My colleague recently wrote about OYO’s rapid development in China. In fact, armed with Softbank arsenal, OYO just launched in Indonesia last month.

It started working with about 30 hotels in 3 big cities: Jakarta, Surabaya and Palembang.

The name OYO was actually not new to people in tech sector in Indonesia. Since 2015, a few startups have been inspired by OYO, and developed the same (or similar) model in the country: Airy, Nida Rooms, Zenrooms, and Reddoorz.

The so-called manchise (management + franchise) model for low end hotels is the bread and butter for OYO. To increase customer uptake for the OYO branded hotels, OYO works with OTAs including Traveloka and Tiket.com.

OYO money

While still in early days, OYO seems to grow quite fast in Indonesia, thanks, I believe, largely to its effective referral code marketing. IDR250k (US$17) voucher is given to both the referrer and the referee. Referrers can also accumulate the vouchers in their wallet called OYO money.

That said, some users feel cheated as the OYO money balance can only be used fully for the first transaction. However, we believe that this is likely to be just a small nuance as OYO is experienced enough to handle, and spur, growth.

Whether their Indonesian team is competent enough, and gets enough autonomy from the HQ, probably matter more for their viability in Indonesia.

OYO Hotel near our Indonesian office

Deep pocket wins

The macro environment seems to be favorable as Indonesians travel more and more (hence the demand for value-for-money hotels, just look at any Amaris Hotel during breakfast time).

The question is, with a number of players already in the market, can OYO pull it off and overtake its peers?

We believe it can, if it is committed to the market and doing things right.

This answer for the former seems to be a given, since OYO CEO Ritesh Agarwal have announced that OYO will invest up to US$100 million in Indonesia.

And their target is to reach 35 cities in Indonesia for the next 15 months.

Unless they screw up themselves, their competitors should feel some serious pressure.

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at hello@mworks.asia.

 

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