Hospitality unicorn Oyo expects its co-living and co-working businesses to recover in a slow but steady manner, as demand inches back amid the ongoing pandemic.
Oyo sees affordable and flexible solutions playing a key role in the recovery of the shared working and living segments, and may slow down a bit in terms of growth and expansion, said Ankit Gupta, chief executive officer, Frontier (Oyo LIFE and Workspaces), Oyo India and South Asia.
The unicorn is witnessing demand growth of 30-35% across Oyo Life (co-living) and Oyo Workspaces (co-working) businesses. “Having said that, there is still a long way to go before we reach pre-covid operational and occupancy numbers, especially since prices, as in other hospitality chains, short-term rentals options, and co-working offerings, are still below pre-covid level,” Gupta said in an interview.
For its co-living business Oyo Life, the unicorn recently launched a 20% discount on monthly rent, starting from the fourth month of the long-term stay. With lowering rental yields, it has also been working with asset partners for a revenue-sharing model instead of traditional fixed lease and offering more value-added services and multi-brand partnerships ranging from laundry, shared mobility to up-skilling.
Oyo Life operates in more than 200 buildings across nine cities, while Oyo Workspaces has 17 centres in seven cities.
Oyo is seeing shoots of recovery though prices remain far from pre-covid levels, like other co-working operators who are offering either price discounts or flexible options to users, as people slowly return to workspaces.
Oyo Workspaces offers Flexi Pass starting at ₹1,999 a month and other options such as Hotdesk at ₹5,000 to ₹8,000 a month.
“We have also offered our clients options to restructure their deals on the basis of their new demand and are continuously investing to offer a safe, hygienic work environment as offices open post the lockdown. Demand is slowly coming back and the customer decision making cycle has reduced from 2 months to 25 days now, which could be a temporary phenomenon, given that the businesses want to come back fast,” Gupta said.
“The focus is on retention or signing new customers and give make them viable offers, even as occupancy remains a challenge,” he said.
Oyo will offer affordable co-working spaces and accommodation in its Oyo Townhouse hotels with ‘Oyo Workpad’, keeping in mind the new business realities and changing demands of the young workforce. Oyo launched the first Oyo Workpad at Oyo Townhouse Chattarpur, Delhi, which can be subscribed to for a month and booked for up to four guests or colleagues, as an alternative to working from home at affordable rates.
Co-living startups, which were sharply hit by the pandemic, are also looking at new revenue streams to diversify their business even as uncertainty lingers over the future. During the lockdown, force majeure was invoked with contracts with owners, physical occupancy was low and rentals were negotiated.
For most shared living operators, while demand is returning, there has been a massive disruption in home rental market and occupancy levels continue to be lower than pre-covid levels. Oyo Life is seeing a 50% growth demand for private rooms with a kitchenette in its co-living facilities, as companies adopt a hybrid working model with employees working from offices for a few days and from home for the remaining time, Gupta said.