OYO Rooms Hits Back On Being Called A Ponzi Startup, The Founder Feels Insulted !

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Aarzu Khan
A full-time data scientists and a part-time industry analyst; still learning power of effective presentation and firm believer of the thought "Numbers are always magical". Love to be in the network of people who 'know' how to respect their time and keep others engaged in meaningful activities.

OYO Rooms, Ponzi Scheme and Startup, the debate is far from over. In a response to the controversial statistical analysis that has gone viral on the internet since Friday, claiming OYO Rooms is nothing but a Ponzi startup, Ritesh Agarwal, Founder & CEO of OYO Rooms, wrote an email to all its employees and also published it on OYO Rooms blog. In the email, Ritesh has accused the author of the article for insulting 2,200 employees of OYO Rooms.

For all of those who may be wondering what’s really pinched Ritesh and OYO Rooms and made them write, all guns blazing, then you must go read our earlier published statistical analysis, titled “Is OYO Rooms the Startup nothing but a Ponzi scheme?“, before you continue to read further.

In the response email Ritesh writes:

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Dear Friends,

Many of you have expressed your anger and frustration since a post about OYO appeared on LinkedIn last evening. We have been criticized before and I am sure we will face criticism again in the future. However, by questioning our integrity and intent using presumptive half-baked theories and insufficient data the author has insulted more than 2,200 of us who are working day and night to realize our shared dreams.

It has taken a lot of sweat, a lot of pain and many sacrifices from all of us to get OYO to where we are today. We have amazing customers who love us, a great technology platform, one of the best teams in the start-up ecosystem, loyal partners who work with us side by side, strong investors and a business that’s growing month on month with positive take rates and a clear path to profitability – calling all this a ‘Ponzi scheme’ is just preposterous!

We are here to solve a really difficult problem for the Indian budget travelers, and we are proud of what we have achieved already. OYO has started a revolution – from the largest OTAs to more than 20 start-ups across the globe, there are many who are trying to build another OYO.

Our customers love our product and our services. They love us because we take end-to-end responsibility for guest experience. Starting from selecting hotels, standardizing the infrastructure, training staff and using technology to drive ease of use, we have always seen ourselves as a hotel chain. More than 600 of our colleagues are working incessantly to shoulder this responsibility in the 179 cities we operate in. “I enjoyed my stay at OYO” or “I booked an OYO” are common references these days. And this is what brings each one of us to the office every day!

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Not only are we growing fast, we are also growing strong! Our take rates have improved significantly and are now positive across the network including minimum guarantees (less than 3% of our business now). Our pricing team is continuously improving algorithms to maximize revenues while driving target take rates. Only ignorance or a strong desire to malign can lead to the use of a term like “Ponzi scheme” in the above context.

Our consumer app is game-changing – a simple three-click booking process, relevant content, turn by turn directions, in-app ordering service, choice of hotels at almost every location and so on. This app is fundamentally changing consumer behavior – our customers are now booking more and more OYOs closer to check-in time, a trend earlier seen only in the taxi aggregator space.

More than 99.5% of our guests get exactly what they book. This is made possible by our partner hotel mobile app that ensures real-time synchronization of room inventory. Our partners also are making more money and are getting better returns on their assets because of OYO. With more than 5,700 OYOs on our network now, we have lost fewer than 2% hotels ever – most let go after consistently failing to deliver a predictable guest experience.

Like any evolving start-up, we have made our fair share of mistakes. Nothing hurts us more than a guest undergoing a bad experience. We have always stood up to take responsibility and then worked tirelessly to build OYO, one great experience at a time. Many times I have personally apologized to the customer. Each mistake hurts me, but I am not ashamed of my mistakes, as I am yet to hear of an entrepreneur who can claim to have succeeded without making mistakes.

As a company, we are always open to constructive criticism but when someone questions our intent and integrity, it infuriates us all. Your reaction is a reminder of how passionate we are about OYO and how closely we are bound together in our mission. If there is one thing I know, it is that naysayers and detractors increase our resolve to create the world’s most loved hotel brand. Keep building team!

Cheers,
Ritesh

Kudos to Ritesh; unlike many well-funded startup entrepreneurs, he decided to respond instead of ignoring and flushing it out, considering it just another article published on the internet. There is absolutely no doubt that Ritesh and his team have been registered a commendable growth for the last few years that many funded startups entrepreneurs fail to do so.

However, there are few questions that are raised in the previous article remain unanswered, and we leave you with that to think, analyse and pen down your opinion in the comment section.

  • The non-refundable upfront payment to hotels as a minimum guarantee is being accounted as booked room nights?
  • There is no enough clarity provided on the claim of ‘exaggerating numbers‘.
  •  What checks and balances OYO Rooms have put to ensure the quality standards of the rooms of hotels that are receiving the upfront payment as a minimum guarantee?

 

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