Oyo’s loss rises sevenfold but says no brakes on expansion
BENGALURU: Oyo Hotels and houses will continue its expansion into international markets like Latin America, China and therefore the UK, senior company executives said, whilst its losses surged sevenfold last fiscal. This SoftBank Group-backed hospitality startup will also specialize in turning profitable in its home market India, where its margins improved 4.1% in 2018-19, Oyo member Aditya Ghosh said during a call with reporters to debate the audited financial results for FY19.
One among the world’s largest hotel chains currently has 18,000 hotel partners and a listing of 270,000 rooms across India. The Bengaluru-based startup attributed the rise in losses to the inherent cost of building new markets, including those associated with talent, entry into new markets and operational expenses. When asked – Ghosh didn’t say when Oyo could start making profits, as Oyo’s consolidated loss ballooned to around $335 million in 2018-19 from $44 million in FY18. the corporate
It renovates the space and sells individual rooms under the Oyo branding as it operates on a franchise model where it takes over hotel assets, Further as the consolidated revenue jumped to $951 million in FY19 from $211 million within the previous year. It included $604 million in revenue from India operations Around $348 million was contributed by overseas operations, primarily China. It claims to possess hosted quite 180 million users between January and December 2019.
The startup said it’s around 43,000 hotel partners and 1,000,000 rooms on its inventory, including 99,000 rooms across 300 cities in South Asia, 17,000 rooms in West Asia, 12,000 in Japan and 16,000 in Latin America.
The International markets & China were in “development and investment mode”, and accounted for 75% ($252 million) of losses during the year, said OYO. In addition, the startup said margin of profit in India improved to 14.7% in FY19 from 10.6% a year ago, although it didn’t detail the margin figures for international operations as in its oldest market India, the startup narrowed its losses to 14% of revenue in FY19 from 24% a year ago. In an interview about corporate clients opting out of Oyo, Rohit Kapoor, chief executive of Oyo India and South Asia, said about their corporate business, as only two-three corporate clients have left thus far as It grew around 80% in FY19… we currently have around 7,500 clients on the company base. In 2019, we added 4,000 new clients to our corporate base,” said Kapoor. The retrenchment process, which Oyo describes as a “right-sizing” and restructuring exercise, went on over the last few months. The announcement of the audited financial performance comes at a time when Oyo has been shedding employees across India and other geographies to stay costs in restraint.
“We have crossed a crucial milestone of achieving global revenue of $951 million in FY2019, a 4.5 times increase on a year-on-year basis,” said Abhishek Gupta, Oyo’s global chief treasurer. “OYO is working full bound in improving the financial performance, and we are ensuring strong yet sustainable growth, high operational and repair excellence and a transparent path to profitability are going to be the major dimensions in 2020 and beyond.” as, During 2019, Oyo claimed to possess generated over 90% of its revenue from repeat customers and organic users, with repeat customers contributing to 73% of total revenue.
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