Many traditional fields are experiencing disruption from “barbarians”，They are backed by various capitals，Taking the new model of online and offline integration as the starting point，“Dream” through the revolution of traditional industries，Realize your own value in the business world。

The controversial Luckin，The current market value is close to 10 billion US dollars，Be the first of these "barbarians" to land。OYO as a “new species” in hotels，While the Chinese market is rapidly expanding，But there are constant troubles。From business model、Development trajectory and business strategy，The two are very similar，Judging from the results，OYO has not demonstrated Luckin’s dominance in the new retail track in the hotel industry。

Mid-February，Indian hotel chain startup OYO announced its 2019 performance report，Fiscal year ended March 31, 2019，OYO global revenue is 9.US$5.1 billion，Compared to 2 in fiscal year 2018.USD 1.1 billion, an increase of 4 compared to the same period.5 times。While operating income has increased significantly，OYO’s losses are also expanding。OYO’s comprehensive loss in 2019 was as high as 3.US$3.5 billion，compared to $52 million in fiscal 2018，Overall increased by more than 6 times。

The "barbarians" who broke into traditional industries，In the early stages of development, the momentum of high growth relies on capital，Loss is not a big problem for them。

Problems exhibited by OYO，Intuitive view from the financial report，The money-burning efficiency is not only not improving but is declining。The price control system was complained by hotel owners、Unilaterally modify the contract、Conflicts of interest with OTA platforms and other issues，This is the real hidden danger of OYO in the future。

Similarly burning money，Why OYO failed to repeat Luckin’s “success”？

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As a "unicorn" born in India，Indian market data is pretty good。

According to the financial report，In the Indian market, OYO achieved 6 goals in fiscal year 2019.$0.4 billion in revenue，Contribution rate as high as 63.5%。An increase of 2 compared with fiscal year 2018.9 times，Although the loss amount reached 83 million US dollars，Proportion of lossable amount to operating income，But it dropped from 24% in FY18 to 14%。

China is OYO’s second largest market，OYO’s losses expand，Related to the great development in the Chinese market。November 2017，OYO enters China。According to OYO’s financial report data，5.1 billion in total revenue.5.1 billion in total revenue，Judging from annual losses.USD 0.7 billion，Accounting for 32% of total revenue。Judging from annual losses，The ratio of losses to revenue in the Chinese market is 64%。

It’s something to be proud of，OYO is developing very rapidly in China，With so many powerful domestic hotel chains，A hole was opened in just two years。

After entering China，OYO received US$1 billion in financing led by SoftBank Vision in August 2018，According to OYO official disclosure, US$600 million will be focused on the Chinese market。In December, Grab invested an additional 188bet app US0 million。February this year，Didi also invested US$100 million。Incomplete statistics，As of April 2019，OYO’s total financing exceeds US$1.7 billion。

Just last May，OYO Hotel CFO Li Wei announced that OYO has surpassed Huazhu and Homeinns，Become the second largest hotel group in China。After coming to the Chinese market，OYO avoids first- and second-tier cities where competition is relatively saturated，Mainly focus on second- and third-tier urban markets and below，The number of partner hotels exceeds 10,000，Has more than 500,000 rooms。

This speed is really amazing，You must know that Huazhu and Homeinn have been developing for nearly 20 years，That’s how we got our current size。According to OYO founder and CEO Ritesh Agarwal in an interview，January 2020，OYO introduces 8,500 new guest rooms in the Chinese market。Judging from the number of hotels and expansion speed，OYO indeed already has Hehuazhu、Capital to challenge established hotel giants such as Home Inns。

It seems，OYO has also adopted the model of raising high and hitting high，Will become the next “Luckin” in the hotel industry。If that’s the case，The money is worth burning。

But the problem OYO faces is not just losses，Three shortcomings in the Chinese market，It may destroy the possibility of landing after burning money。

The first shortcoming, excessive focus on the sinking market；The sinking market is very important，Any new species achieves rapid growth in first- and second-tier cities，Everyone will regard the sinking market as the second curve。For example，Luckin launched a new brand Xiaolu Tea last year，Its new retail partner model targets the sinking market in the second, third and fourth tiers。The difference between OYO and Luckin is，After entering China, it focused on the sinking market，I don’t pay too much attention to the first and second tier markets。

Tianhao uses Baidu Map App，Enter OYO in the search box，This feature can also be seen in the displayed results。Choose second- and third-tier cities and below to enter，Mainly because the branding and chaining pattern of economic chain hotels in first- and second-tier cities in China is relatively mature，A huge sinking market dominated by independent hotels，Easier to penetrate and develop。In terms of business potential，The value of a single user in a sinking market is obviously much lower than that of a user in a big city。Last year，OYO even established an EGM (Emerging Growth Markets) division，Mainly focus on the expansion of county-level cities and county towns。

Luckin Coffee is burning money like crazy，There is still capital to buy it，It has a lot to do with its focus on first- and second-tier white-collar users。Although，Similarly burning money to change the market，OYO’s ecosystem potential around second- and third-tier cities and below，Obviously far inferior to the former。

The second shortcoming is that the service chain of hotel chains is too long；Past two years，There is a lot of controversy surrounding Luckin，But there is not much discussion about service quality，Because the coffee retail or takeaway service chain is very short，It is easy for enterprises to control and unify service quality。OYO’s hotel chain service chain is very long，Includes reservation、Reception、Check in、Guest Room、Catering、Entertainment，And other services。The longer the chain，means the service quality is more difficult to control。And compared to Luckin’s direct sales model，OYO has three main business models (franchise、Lease operation and own asset operation)。Among them，The largest proportion of franchised rooms，Nearly 300,000 rooms。

OYO is the earliest to execute 1.188bet sports betting app download 0’s “light franchise” model (hotel front door、Branding of interior decoration，Identification transformation)。April 15, 2019，OYO decides to start pilot in China 2.0 mode - changing from "light franchise" to "strong control"。

2.In 0 mode，OYO requires hotels to use a unified PMS system (hotel property management system)，Hotel price control rights are unified and regulated by OYO headquarters algorithm，Use smart key card to ensure that all hotel revenue enters the system，Cannot escape the order。At the same time, OYO provides guaranteed income to hotels，Both parties will share the income exceeding the minimum guarantee。OYO Hotel has recently launched the "Win-Win Treasure" project，Extend 2.Commission mode of mode 0，Weekly settlement，Known as OYO’s 3.0 mode。

Although OYO’s franchise model continues to upgrade，Still unable to completely solve the problem of chain hotel service chains being too long。The huge test facing operational capabilities，During Golden Week in 2019，Some tourists booked hotels on OYO，After arriving at the hotel, I was told that I could not check in，The reason is that the cooperation between the hotel and OYO has ended，As a result, many users can only "sleep on the streets"。

On the Black Cat Complaint Platform，Some netizens also complained about OYO’s poor hotel facilities，Bad service attitude，This is a common problem among hotel chains，OYO has insufficient control over the franchised hotels，It is impossible to strictly control the service quality of each store like Luckin。

The third shortcoming is the hotel’s low repurchase rate；Every Luckin store sells takeout，The service radius can reach the surrounding business district of about one kilometer，Coffee drinks and tea drinks to be developed later、High repurchase rate for catering and other consumption，As long as it can meet the needs of consumers，A single person’s annual contribution to consumption is considerable。The particularity of hotel consumption determines the low repurchase rate，Except for those who frequently travel for business，Staying in a hotel is not a very “daily” need。

It is reported，After the merger of members of Plateno Group and Jinjiang Group，The overall number of active members has reached 1.500 million，The problem of being able to guarantee 15% of the customer base of its hotels，More consumption still comes from Meituan、Ctrip and other OTA platforms and direct in-store consumption。

OYO does not charge franchise fees，Attract independent hotels to join，And through the agreement of cooperation between the two parties，Those regulars who will sink into the market、Individual customers converted into OYO App members，Look and Luckin pass massive free discounts，The same method is used to attract new users and retain them in the App or mini-program。Low repurchase rate that can be limited to hotel consumption，Burning money to exchange users for OYO，By creating a traffic pool，The idea of ​​gradually realizing the control of downstream franchise hotels from the perspective of mastering customer sources，brings great difficulty。

Meituan’s development model includes the saying of high frequency and low frequency，Gain traffic through high-frequency takeaways，Then to catering、Hotel and other businesses “blood transfusion”。Undeniable，OYO can also build a huge traffic pool by burning money，The input-output ratio may not be optimistic。

The scary thing is，Meituan、Ctrip and other OTA platforms are not sitting still。According to reports，OTA platforms such as Meituan and Ctrip blocked OYO hotels in 2018，Can’t find OYO results in their app，188bet app download Although it has been restored now，But it also shows the OTA platform’s defense against OYO。

For these to be in the traditional business field，For the "barbarians" who challenge the established giants，Loss is part of the strategy，No need to worry too much，But if the money is burned, it cannot be exchanged for higher value，This is the fatal place。If Ruixing is regarded as a ruler，It will be difficult for OYO to repeat its success，At least in the above three shortcomings，These are some insurmountable obstacles for OYO to move forward。

The epidemic in 2020 will make things worse

The beginning of 2020，It is undoubtedly worse for OYO。The new coronavirus epidemic has had a huge impact on the service industry，The wine and tourism industry was instantly shut down during the peak season during the Spring Festival。According to the Ministry of Transport, it is expected that transportation will send passengers nationwide during the 10-day holiday 1.900 million visitors，Decreased by nearly 73% compared to last year’s Spring Festival，

Originally expected to hit 4.Spring Festival in the Year of the Rat with 500 million people traveling at a new peak，Related industries such as tourism, hotels and catering have been severely affected。

According to Caixin report，Each sector of the tourism industry will have different recovery times after the epidemic，Inbound tourism requires more than 1 year of recovery time，The resumption time of outbound travel is about 3 months to half a year。

As OYO’s second largest market，China’s wine and tourism industry has been severely affected by the new coronavirus epidemic，It means that the booking volume of hotel chain brands including OYO will decline to varying degrees，The specific extent of the impact may not be seen until the next quarter’s financial report is made public。

Early February 2020，OYO founder and group CEO Li Taixi published an article on his blog，The company is taking multiple measures to deal with the challenges of the epidemic，Including restricted travel arrangements to China、Monitoring employee health status、Fees reduction for newly signed hotel owners。

He Meituan、Same as Ctrip，After the epidemic，OYO Hotel also immediately launched refund and exchange measures for consumers。

OYO promises that all bookings made between February 29, 2020 (when the epidemic occurred) will be fully refundable without loss，And launched a strong support policy to waive commissions and own costs，For hotel owners who have newly signed or re-signed the Win-Win Treasures，Hotel owners in severely affected areas will be given a 60-day commission exemption，Business owners in other areas are exempt from commission for 30 days，OYO is responsible for zero income loss；And give a delay to brand building expenses，We will collect it in due course after the epidemic。

This move will undoubtedly increase OYO’s losses.

Not only that，OYO’s model has caused dissatisfaction among many franchise owners，January 2020，Some rights protection owners protested to OYO China，Many owners have revealed through Internet channels that there is an overlord clause in OYO’s franchise contract，Disguised fraud, etc.。

According to the owner of Weiquan Hotel，For own profit，OYO unilaterally modified the cooperation agreement，Forced reduction of the minimum guarantee amount，And introduced many new policies on fines、Charged items，Making it impossible to continue cooperation。On the other hand，Hotel traffic、Most of the income comes from online OTA and OYO channels，Frequent customers、Individual customers have been converted into members of OYO App，Other OYO franchise hotels 188bet Online Sports Betting and Casino have appeared in the business district。If you don’t cooperate with OYO，The hotel cannot continue to operate。

OYO in order to make profits as soon as possible，Management has adopted various methods to reduce costs，Increase income。In January 2020，There are foreign media reports，OYO has reduced its front line，Withdrawn from more than 200 cities around the world (including India and other countries)；At the same time，OYO also continues to launch layoff plans around the world，In order to reduce labor costs，This will result in thousands of people being laid off。

OYO has laid off 15% to 20% of its employees in India，About 5% of layoffs in China。360 US employees laid off in US。However，OYO will subsidize 3-N months of salary for laid-off employees，Compared with the performance of many domestic Internet companies last year, it is much more humane，However，This expensive expense will also become a burden。

OYO model reform determines future life and death

After entering the domestic market，OYO is not static，Several changes in franchise model，Trying to find the most suitable way to play in China。

In order to quickly enter the market，OYO adopts a model that does not charge franchise fees，The main revenue is，Collect a certain percentage of commission from the transactions of franchised hotels，And provide the hotel with free appearance、Modification of room linens, etc.，This is also the reason why it attracts the favor of independent hotel owners in the sinking market，According to industry estimates，The relevant modification fee provided for a single franchised hotel is about 10,000 yuan。

In comparison，The conditions for joining traditional hotel chain brands are very demanding。Take Home Inn as an example，A hotel franchise needs to meet several conditions。

First，The hotel lobby area must be more than 100 square meters，The room area is basically more than 20 square meters，The overall area of ​​the hotel must also reach 4,000 square meters，The number of rooms cannot be less than 100。In addition，The franchise fee is also around 250,000，Deposit 100,000，Plus hotel management system installation fee, etc.，The basic investment is about 400,000。And，Five percent of the turnover will be charged as management fee。

Lower threshold is the secret of OYO’s rapid growth in China，However，Since OYO will 1.0 "Light Franchise" mode upgraded to 2.0 "Strong Control" Mode，There are more conflicts between the platform and hotel owners。

So-called 2.0 mode，That is, in 1.0 based on，OYO also requires hotels to use a unified PMS system (hotel property management system)，Hotel price control rights are unified and regulated by OYO headquarters algorithm，Use smart key card to ensure that all hotel revenue enters the system，Cannot escape the order。At the same time, OYO provides guaranteed income to hotels，Both parties will share the income exceeding the minimum guarantee。

at 2.Under 0 mode，According to the provisions of the agreement，OYO has the power to adjust hotel pricing，This also gives OYO a similar “discount right” to Luckin，But because the discount is too heavy，Failure to pay the minimum guarantee fee as scheduled，And strongly modify the owner rules，Causing new problems。

After OYO took away the hotel’s price control rights，In Meituan、The prices listed on OTA platforms such as Ctrip are determined by OYO，In order to better acquire customers，or for other reasons，OYO offers unreasonable discounts on some hotels。A certain owner complained that “rooms sold through normal channels are 118 yuan to 198 yuan/room，After signing the agreement with OYO，Often more than 188bet sports betting app download 20 yuan per room，Seriously disrupting the market and our operations。”

Extremely low house prices，Although it has brought about an increase in order volume，But water and electricity bills、Labor costs and other costs are also rising。

If the guarantee fee can be paid stably，The reaction from hotel owners will not be so great，Last year, OYO offices across China were constantly besieged by contract owners，Some owners revealed，OYO self-signed 2.0 model contract since，The guaranteed balance that failed to be paid as scheduled，This puts a lot of pressure on their operations。

Perhaps it’s because the burden of “subsidy” is unbearable，OYO has not discussed with the owner，Modified the guaranteed amount when initially signing the contract with the owners，And notify the contract owner of the change decision by email。OYO requires owners to reply "disagree" within 24 hours of receiving the email，Otherwise, it will be deemed that the owner agrees to change the contract。

at 2.In 0 mode，The revenue of hotels that join OYO will be collected by the platform，High occupancy rate brought by high discounts，Will bring utility bills、The rise in labor costs，OYO failed to settle the guarantee fee in time，It will bring them huge operational trouble。And the overlord-style modification of the guaranteed amount (almost always adjusted downward)，Intensifying the conflict between the owners and the platform。

OYO focuses on the mid- to low-end hotel market in India，Preparing to copy this model in China，You must know that it is due to the degree of development，The service quality requirements of China’s mid- to low-end hotel market，will be higher than the Indian market。Differences in user needs between the two markets，Perhaps a key reason why OYO has upgraded its model several times in China。

In addition，OYO’s tight funds may be another reason for privately changing the contract guarantee amount，In October 2019, OYO announced that it would start a US$1.5 billion Series F financing plan，Used to expand the US market，Consolidate European business，Enterprise valuation will also reach 10 billion US dollars。

According to reports，OYO’s board of directors has approved this financing，Its founder Ritesh Agarwal will invest US$700 million through RA Hospitality，Subscribe shares held by Sequoia Capital and Lightspeed Venture Capital，The remaining 800 million is invested by SoftBank Vision Fund and other investors，After the transaction is completed，Agrawal’s shareholding in OYO will increase from 9.43% increased to 18.03%。

This round of financing will be the first in the Indian market since SoftBank invested $2.5 billion in Flipkart in 2017，The largest unicorn enterprise financing。

However，As a major investor in OYO，Japan’s SoftBank is experiencing its own “darkest moment”，According to SoftBank’s latest quarterly financial report released this month，SoftBank’s net profit in the third quarter of 2019 dropped by 92% year-on-year.1%，Second quarter of 2019，SoftBank’s Vision Fund suffered its first loss，The loss was as high as 970.3 billion yen。Although the profit situation improved slightly in the second quarter of 2019，There is still a deficit of 255.1 billion yen。

OYO is similar to Wework, another failed investment by SoftBank，OYO has not revealed any signs that it can "responsible for its own profits and losses" in a short period of time，In other words, SoftBank still needs to continue to inject capital，If we can’t find a new “funder” in the future，If SoftBank’s support also declines，OYO’s narrowing of losses in the Chinese market will become more urgent。

188bet app Earlier 2020，The New York Times reported，OYO is unable to perform its contracts and defaults on payments，Messages like this，Pushing this “gold-eating unicorn” to the forefront。

The track entered is different，There are still big differences between OYO and Luckin，It is difficult for the former to copy the success path of the latter，OYO cannot become India’s Luckin，It must find its own path to development。

With the impact of the epidemic in 2020，External overexpansion and internal layoffs，With internal and external troubles, OYO’s 2020 can be said to be “walking on thin ice”。

*Source of this article: Pintu Business Review,Author: Shi Tianhao, original title：《OYO is not Luckin》.