Oyo’s CEO said the hotel operator is pursuing an aggressive “premiumization” strategy in its home market of India, where rising incomes have created a demand for higher-end accommodation.
Ritesh Agarwal, founder and Group CEO, said Oyo is also expanding in the U.S., where he believes the company’s technology savvy can give its newly acquired brand Motel 6 a competitive edge.
“Motel 6 is by far the most recognizable economy [brand] in the U.S.,” Agarwal said at the Skift India Forum on Tuesday. “It’s become a cultural icon.”
The moves are opportunistic ahead of a planned IPO. They also fit the celebrity persona he’s developed as an entrepreneur judging on Shark Tank India, which he said has captured a cultural change in India.
Here are some of the key points Agarwal made during his on-stage conversation with Rafat Ali, founder and CEO of Skift.
Oyo’s India Business
Agarwal highlighted the unprecedented travel boom in India, mentioning Kumbh Mela (a Hindu pilgrimage that drew hundreds of millions of visitors), and strong growth in spiritual tourism destinations, like Ayodhya.
Overall, Oyo is experiencing strong growth in India, particularly in the premium segment.
The CEO noted that while the company remains prominent in the economy hotel sector, it is expanding upmarket due to rising Indian incomes.
“It’s a relative premiumization, not absolute, which means we’re going from a classic Oyo to Townhouse Hotels, which is the one level up,” Agarwal said.
This “premiumization” strategy has led to significant growth across brands. The hotel operator has grown its five-star Sunday brand from just 4 to 14 properties in a year, while its mid-tier Townhouse concept has exploded from 100 to over 1,000 locations.
Unlike in the U.S. and Europe, Oyo is managing these premium properties themselves because there are no organized management companies to work with.
U.S. Market Trends and International Growth
Last year, Oyo made its biggest bet on the American market via its $525 million purchase of G6 Hospitality, owner of the Motel 6 and Studio 6 chains.
Agarwal said the appeal of this M&A was clear: Motel 6’s brand recognition, an established franchise network (whose managers are 80% of Asian descent and many from India’s Gujarat state).
The biggest financial opportunity is to apply Oyo’s tech-driven approach to traditional economy hotel operations.
“The application of technology can make such a huge difference to this business,” Agarwal said. “I would say the economy segment, in general — and Motel 6 would be the same as others —but the economy industry is not as technologically advanced as the middle of the market.”
“We’ll bring what’s status quo or table stakes for an upmarket hotel to our economy segment with Motel 6, and it starts with distribution,” he said.
Agarwal said his company was experimenting with bringing the Sunday brand to the U.S. market, which hasn’t been previously reported, though he didn’t give specific details.
Infrastructure investments across America drive business for economy hotels like Motel 6, as construction workers need accommodations.
Oyo previously said it planned to add 150 hotels to Motel 6’s footprint of 1,500 locations across the U.S. and Canada in 2025.
Oyo is also seeing rapid growth in the Middle East (Dubai, Abu Dhabi, Jeddah, Riyadh), where it now has more Sunday premium hotels than in India, catering to the growing number of Indian travelers visiting these destinations.
Ritesh Agarwal, founder and Group CEO of Oyo, with Rafat Ali, founder and CEO of Skift.
IPO Outlook
Regarding Oyo’s potential IPO, Agarwal was non-committal on timing but emphasized the company’s strong financial position, mentioning they will achieve close to 1,500 crores of pro forma EBITDA for the fiscal year ending March 2025, with projections of 2,000 crores for the following year.
He stressed that the board would ultimately make any IPO decision based on earnings, market conditions, and the desired share price.
Agarwal said his current focus remains on business growth, customer service improvement, and executing Oyo’s premium strategy.
“We are still one of the most prominent economy hotel brands in India, and we continue to expand,” Agarwal said.
Shark Tank and India’s Entrepreneurial Evolution
Agarwal discussed his experience as an investor on Shark Tank India, which he said has even higher viewership than the U.S. version.
He’s impressed by the quality of founders appearing on the show, and that they represented a shift in Indian aspirations.
“The common Indian dream, probably three decades ago, used to be to get a government job,” Agarwal said. “Then it became to get a job at an MNC [multinational company] during the I.T. revolution. And I think today for a young Indian growing up … the biggest incoming aspiration is to become an entrepreneur and a founder.”
This shift is so significant that “entrepreneur” has become one of the most sought-after professions in matrimonial searches, he said.
Agarwal personally gravitates toward founders who come from humble backgrounds and have overcome significant challenges, seeing reflections of his journey in them.
He suggested that the AI revolution will only help encourage entrepreneurship.
“Our Prime Minister [Narendra Modi] always says AI stands for America and India,” Agarwal said.
Accommodations Sector Stock Index Performance Year-to-Date
What am I looking at? The performance of hotels and short-term rental sector stocks within the ST200. The index includes companies publicly traded across global markets, including international and regional hotel brands, hotel REITs, hotel management companies, alternative accommodations, and timeshares.
The Skift Travel 200 (ST200) combines the financial performance of nearly 200 travel companies worth more than a trillion dollars into a single number. See more hotels and short-term rental financial sector performance.
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