Ritesh Agarwal On The Tech Driving OYO, Balancing Supply-Demand And Product Principles

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The opening day of The Product Summit 2020 saw some scintillating discussions and conversations and topping that was never going to be an easy feat. But in what was arguably the most riveting and insightful look at OYO, Ritesh Agarwal took us deep into how the hospitality giant has built its products, fixed its mistakes and overcome challenges.

The OYO founder and CEO energised everyone on Sunday morning, diving straight into how the company has been building products for the real India “rather than the top 20 to 30 Mn credit card users”.

Agarwal did ‘warn’ us that the session would include an exclusive look at how OYO has used technology for pricing, room-matching, safety and security and creating a product that most Indians can use. And his presentation lived up to the hype. The most critical thing for OYO, he said is:

“Whenever we see a problem, we are able to figure that out, react to it and try and make a positive difference around it” he said. The trick is to make sure you get more things right than making mistakes.

Designing A Pan-India Product

The OYO chief said the company has built 40+ products within the OYO suite and 500+ microservices, but at the same time, failed at many. The few products that worked have made OYO what it is today.

Agarwal began by showing the virtual audience how OYO is at the intersection of consumer, technology and hotel owners, and unique among tech companies since it is targeting the mass market and budget travelers.

“In India, fundamentally, you have to target the mass market to create a real impact,” he said, citing parallels in retail and other sectors to what the vision of OYO was. It was to serve the common man, and not the higher income strata.

He stressed the importance of meeting the customers — recalling how he met hotel owners around India to understand the supply side and figure out the product that could work for them. The resistance to technology is not as big a hurdle as many claims, he believes, which is what OYO wanted to prove in a market where 500+ hotel management systems existed.

The drive to get feedback is something Agarwal has kept going even many years later. And it has delivered the next big innovation from OYO’s side.

Ritesh Agarwal On IoT And Machine Learning

Many bemoan the fact that OYO is not a tech company and that facilitating bookings is not tech enough. But Agarwal dove into the OYO OS, which is the SaaS suite powering the OYO experience for hotel owners. He talked about the intricacies of building an all-encompassing software that can be used by even the most untrained hotel front of the house executives.

“The system tells the managers what decisions to take, rather than them searching for the right options,” he said, so decisions such as which room to give to the customer (based on their past preferences and feedback) are not left to human intervention. OYO OS automatically suggests the right room based on availability. This helps immensely in solving the burden of visibility for the hotel owner at any given time.

The second part of the product is keeping a check on pricing. Hotel owners do not have to input any price to start with since OYO uses machine learning algorithms to automatically recommend prices. Agarwal even joked that some customers have figured out the algorithm and know exactly when to book to get a 5%-10% saving.

Solving pricing and making room selection easier both stem from a common problem in India. Hotel owners actually do not visit the property on a regular basis and may even be living full-time in another city, leaving the hotel to be managed by a contractor. This leads to room pilferage and rooms being denied to OYO guests at times. To stop this, the company has integrated an IoT system into OYO OS, which links power supply in the room to a keycard which can only be activated by authenticated guests.

Customer Education Built Into Products

A lot of the challenges for OYO, the founder believes, come from the fact that it is managing a diverse group of hotels and hotel customers across the country. It takes time to get things across from the ground to the product team and be implemented in the product in a meaningful manner.

Agarwal said that thanks to the CO OYO app, which gives hotels analytics on revenue, costs and tools for procurement, OYO has solved a lot of challenges that hotel owners face, but it cannot get them all in the first go. While during the Covid crisis, many hotel owners complained about the company owing them dues, the CEO believes that a lot of this has to do with not communicating changes clearly — changes that are intended to benefit the hotel ecosystem, according to the company.

While OYO has brought in visibility to the budget hospitality industry in India, this has increased their need for higher revenue through tech adoption. “Because they have visibility, they expect more and from a product point of view, they want more simplicity in use.”

Agarwal stressed that the company designed a mobile product for accounts reconciliation after speaking to customers on ground and then acting like their chartered accountants.

These changes in products have led to 45% drop in complaints from partners globally, the founder claimed, while sign-ups are up by 30%-35%. At the same time, he was cautious about adding features too quickly based on learnings from mistakes in the past where products didn’t convey the right message despite there being a benefit for the hotel partners, which has led to many complications.

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The Role Of Training

For Ritesh Agarwal, a point of pride is how OYO has created semi-skilled and skilled workers for the hospitality industry, who are also succeeding in other fields. He believes that creating a tech product and giving it to a hotel owner to use would simply not have worked in India, since it is the hotel staff that interacts with the end consumer. So the challenge was to train them in technology and also the soft skills needed in the hospitality industry.

This is no easy task, and scores of poor reviews for OYO hotels suggest that it is a work in progress, but credit where credit is due. Agarwal was keen to point out that many hotels are run by people who have got their first job at OYO, who have learned on the job and through product-based self-training.

Lessons From The Consumer Front

Of course, the story of OYO would not be complete without the demand side, which is the consumers or the guests. Agarwal recalled how the company began with just a website and only in 2014 did the company decide to focus on mobile app experiences.

“From our perspective, we went back to the roots and asked ourselves, what would our customers care about,” he said.

For Agarwal, the reliable experience, location of the hotel and value for money are the key factors for a typical OYO consumer. While the pandemic impacted the revenue, a lot of customers had to cancel bookings and get refunds. This was about reliability.

The solution came through the Yo chat assistant, which managed to handle the flood of inquiries and allowed customers to get help themselves rather than rely on an OYO resource. This handles 85% of queries now within a single session in India and globally.

Understanding the constraints of the customer is key for Agarwal to innovate on this front. In the times since the lockdown on hotels was lifted, sanitisation has become a big focus for hotels. For OYO, the standard operating procedure is to sanitise every room after checkout, but some guests want to see the act in person. OYO is now working on a product change to ensure that this can be made available to many of these customers.

Ritesh Agarwal rounded off the session with the company’s product principles:

“We lead with propositions and always remember that products can either build or break trust.”
“We enable technology to lead decisions and operations.”
“We always keep the user at the centre of all our products.”
“Democratise data and use it for your customers and partners.”

This article is part of our coverage around The Product Summit 2020 by Inc42, which took place on October 10 & October 11. TPS 2020 was supported by Amplitude, AWS, Dell Technologies, and DigitalOcean.

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