Aiming to further boost loyalty among its partners and to maintain the margins, hotel room aggregator OYO Rooms has launched OYO Bazar, which is a one-stop shop for hotels to procure daily essentials required to run their business.
OYO Bazar was first 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 now 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.
The idea behind the online marketplace is to help retain hotel partners and enable long-term value, said 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 e-commerce company but to become a preferred supplier for our partners,” said Agarwal.
OYO Rooms has a network of more than 5,500 hotel partners and its margins range between 15-20% per hotel partner. It looks to use this bulk sourcing capabilities and bargaining power to provide inventory to hotels at 20-25% cheaper prices than the market rates while generating 20-25% margins for itself in the process.
“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,” said Agarwal.
Around 10 vendors have signed agreements with OYO Bazar, who will be providing hotel supplies in a certain price limit, maintain quality standards and deliver products to hotels on time.
The executives said that their preferred logistics partners or the vendors themselves will take care of the logistics.
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.