In this uncertain economy, age-old businesses have laid off their employees by drastic margins, giving way for an abrupt terrain for employees and businesses to sustain in the start-up ecosystem. India is seeing waves of changes in the transitioning of the travel and tourism sector in 2021.
Isn’t it astonishing that once a hospitality giant, is now laying off hundreds of its employees across cities to stay afloat in the market? Unicorn of the hotel space, Oyo Hotels & Homes, founded in 2013 by Ritesh Agarwal, made its strong presence in tier I and tier II cities by offering budget stays and franchising with hotels, homes, and living spaces. After the pandemic struck India, and the rest of the world in 2020, revenues of the overall hospitality sector plummeted, severely affecting the financial health of the startups in the space of travel and tourism.
Travel tech sector makes its revival in the industry post covid: Oyo and Nestaway modify their business to sustain.
Not only in India but across countries such as China and Thailand as well, Oyo expanded its business and witnessed unmatchable growth. Along with the hotel stays, the other two profitable businesses Oyo Life (co-living) and Oyo Workspaces (co-working) had their presence over seven cities of India and were riding the high tides of the industry. Their strategy was simple: expand and acquire. They improvised their digital platform to make it user-friendly. Rather, Oyo realized that 40 percent of the bookings come from non-English speaking cities like Jaipur, Ahmedabad, and Lucknow. To give a more customized experience to the user, the company tapped into the play of vernacular languages. They launched their app in the Hindi language as well to attract a local customer base and cater to a larger audience.
On one hand, the lockdown due to Covid-19 which was imposed over the year prevented the spread of the virus. But on another hand, people-oriented businesses and industries went to the core of the losses. As hospitality sectors were among the worst sectors to be hit, even established businesses faced turbulence in their journey.
Watch: The impact of Pandemic on India’s Hospitality Industry
Bridging the gap:
Offering a slice of home, being away from home, startups like Zolo, Colive, Oyo life and Nestaway, leveraged the opportunity of providing a comfortable stay to the young professionals who are settling in megacities for work. Together these companies raised $220 million (Rs 1,700 crores) from the investors, out of which Nestaway mopped $145 million (Rs 1,200 crores) from the investors including, Tiger Global and Goldman Sachs.
Despite, typing up with various startups for laundry services (Pickmylaundry & Dhobhi Locker) and travel (Yulu), Oyo’s business was not able to meet the expectations of the user. These tie-ups were made to provide a better living experience through Oyo life. Now, the company is shutting its loss-making venture and tracing its steps back to its prime business of hotel chains. Whereas, Nestaways’ core focus was on enhancing and uplifting the co-living experience through their CRM platform such that even during pandemic the people don’t feel alienated.
As it is popularly said, no pain, no gain. Relying on this Nestaway has put its heart and soul to ensure the maintenance of hygiene and safety factors in their apartments. The massive disruption in the home rental market continues to be lower than pre-covid levels, still, demand is returning. Giving rays of hope slowly and steadily, Nestaway is reshaping its business. They have shifted their model by offering billability based on weeks basis instead of monthly and adding a feature of a virtual tour of the property through which the migrant can directly come to stay in the home instead of looking for places in different areas.
A RedSeer report states that the market for co-living start-ups in India is expected to touch $2 billion by 2022. The overall segment though, which includes paying guest accommodation and interest from real estate players, is worth a whopping $93 billion over the next 10 years, according to a PropTiger report. The tech-enabled co-living market will be focussing more on the establishments near office hubs and entering into the apartment space, where a wholesome livelihood experience can be offered.
Providing easy living for everyone, the Indian market must prepare itself for welcoming co-living structures and seeing it as a way of life. It is going to be a race between real estate players and start-ups, in easing the living style. But it will be all worth the wait to see how differently players like Oyo and Nestaway approach the market now and bounce back in the business.