Oyo to foray into F&B business through in-house kitchens, QSR across company-serviced hotels

The hotel service provider has been testing the concept through a pilot since January this year across 100 company-serviced hotels Delhi, Gurgaon, Hyderabad and Bangalore.

Hospitality tech player Oyo will foray into the F&B business through in-house kitchens and Quick Service Restaurants (QSR) across company-serviced hotels, Townhouse by OYO, the company said on May 1.

The accommodation company said it will offer guests at its hotels in-house kitchen services, to order meals via online platforms, including OTAs and the OYO app. The setup would range from full-fledged kitchen with extensive menu to pantry of essential items, based on the hotel's profile and infrastructure.

"The initiative aims to enhance the in-hotel dining experience for guests by offering fresh, convenient, and quality meal options across its network," said OYO's COO, Varun Jain. OYO is in the process of developing a 'network of trusted F&B experts' in major cities like Delhi, Mumbai, Bangalore, Hyderabad, Pune, Indore, Kolkata, Jaipur, and Lucknow.

"OYO is expecting F&B to contribute 5-10 per cent additional revenue at the hotel level on a stable state basis," the company said.

The hotel service provider had been testing the concept through a pilot since January this year across 100 company-serviced hotels Delhi, Gurgaon, Hyderabad and Bangalore. "The successful implementation of this pilot has paved the way for the nationwide rollout in the upcoming fiscal year," a company statement said.

The initiative has followed consistent feedback from users that the hotels should provide in-room dining options too, and the company hopes the program will increase customer satisfaction scores for OYO.

The hotel brand will also introduce QSR carts and lobby stores under ‘Townhouse Cafe’ brand to offer ready-to-eat options that will stock midnight meals and snacking options or cater to the on-the-go customer. The menu will focus on well-priced meals with regional cuisine and continental options, the company said.

Before this initiative, the chain had forayed into the cloud kitchen business in 2019, but exited during the Covid years.

The startup is in discussions with bankers for an IPO valuing the company at up to $5 billion, as per reports. SoftBank is OYO's largest shareholder with a stake of more than 40% and Ritesh Agarwal owns more than 30%.

According to one assessment by the World Travel and Tourism Council, India's tourism and hospitality business is projected to generate $50.9 billion in revenue by 2028 and create five crore jobs by 2029. The industry is on an upcycle and seeing a gap in demand-supply, with Tier II and Tier III cities significant growth opportunities. A rising affluence has also meant that the trend of premiumisation and brand consciousness travel is on the rise.