because a lot of people who used to go abroad will look for options.”

There’s a recent survey also that points clearly in that direction of how intuitively consumers are thinking. So you will find new destinations emerge. For example, maybe the small village near Gurgaon will be the new Alibaug and people will seek these kind of places.

11. Till some time back it was all about globalization, but slowly it seems like the world is moving away from that to isolated economies. Do you see that impacting multinational companies like yours?

First of all, I don’t handle the overseas businesses, I handle India. But as a frame, while we have operations in different geographies, our clientele in each country is very local. So to that extent, the business is insulated, except Europe of course. And I think there as those borders start to open up, we can already see early demand picking up in those markets. Also, summer is coming and people really are looking for that break or a vacation. So there we are seeing bookings go up again quite strongly. If there a specific impact coming out of lack of globalization or lack of international travel, that is a second order, third order in effect. That’s not so prominent for us.

Also Read: 20 – 40% Restaurants Might Shut Down: Massive Restaurants CEO

12. When do you think people would be able to make travel plans fearlessly again?

Much sooner than you believe. First of all, I will advise everyone that it is socially responsible for us to make sure to keep each other safe.

We’ve been at home for three months and the urge to just go somewhere else is the strongest point ever. So I do suspect that as soon as pockets become safe, things will open up. First, in cities, travel will start when people will be comfortable just going and checking into a hotel next door. Second, SMEs will start travelling for business cases and third maybe, leisure tourism.

Just like interstate borders are starting to open in many places, it is a start, but one needs to start with caution. The differences in trends will not be the same as before.

13. What do you think is going to be the new normal for holidaying?

“Road trips are going to be back very strong because you just feel safe in your own car and with your own family or people.”

You will go to a destination which is slightly remote because you will feel that you’re in a safe place. It’s much easier than taking a train or a flight for example, so that’s going to be the big one. The second is you will choose stations or places which you can access quickly from your city. So you’re away but you’re not too far away to be unsure that if something happens, how do I come back? Third is pilgrimage with safety precaution. People in these tough times do tend to lean more towards spirituality, religion, etc. Pilgrimage has started off, for example, in Uttarakhand. I also read in the newspaper that the Chardhaam Yatra is being started in phases already. Fourth, people will stay longer wherever they go. Earlier, the tendency was the traveler would go to five-six places and see everything. Now they will just go to one place and stay there for five days rather than move around a lot.

To read more about what’s going in the travel and hospitality industry, and know what experts have to say, click on #CTCares