OYO Expansion "Stall"? Chain Fasthotel Dreams China

In April 22nd, media reports said that the Hotel India start-up company OYO has cut the salaries of all its employees in India by 25%, while allowing more global staff to take a vacation.

"It is said that there will be no pay leave. Will China follow up?" In April 24th, Zhao Zilin, a staff member of OYO hotel in China, told the twenty-first Century economic report that the staff in China are still working normally.

But this year, the bad news of OYO is endless. Zhao Zilin revealed that under the double blow of the epidemic and the economic situation, the whole company seemed to be in a precarious situation.

More than OYO is affected. The H hotel of Hua Hua Investment and the light hotel in the US group, OYU of the same elong investment is also facing the same problem of layoffs, but the scale of OYO is even larger.

"OYO is the leader of the industry after all. If it falls, its mode will doubtless be challenged by the capital market, which will affect the industry financing." Yang Honghao, director of the Industrial Research Institute of China Tourism Research Institute, believes that the light chain mode represented by OYO is a new main force to accelerate the integration of the monomer hotel market.

How to move forward in reflection? More than a dozen employees and senior executives of OYO hotels in China have provided different dimensions of information and insights to the twenty-first Century economic report, drawing together a number of vital issues that this young India enterprise has exposed in the development of China.

The bad news of OYO has emerged one after another this year. IC photo

Once hurricane

Back in the early part of the year when OYO employee Tan Min was hired, the OYO hotel was being hit by a hurricane in the Chinese market at that time.

The hotel group from India only entered China in November 2017. It has increased the number of hotels from 0 to 6700 in 15 months, covering 292 cities in China, most of which are three or four line cities. In 2019, OYO flew at a faster speed. Official data provided that it had expanded to nearly 2 hotels by the end of 2019.

In 2019, Tan Min was proud and proud of being a front-line employee. She told reporters that unlike other nothingness of the Internet sinking market, the hotel chain in the three or four line or even five or six lines to sink the market expansion is really room to do, but also to achieve results. Five or six line cities too many wife and wife's small hotel and guest house need the service and the operation improvement, OYO and so on the platform is compatible with these small monomer hotel demand, moreover this market potential is huge.

According to the China hotel industry report, there are about 92 000 single hotels in China's Hotel stock market, accounting for more than 85%, and the market size can reach nearly 1 trillion. However, these monomer hotels generally exist problems of great pressure of survival and difficulty in transformation and upgrading. On the one hand, the monomer hotel lacks professional operation and management talents. It has the characteristics of high cost, low customer access, no branding, low overall quality, and no centralized purchasing advantage. On the other hand, the relatively harsh conditions of joining, high joining fees and other barriers also block the further development of single hotel through joining the traditional chain hotel group. At the same time, the general concerns about the low quality overall impression and safety and hygiene problems of the hotel have also affected the development of the monomer hotel.

Livy, chief financial officer of OYO, once explained to reporters in his exclusive interview with the newspaper that the size of the single rooms of the Dalian locks hotel group is generally over 70, because less than 80 rooms are difficult for the Econo Hotel group to maintain the cost, let alone the high star hotel group. Therefore, even if the hotels are willing to cut this stock market cake, they will suffer from both scale and profit. The model of OYO hotel just hits the gate.

OYO's entry into China is aimed at 80 small hotels under the guestroom, with low franchise threshold, no affiliate fees and margin, and 10% of the commission fee. Some of the retrofit fees will be as low as 700 yuan / room. Most of them will be rebuilt directly after 15 days. Some good single wine shop owners do not even have to pay the cost of transformation. OYO hotels pay the money for transformation. So direct and "barbaric" is the way of thinking of small owners, and therefore joined in a very fast pace. Not only did China's housing market change, but the number of contracted hotels soon exceeded that of India.

But the price is burning countless money. Chen Nailiang, the departing executive, revealed that OYO's early operation in China was like a loose alliance. It did not force the owners to use OYO's management backstage. They did not assign the store manager, and the income was uncontrollable, and they also paid for the hotel renovation. At the end of September 2018, OYO headquarters received $1 billion in financing, and 600 million of it was hit into the Chinese market. The money soon burned to the bottom.

In order to improve the financial data and strengthen the control of joining the hotel, OYO quickly launched the 2 version of the franchise scheme. But then the problem began.

The mystery of signing a hotel

May 30, 2019, Chengdu, Sichuan. It was very hot that day, and hotter than the weather was the smell of gunpowder between the two venues that were only a kilometer away.

On the same day, the H chain hotel of Hua Hua group and IDG capital strategic investment officially unveiled, announcing the two core products of "intelligent store manager" and "octopus central platform" for the domestic small and medium-sized single hotels, and planning to exceed 20000 by the end of 2022.

For sniper opponents, OYO arrived in Chengdu from Shanghai and held the franchisee conference at the same time, announced the upgrading strategy, transforming the brand mode of the small and medium monomer hotel from the "payment of affiliation fee" and "simple pumping out" mode to the 2 mode of "sharing risk and sharing revenue" between the brand owner and the owner, and building a moat for another. OYO will accelerate its expansion, and the target layout in 2019 will reach more than 1500 in the whole country. One city, more than 20000 hotels.

Hua Hua staff told the twenty-first Century economic report that Ji Qi, founder of Hua Hua group, was so angry that he fired at the scene at OYO, and compared it to OFO. He said "no matter how much money is spent, if there is no" value creation ", there will be no future and the future will not belong to them.

Chen Nailiang believed that Ji Qi's accusations had some truth. At that time, the problem of OYO was that the expansion speed was too fast, and the operation and management couldn't keep up. There was neither good backstage management nor service improvement and promotion to join the hotel. The staff training was far from enough, just satisfied with the expansion of data. "Everything is done beautifully for future listing." Chen Nailiang told reporters that OYO's Hotel contract data is meaningless. Most hotel systems are not in their hands, nor do they receive much commission.

According to Chen Nailiang, OYO has many "chicken thieves" act, for example, before sending off the contract to the hotel owner before sending off the work on Friday, it is requested that it reply within 24 hours without any reply. Before and after this important mail, there will be a lot of junk mail, so that important mail can be hidden and difficult to find. This routine is often used for other important e-mails, such as important documents. Some owners may even find that some important documents appear in the form of attachments, which can not be opened at the mobile phone end, and can only be seen at the computer side.

Such a way of operation, even if the owner of the hotel had long ago removed the OYO or terminated the franchise, his / her hotel has been counted into the OYO China data territory. It is interesting that in January 4th this year, OYO founder Li Taixi disclosed in an open letter that as of January 4, 2020, OYO has signed nearly 9000 hotels in China, with more than 200 thousand rooms signed. On OYO China's official website, it shows that the number of contracted hotels is more than 1.9, and the total number of rooms is more than 780 thousand. Which data is true?

Reporters also noted that as early as the end of May 2019, when OYO launched its 2 model in China, Livy claimed that the OYO hotel had more than 10000 hotels and 500 thousand guestrooms in the whole country, and the renewal rate was as high as 97%. But after six months of implementation of the 2 mode, the number of contracted hotels has not risen or fallen. What is the reason?

Chen Nailiang pointed out that data is "made", and worse still, the greed for profit leads to the lack of contract spirit.

According to the official statement, the 2 mode of OYO will provide income protection for cooperative owners in addition to more in-depth infrastructure transformation. The two sides jointly set up a revenue target for bottom protection. If the goal is reached, OYO and hotels jointly divide the revenue exceeding the target according to the comparison; if the target is not achieved, OYO will make up the difference. However, the hotel owners have to hand over the online operation and pricing power to OYO.

Many small hotel owners feel this way to save energy and effort, so happy to let the hotel go to OYO. I didn't expect OYO to take a "suicide" low price promotion. The price of the hotel was as low as 29 yuan and 39 yuan. Even in order to increase the users of OYO's own APP, the price of APP was lower. A large number of hotel owners are dissatisfied with such promotions and are unable to earn enough to earn them. But OYO has his own plan. They believe that the same kind of small hotels in the same area can be forced to get into trouble or go to OYO.

Chen Nailiang believes that in fact, OYO is the owner of the hotel resources, the proceeds of the owners to drain their own. This is not the worst; in November 2019, OYO sent emails to the owners, asking for the lowest level of hotel protection which failed to reach the guaranteed level, and a new 2 Hotel operating compliance standard. "There is no spirit of contract." Lv Tongrui, a hotel owner in Benxi, Liaoning, points out that not only the bottom fee is not guaranteed, but also the original promise of free services, such as hotel management system and OTA promotion, has begun charging owners.

What's more, the owners are not satisfied with the new operation rules. In the 9 aspects, there is any discrepancy in every aspect. They are liable to a fine of more than 1000 yuan and a maximum deduction of 100% of the insured amount in the current month, and stipulate that OYO has the right to unilaterally terminate the safeguards agreement.

Several OYO hotel owners told reporters that since joining the company, OYO has never given enough guaranteed price, and every time the raid will be fined, but why it will be punished is never explained. It never says what the standard of punishment is. Some owners said that OYO made many demands to the owners in the contract. These requirements are often overlooked by the owners. Until finally fined, it is found that "everywhere is a pit".

Chen Nailiang told reporters that in January this year, the amazing profits, including fines, made the OYO single store profit rate increased from 10% in October last year to more than ten percent in January this year.

"A healthy platform is growing with our partners, but OYO is sorry for them." Chen Nailiang said that OYO not only took away the original customers of these hotels, but also disrupted the original price system of the hotel, and then promised to attract the owners to invest in the cost of decoration. If the hotel withdraws, OYO will also use the surrounding hotel resources to suppress the exit owners.

In addition, OYO is also recorded as accounts receivable for owners' income, including fines, which is included in the financial statements. "Even if the owner does not recognize the money, the money can not be collected. OYO is still in the statement, making accounts to Softbank." Chen Nailiang's voice was full of disappointment.

Tan Min's values collapsed at the same time. The contract volume of Nuevo Hotel is the basis for Tan Min to avoid the optimization of layoffs. However, the company's training did not elaborate on the details of the contract. In order to persuade the owner to sign the 2 mode, Tan Min had to speak in a clever way. Later, the company changed the contract and imposed various penalties on the owners. Tan Min promised earlier that the company did not recognize the accounts, and the owners had scattered their anger on Tan Min.

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