Working towards taking Oyo Hotels global, says founder Ritesh Agarwal

Given our efficient management and economies of scale, we are generally profitable at the unit level, which is unheard of at this early stage in the business, says Ritesh Agarwal

Ritesh Agarwal, founder of Oyo Hotels and Homes, seems to be making all the right moves. After his $2-billion share buyback, the 25-year-old has taken up a non-executive director role from an executive director position in the India entity Oravel Stays. Agarwal would take up a larger role in Oravel Stays Singapore. In a quick chat with Karan Choudhury and Neha Alawadhi, Agarwal explains the moves he has made in the past 12 months to make his operations global. Edited excerpts:   

Why has Oyo set up an entity in Singapore? Can you elaborate. 

This entity was formed in 2015 and it is our ultimate holding entity for all our global operations. As always, given our focus on good corporate governance, we are operating this entity with all relevant registrations and clearances. 

Are you moving from an executive director to a non-executive director role in India? 

My deeper engagement in the global business is a natural progression given our continued growth over the last couple of years and the opportunities in the US, Europe, China, and Southeast Asia. This move is part of the ongoing structural changes introduced in the past 12 months as we expand our global operations. 
 

This, however, does not change my continued commitment to India, one of our key home markets, which continues to grow. I will continue to be on the board of Oyo’s global parent entity — Oravel Stays. We are also looking at expanding the board to bring in diversity and experience, to steer growth and help Oyo delivering world-class experience for customers and create value for our asset owners and partners. 

Your latest collaboration is with Highgate in Las Vegas. What is your plan on full-fledged four star or five-star properties?

Yes, we are excited about the commencement of Oyo’s operations in Las Vegas. We have partnered Highgate to create our first key flagship property in Las Vegas — Oyo Hotels & Casino.  Earlier in June, we had announced our plan to invest $300 million in the US. As a new-age hospitality firm, we are offering great living spaces throughout our 112+ Oyo Hotels in more than 60 cities and 21 states. With our newest hotel in Las Vegas, we are excited to cater to a completely different audience segment and are certain that this will be the perfect start to Oyo’s journey in Las Vegas. 

What about profitability?  

Given our efficient management and economies of scale, we are generally profitable at the unit level, which is unheard of at this early stage in the business. Having said that, given how we continue to make forward-looking investments in the form of Capex support to our asset owners, developing our technology, on boarding pricing, revenue management, talent acquisition, training and developments at group level, we are not profitable yet. 

Currently, Oyo is valued at $10 billion. Are you raising more capital?

We have a strong balance sheet with over $1.5 billion. This year, the company has seen a 4.4x year-on-year growth in revenue in June 2019 (against June 2018), with 1 million rooms under management across hotels and homes globally; of which over 200,000 rooms are in India. 

We will continue to make forward-looking investments to build our competencies, strengthening our tech capabilities and talent.