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Oyo Rooms starts leasing hotels

Oyo Rooms, the SoftBank Group-backed online budget hotel aggregator, has started leasing hotels and guest houses under a programme called Oyo Flagship in a significant shift from its pure-play aggregation business, four people aware of the development said.

By exercising complete control over the day-to-day operations of these establishments, the Gurgaon-based company intends to improve the consumer experience and have a better repeat rate, the people said on condition of anonymity. It will also help the firm curb potential malpractices by some hotel owners, which in the past have led to significant cash burn for Oyo. Oyo (Oravel Stays Pvt. Ltd) launched a pilot in Gurgaon, one of the persons cited above said. The company’s website now offers an option for this initiative in Delhi also. This is a shift from Oyo’s earlier strategy of booking a part of the hotels’ inventory and holding it captive for Oyo customers.

 Such a strategy often resulted in hotels making fake bookings, which led to Oyo bleeding more money at a time when investors have become cautious about their bets. The company was also struggling to offer customers a standardized service across all its properties. “We are leasing hotels and guest houses with low occupancy, as well as residential properties based on their location. A lack of good inventory of hotel rooms prompted us to think this way,” said one of the four people cited above