Online travel agencies (OTA) like MakeMyTrip, GoIbibo and Yatra have jointly blocked budget-hotel aggregators such as OYO Rooms and ZO Rooms from listing and marketing hotel properties on their websites.
They unanimously state the reason that OTA sector in India has become the highest margin category, and they don’t want to help their rival companies while taking a hit on their own business.
MakeMyTrip spokesperson said, “For now, MakeMyTrip has temporarily delisted OYO Rooms from its platform, which will be followed by ZO Rooms’ delisting starting tomorrow. This is a part of ongoing experiments that MakeMyTrip undertakes to help its customers make the best hotel buying decisions & get the best value for their money in the most easy & intuitive manner.”
Seeing the recent trends, the budget accommodation space in India is growing fast with players like OYO and ZO Rooms, occupying most of the market share in the segment. Budget accommodation companies work by rebranding individual properties and standardising service levels.
Besides, players like WudStay, Fabhotels, Nightstay, Treebo, Zip Rooms, Zen Rooms and others are tapping the opportunities in this sector.
Owing to bigger opportunities, fund flow and change in customer behaviour, OTAs like MakeMyTrip, Goibibo and Yatra have started feeling the heat.
As per IAMAI report, the Indian online travel industry is estimated to reach $12.5 Bn by this year, whereas, the budget accommodation space has nearly 1,00,000 accommodations and a market size of 1 Mn room.
Sensing the opportunity in this space, OTA players have slowly started drifting towards the budget accommodation space.
Recently, Goibibo ventured into the budget accommodation space with GoStays. Besides, the company also made strategic investment in Djubo, a cloud-based solution for that delivers reservation engine, channel management, booking engine and payments for the hotel owners.
As for Yatra, it launched its TG Rooms and TG Stays in over 60 cities to cater to budget travellers providing hotel & guesthouse options. Also, in August this year, Yatra launched Homestay to enhance its accommodation marketplace.
The online travel agencies have worked hard over the last quarter gaping onto larger share in the market. Under this, MakeMyTrip had acquired travel planning website Mygola to strengthen its proposition.
However, startups operating in the budget accommodation space are able to woo their target audience with fresh strategies. A budget accommodation marketplace, WudStay, collaborated with Microsoft in order to facilitate hotel bookings on Windows platform. Another branded budget accommodation aggregator, Vista Rooms, created app-like experience on Instagram through which travellers could browse for locations, property options and book a hotel. Also, Zo Rooms has reached out to more than 50 cities and towns across India along with offering premium category of 3 star hotels with ZO Prime. OYO has also expanded its network in 73 cities and 135 destinations in India after it raised $100 Mn (INR 650 Cr.)
When asked about the affect of business after getting delisted from OTAs platform, Paavan Nanda, co-founder of Zo Rooms told Inc42 that
OTA was a major contributor to their business when the company started in January 2015. However, the percentage contribution of this channel fell to single digit over past few weeks. Besides, the company has grown aggressively as majority of the bookings came directly through our mobile app and website. The control over the supply along with assured high quality customer experience makes ZO Rooms a preferred choice of accommodation over unbranded options listed on the OTAs.
He also mentioned that only about 10% of the business was contributed by the OTAs. Currently, the company is doing around 1,50,000 bookings per month.
Commenting on this move by OTAs Kavikrut, Chief Growth Officer at OYO Rooms said,
We have worked closely with OTAs since our inception. With OYO listings, OTAs had enabled a wider set of choices for customers who book hotels online. This move will limit selection for their customers. Only 10-15% of our customers today choose to book OYOs via OTAs. We have seen strong growth in customers booking through OYO channels via mobile app, website and reservations helplines. The experience on these mediums is faster, direct and more convenient.
Also read: How OYO Is Building An Empire, Room By Room