A few months ago at an Oyo Rooms hotel near New Delhi, a customer made a casual remark to the young man at the reception desk.
It would be great, the guest mused, if the air conditioning in the room could be switched on automatically as soon as a person starts checking in.
Unknown to the customer, the receptionist was 24-year-old Ritesh Agarwal, the founder of Oyo — who immediately started working towards implementing the idea across a portfolio of properties that stretches from London to Lhasa.
These undercover missions are part of Mr Agarwal’s unorthodox approach to corporate leadership as he tackles what appears to be an absurdly ambitious business challenge: using technology, and a focus on neglected segments of the market, to build the world’s biggest hotel chain from scratch.
Just five years after Mr Agarwal — then a teenage college dropout — founded Oyo, he has made it the world’s fastest-growing hotel chain, adding more than 700 properties each month. Already by far the largest chain by room numbers in his native India, and one of China’s top ten, Oyo is aiming to become the biggest in the world within four years.
Despite gridlocked traffic around the Oyo Townhouse in northeastern Mumbai, Mr Agarwal arrives precisely on time. In a pressed sky-blue shirt and slacks, with a sensible haircut above the closely trimmed beard in vogue among 20-something urban Indians, he has metamorphosed in the three years since an interviewer noted his “dirty nails” and “hair all over the place”.
Oyo is now starting to move upmarket, too, as evidenced by our meeting place, full of mock-Scandinavian design. Launched last year, Oyo’s Townhouse sub-brand is aimed at the growing number of Indians who can afford $50-$60 for a room.
For now, though, Oyo’s main competitive edge still stems from Mr Agarwal’s life-changing realisation in 2013: that there was a gap in the market for small hotels with low prices — $20 per night or less — but with the guaranteed service and quality levels of a known brand.
Big hotel chains in India, he pondered, all focused on establishments with more than 100 rooms that were too expensive for most domestic travellers. “I felt, well, this is a fascinating opportunity and maybe nobody’s seen it,” he says.
Mr Agarwal launched the first Oyo hotel in Delhi’s satellite city of Gurgaon, where he had spotted a budget hotel that was managing to fill only a few of its 15 rooms each night. In exchange for a cut of future commissions, he helped to renovate the hotel and marketed it to local businesses in need of temporary accommodation for new hires. Within a month occupancy was up to 85 per cent.
Oyo’s growth was put on hold when Mr Agarwal won a fellowship run by the charitable foundation of PayPal co-founder Peter Thiel, for which he spent nearly a year in California. That taught him, he says, to trust the power of an unique idea, rather than trying to build an Indian version of a US or Chinese company.
Another key lesson was “thinking big”, he says. “The scale of impact that people aspire to create, based out of the Bay Area, is truly incredible.”
He was eligible for the fellowship because he had dropped out of college to become an entrepreneur — something common in Silicon Valley, but far less so in India.
Mr Agarwal sticks out in other ways, too. Oyo — whose latest $5bn valuation is the third-highest to emerge from a recent wave of foreign funding into Indian start-ups — is unusual among its peers in not having an obvious counterpart abroad.
After his return from the US, Mr Agarwal added hotels to his network at an increasingly breakneck pace.
Central to this growth has been technology, Mr Agarwal says. Oyo uses its data to identify hotels that could gain a big occupancy boost from joining its network, then shares that data with the owners to persuade them to join.
Mr Agarwal is far younger than most other Indian start-up founders, and younger than many of his employees — a potential complication in a culture where young workers traditionally treat their elders with deference.
“Maybe a generation back, it would have been very hard,” he concedes while insisting that, in today’s India, “people regardless of age are able to do a good job if they’re inspired by the leader they work with”.
It helps, he adds, that Oyo has pursued a system of “distributed leadership”, encouraging “Oyopreneurs” — as all 3,000 employees are known — to come up with their own ideas to move the business forward.
Mr Agarwal has given particular autonomy to the Chinese operation, where most of the senior management do not speak fluent English — reflecting the desire to make it an authentically Chinese business. “Nothing needs to be decided from India [except] maybe a capital raise or a public offering kind of thing,” Mr Agarwal says.
He sets aside an hour a day to respond personally to emails and text messages from hotel owners and employees — another example of his determination to stay close to activity on the ground.
“Our first cultural attribute is over-communication rather than under-communication,” he says. Mr Agarwal may find it increasingly tough to keep up with the incoming messages if Oyo maintains its current pace of growth.
Analysts have voiced concerns about it, questioning whether it could lead to an erosion of standards. Mr Agarwal insists that Oyo will “take a pause” if its expansion starts to weigh on quality. His youth, he says, means he has an entire career ahead in which to pursue his ideas.
“It’s an advantage because I can take a longer-term view to the decisions I make, right?” he says. “I have probably 30 or 40 years to make this happen.”
Three questions to Ritesh Agarwal
Who is your leadership hero?
Bill Gates. What he achieved with Microsoft is incredible but what I admire is that he knew when was the right time to leave and share his wealth with real people in the world and impact their lives.
If you were not a CEO, what would you be?
I dreamt of running my own business even as a kid, but if not a CEO, I would have probably been a pilot. I would have loved to travel and enjoy the undercurrent of excitement that builds from the feeling of discovering a new city entirely on your own.
What is the first leadership lesson you learnt?
Only when I went for the Peter Thiel fellowship did I learn to think big, to think in terms of creating an enduring, growing, lasting business idea. The other important lesson is to invest in building a strong work culture. You should never compromise on culture even if your company becomes huge. Hire extremely smart people.
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