Hospitality chain Oyo chief executive for India Aditya Ghosh is betting on his experience in successfully building the low-cost carrier Indigo to wade through the present-day economic woes.
Citing his experience at Indigo, which weathered the 2008-09 crisis in the aviation sector and since then became the largest carrier controlling half of the domestic aviation market, he said there will be takers for cheap but quality services of you have the right model.
“I was in a similar role at Indigo. What I saw was that when this kind of circumstances (of slower economic growth) happen, a lower cost product at better quality fundamentally, wins,” he told PTI on the sidelines of a company event here Thursday.
Because he says even in a crisis, consumers do spend, but only that she is spending less and not that she is not spending at all. “If you can fundamentally change the price point and lower it, with a better cost structure and efficiency as you grow and create a quality product, actually you might end up benefiting,” he said.
Ghosh, who is credited for the massive success of Indigo, said in the past 18 months since the economy began slowing down, Oyo Hotels & Homes has grown on every parameter, including revenue, room supply and even occupancy.
It can be noted that economic growth slipped to a five year low of 5.8 percent for the March quarter, driven largely by poor consumption demand. Experts feel the situation is unlikely to improve and have been forecasting a lower growth on the same concerns around consumption.
According to experts, people generally start cutting on discretionary spends like travel when they start feeling uneasy about the economic outlook.
Ghosh had quit Indigo last year, much before the rift among the promoters became public, and is widely credited for making the airline what it is today, through multiple business model interventions. However, he refused to comment on the public spat between the promoters over a host of issues.
He said Oyo has 2.5 lakh rooms now in the country as against 1.75 lakh rooms till six months ago, adding it has added over half of its supply in the last six months alone.
On Thursday, Oyo, which has grown to become one of the top five hotel chains in the world, introduced a new programme for its asset owners, offering easier finance and also car buys at lower prices through dedicated tie-ups.
Ghosh said Oyo has already advanced Rs 60 crore to its asset owners as working capital in the past two months from the Rs 1,400-crore investment corpus earmarked for South Asia this year, and it is keen to put more money into this area. He said apart from advancing money itself, it has also
tied up with six non-banking lenders for loans to its partners at better terms including lower interest rates. It has also partnered with German carmakers BMW and Volkswagen to take care of the lifestyle needs of its asset owners, and also with Paytm to provide insurance solutions as part of its partner engagement network.
Asked if some of the Rs 1,400-crore investment will be used for pursuing inorganic growth opportunities, he replied in the negative. PTI AA