Clocks 600x growth in stayed room nights; OYO Hotels is now the 2nd largest hotel chain in China
OYO Hotels & Homes – South Asia’s largest, China’s 2nd largest, and the world’s 6th largest chain of hotels, homes, and quality spaces – in an effort to uphold its commitment to the highest standards of compliance, integrity and ethics, today announced that taking an inspiration from JD.com, OYO Jiudian, has set up an integrity committee in China, with representation from select senior leadership members and third-party representatives, as a forward-looking measure to help the company maintain a high level of integrity and transparency in running day to day business, while it witnesses unprecedented growth and strong business performance in the country. Today, OYO is in 8000+ hotels and 400,000 rooms across 290+ cities, and on an average every building that becomes a part of OYO’s chain witnesses increased occupancy from 25% to 65% in few months time.
The integrity committee meets on a regular basis to take important decisions with respect to day to day operations, ways of working for employees, and other business stakeholders like asset owners. In a bold move, the committee that has a zero-tolerance policy towards unethical practices has directed the discharge of over 25 employees in China of their duties, for misconduct and issued a strong warning to over 110 employees. While the majority of offenses involve sums as small as RMB 10, the sharpened focus on integrity and corporate governance have resulted in this bold move. OYO’s newly constituted integrity committee has been at the forefront of ensuring compliance across all levels of the organization in China. The company also confirmed that it has delisted two hotels in the last two months, subject to fulfillment of quality standards and other customer experience checks as part of its comprehensive quality assurance program for all the 8000+ hotels that are part of its chain in China.
OYO’s integrity committee draws inspiration from some of the best practices followed by local and global companies and identifies, evaluates and recommends decisions every thirty days. Reflecting on the company’s decision, Sam Shih, COO, OYO China shared, “We are really happy to see the overwhelming response to our business here, we are in line to be the largest hotel chain, with 600X growth in daily stayed nights since March 2018. At this stage in our growth, it is important for us to set the highest standards of integrity and corporate governance to ensure we are not just growing fast but also moving in the right direction. Having worked with some of the best and biggest organizations in the world, I am a firm believer in the fact that culture eats strategy for breakfast. Corruption in any form or denomination, no matter how small, is against the spirit of fairness and transparency and my personal value systems cannot reconcile with letting off someone who disrespects these basic human virtues and values. I am not alone in this belief. Whether its global corporations like Pepsico or respected Chinese organizations like JD.com closer home, acting swiftly and strongly against unethical practices have helped them set world-class benchmarks while maintaining business growth and performance. OYO China intends to lead by example and hence took this bold initiative to set up this integrity committee. While this may seem harsh and unpopular and has already elicited some reactions, the best decisions are the hardest ones. For OYOpreneurs who live by our value systems, focus on great customer experience and ethical dealings with the hotel owners, the world is their oyster and for those that disregard the trust and faith placed in them, even for small transactions, there will be no leniencies. It’s never the quantum but the intent that matters.”
On the hotel owners front, significant business at OYO Hotels China is generated by the repeat, direct or word of mouth customers, i.e. customers who have had a pleasant experience or heard good positive reviews choosing an OYO over other hotels time after time. What makes this possible is the continued joint commitment between OYO and its franchise partners, to uphold the high quality, service levels, and experience that customers have come to expect of us. To this effect, OYO China also has a strong set of quality assurance checks and balances in place. Powered by technology, multiple apps help regularly audit everything from room appearance, hotel and food quality to reasons behind any critical feedback received from guests. OYO regularly connects with asset owners and partner franchisees to guide and direct corrective action for a quality customer experience. When buildings fail to make improvements despite interventions, OYO takes the tough call of delisting buildings. On the other hand, the best asset owners that work pro-actively with OYO on improving customer experience enter a ‘virtuous cycle‘ that ensures that growth fuels growth and it is our effort to ensure that most of our asset owners enter such a growth cycle wherein performance leads to good customer feedback. This, in turn, leads to better rankings which fuel more occupancy leading to better returns which in turn leads to investing back into performance with CapEx and expansion.
“Each and every progress and breakthrough of the total revenue is because of all OYOprenuers’ wit and diligence. The discussions for revenue structure at beginnings of the month, late-night meetings on maximum profit adjustment, rigorous work style, and accurate data, are all vividly memorable. 220k revenue in May, 230k in June, and 290k in July, OYO ops team and the hotel has been side by side for 90+ days when we strive to work from 10 am to 3 am. We are especially grateful for OYO’s dedication and professionalism because of the industriousness demonstrated by the Operations team,” said the owner of 深圳新铭都酒店 Shenzhen Xin Ming Du Hotel, Mr.马骏 Ma Jun.
Establishing his key priorities for the business, Sam Shih, COO, OYO China commented, “For the year 2019, we have recognized key priorities, including a deep and wide expansion of OYO’s chain while ensuring a consistent product and service delivery, and high-quality customer experience. To that end, we are continuously evaluating our 8000+ hotels and 400,000 rooms across 290+ cities for quality assurance. With utmost conviction towards delivering high-quality accommodation to our customers, any building which does not maintain the standards we have set for us and the industry is churned out of our system.’’
It is important to note that these measures apply to hotels that fail to improve facilities or compliance with OYO guidelines despite reminders and assistance. They are then churned out of the system, basis non-adherence to contract requirements.
Commenting on the development, Mr. Ye, owner of OYO YunShi Hotel, further added, “As the owner of multiple hotels with OYO, I can confidently state that this decision is good for business. A lot of guests decide to try an OYO in Zhengzhou based on their experience in some other city. At OYO YunShi Hotel, we work really hard to ensure customers enjoy their stay with us and come back to our hotel. My buildings are consistently rated high and it would hurt my business if people begin to feel that they cannot predict how their stay at an OYO will turn out.”
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