OYO Indonesia Boosts Accommodation in the Business and Premium Segments

Oravel Stays Ltd, the holding company of budget hotel operator OYO, revealed that positive EBITDA is expected to be realized for the first time in the 2023 financial year. It estimates that adjusted EBITDA in the second semester of the 2023 financial year will triple to $24 million compared to the first semester.

Quoting the news Inc42, the increase occurred thanks to the reduction of a number of cost elements so that the company can enjoy operational efficiency, growth in business segments, and continued operational profitability.

In its official statement, OYO estimates that the total Gross Booking Value (GBV) in the 2023 financial year will increase by 23% to $1,3 billion compared to last year where the accommodation business made the highest contribution. OYO is also adding a team in Business Development to boost the number of properties by around 15% in the second half of the 2023 financial year. 

The business segment is indeed being intensified by OYO in Indonesia as one core market-in Southeast Asia and globally. Delivered at official blog, Global CBO & CEO in Southeast Asia and the Middle East Ankit Tandon said the demand for accommodation needs business travel starting to increase.

The Ministry of Tourism and Creative Economy also reported that the movement of domestic tourists reached 633 million-703 million as of October 2022. This year, the movement of domestic tourists is estimated to have skyrocketed 1,2 billion-1,4 billion. Then, property consultant Jones Lang LaSalle (JLL) estimates that the investment volume of the hotel business in Indonesia will reach $300 million in 2023.

In addition to corporations, it plans to multiply premium hotel volumes this year. Currently, OYO offers accommodation in the mid-premium segment through Townhouse Oak, Townhouse, Collection O and Capital O.

In addition, Ankit considers Indonesia to be the most mature market in terms of scale and economic units. It seeks to take the role of a catalyst to maximize local market potential and technological innovation to address market needs. "We are ready to serve customer by maximizing portfolio growth, technology innovation, and more domestic travel options accessible," he said.

Business accommodation

In 2022, OYO explained that there would be an increase in orders for the corporate segment in Indonesia by 237% to 253 corporations from the previous year which was only 75 corporations. These orders came from the financial, technology, startup, and retail and logistics sectors located in Jakarta, Tangerang, Surabaya, Bekasi and Medan. Mainly contributed from the financial sector which is the biggest contributor to OYO Indonesia.

This growth indicates that business travel began to gradually rise because the Indonesian government gradually relaxed travel restrictions. The level of Covid-19 vaccination among the public also continues to increase.

OYO has also begun to strengthen innovation to bring new experiences and features to travelers. According to Ankit, today's adaptability can result in higher growth. It gives flexibility to technology teams to experiment and find new ways to reduce complexity and increase cost savings.

Currently, OYO offers options storefront ranging from the OYO application, web and mobile web, to the OTA platform. Apart from that, his party is also developing OYO 360 or tool AI-based for self-onboarding with two-click platforms.

Strategy navigation

A number of accommodation provider platforms or OTA has navigated its strategy in order to get out of the pressure of a situation that had reduced its services. RedDoorz, which is a strong competitor of OYO, has also just announced the BEP achievement in 2022 with five times revenue growth.

In his presentation, RedDoorz officials announced the business strategy to be new-age hospitality. One of them is entering the property business through the "Sans Hotel" brand which has been echoed since late 2020. Sans Hotel targets travelers from generation Z and millennials who combine smart technology and affordable prices.

RedDoorz claims to have accommodated around 3.000 properties in 257 cities in Indonesia. This number has grown 55% since 2019. He also said that this change in strategy proved RedDoorz's business resilience in the midst of a pandemic.

Meanwhile, OYO includes new achievements with 100 million downloads globally in 2021. As of January 2020, OVO accommodates 43.000 properties and 1 million rooms in 800 cities around the world. Another competitor that remains now is Zen Rooms. Previously, there was airy who finally gave up in May 2020.