Oyo Rooms starts leasing hotels.

Oyo Rooms, the SoftBank Group-backed online budget hotel aggregator, has started leasing hotels and guest houses under a programme called Oyo Flagship in a significant shift from its pure-play aggregation business, four people aware of the development said.

By exercising complete control over the day-to-day operations of these establishments, the Gurgaon-based company intends to improve the consumer experience and have a better repeat rate, the people said on condition of anonymity.

It will also help the firm curb potential malpractices by some hotel owners, which in the past have led to significant cash burn for Oyo.

Oyo (Oravel Stays Pvt. Ltd) launched a pilot in Gurgaon around three months ago, one of the persons cited above said. The company has since extended the initiative to at least 30 properties in Delhi-National Capital Region, Bengaluru and Mumbai.

This is a shift from Oyo’s earlier strategy of booking a part of the hotels’ inventory and holding it captive for Oyo customers.

Such a strategy often resulted in hotels making fake bookings, which led to Oyo bleeding more money at a time when investors have become cautious about their bets. The company was also struggling to offer customers a standardized service across all its properties.Oyo largely deploys its own staff in these properties, such as managers and front staff, in a bid to improve service, said another person cited above. The number of staff ranges from four to six, depending on the size of the property. The company is also planning to integrate services such as food ordering and laundry within its app.

The lease contract ranges between six months and several years, depending on the location and the pricing of the property. Financial details of the contracts could not be ascertained.

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Suraj Kumar

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