budget hotel (1)

Update: Oyo Rooms had the following to say:

Kavikrut, Chief Growth Officer, OYO Rooms, said, “We have worked very closely with OTAs right since our inception. With OYO listings, OTAs had enabled a wider set of choices for customers who book hotels online. The move will limit this selection for their customers. OYO has seen strong growth in customers booking OYOs via our channels such as the mobile app, website and reservations helpline. The experience on these mediums is faster, direct and more convenient. Only 10-15% of our customers today choose to book OYOs via OTAs.”

Update: Cleartrip and Oyo Rooms wrote to us with the following:

Amit Taneja, Chief Revenue Officer of Cleartrip said, “At Cleartrip we work with over 25,000 hotels in India spanning across all categories including budget/value, covering 900+ cities/towns. Our focus has always been on making sure that we have the most comprehensive accommodation offerings across all categories. A new breed of discerning travelers today are seeking value in terms of their options for accommodation, based on location and purpose of travel. And as their preferred portal, Cleartrip has, and always will, continue to work with all the relevant players in the accommodation space, to offer the most comprehensive choice to our customer base.”

Earlier today: Online travel websites MakeMyTrip (MMT), Goibibo and Yatra have delisted budget hotel chains Oyo Rooms and Zo Rooms from their platforms, reports ET. As of now, it seems that only Cleartrip is listing Oyo and Zo Rooms. We’ve written to MakeMyTrip, Oyo Rooms and Cleartrip and will update the story once we hear from them.

The report stated that Oyo Rooms saw this coming and would not be affected since less than 10% of its business came through these travel websites, adding that Zo Rooms expected to cover the lost business through its app.

MediaNama’s take: While larger players have launched their own budget hotels, existing budget aggregators are focusing on increasing the standardised experience with cheaper rates by adding more and more hotels to their repertoire. This move is unlikely to affect users at large, given that individual platforms will still be available. However, it’s interesting to notice the moves of larger players, who might feel threatened by budget hotel chains maybe as a resistance to change or as something likely affecting their margins in a big way. One study (pdf) indicates that hotels have to pay 15-30% commission to OTAs, affecting their profit margins. A Hindu report from 2013 states that the Indian hotel industry’s margins would slide to a 5 year old low of up to 8% due to decline in revenues per room, and inflation of consumable costs.

MMT hotel and packaging revenues surpassed air ticketing revenues
In July, we reported that MMT’s revenues from the hotels and packages business grew by a mere 2.8% to $18.37 million for the quarter, from $17.87 million in the same quarter last year, while the number of transactions grew by 14.36% to 0.43 million for the quarter. Hotels and Packaging business contributed for 48.21% of MakeMyTrip’s net revenues for the quarter. It is worth remembering that this segment has been driving MakeMyTrip’s revenue growth for a few quarters now and had even surpassed Air ticketing revenues for the company in Q1-FY15.

Cleartrip’s hotel transactions hit 45%
In the same month, almost 45% of hotel transactions on Cleartrip in Q1 2015 came via mobile phones. (Q4 2014 data here)

Goibibo’s budget accommodations GoStays
Last month, we reported that Goibibo launched a new section called GoStays on its website and mobile app which would aggregate unbranded budget accommodations across India.

Yatra’s foray into accommodations
Earlier this month, Yatra launched two new types of accommodation options for travellers: TG Rooms and TG Stays, which would be bookable via both Yatra and Travelguru.

Oyo We for women travellers and funding
Last month, Oyo Rooms launched a women-exclusive brand called Oyo WE with all women staff. In August, it raised $100 million in a funding to expand its rooms and available cities.

Zo Rooms’ funding
Earlier this month, Zo Rooms launched a premium service called Zo Prime, which would have 500 rooms across metros with plans to expand to 10,000 rooms in next 12 months across the country. In August, it raised $30 million from existing investors, while in July, it raised an undisclosed amount.