June 15, 2016: OYO Rooms, Hotel room aggregator is betting on online marketplace OYO Bazar, a one-stop shop for hotels to procure daily essentials required to run their business, to boost loyalty among its partners and maintain margins.
Ritesh Agarwal, chief executive of OYO Rooms, “As the market matures, hotel partners will look for more support from a single partner they work with. The intent is not to become an ecommerce company but to become a preferred supplier for our partners.”
The idea behind the online marketplace is to help retain hotel partners and enable long-term value, he said. The company wants to leverage bulk sourcing capabilities and bargaining power to provide inventory to hotels at prices that are 20-25% cheaper than market rates while generating 20-25% margins for itself in the process.
It has a network of more than 5,500 hotel partners and its margins range between 15-20% per hotel partner.
Agarwal said, “Our margins are healthy enough to hit profitability but to continue to grow and maintain our partnerships with hotels, we need to expand our services.”
For providing hotel supplies in a certain price range, maintain quality standards and deliver products to hotels on time about 10 vendors have signed agreements with OYO Bazar . OYO Rooms’ preferred logistics partners or the vendors themselves will take care of the logistics, executives said.
The company is also planning to expand to other businesses such as providing loans to hotel partners, for which it is in talks with financial services providers. OYO Bazar was launched in March with 180 stock keeping units or SKUs in three product categories – linen, maintenance services and LED lights – and was initially piloted in Delhi and Gurgaon.
The company plans to expand the online marketplace to 500 SKUs in the next two months with more products such as cleaning supplies, crockery, bathroom wares and room and kitchen appliances.