OYO's loss-income ratio estimated to have halved in 2018-19

Oravel Stays Pvt Ltd, which operates OYO, South Asia’s largest chain of hotels, is estimated to have halved the ratio of its loss to revenue in 2018-19 compared with previous year even as its net loss widened. The Ritesh Agarwal-founded hospitality firm has been pursuing an aggressive expansion plan, repositioning, and scaling up some of its brands under the leadership of Aditya Ghosh, its newly appointed chief executive-India and South Asia, in its quest to become the world’s largest hospitality firm. 

OYO’s realised value or income for financial year ended March 2019 is estimated to have increased to Rs 4,921 crore, from Rs 1,768 crore, in 2017-18, while its loss widened to Rs 511 crore, from Rs 360 crore, in the same period, the company said. 

The percentage of loss to revenue halved to -10.40 per cent, from -20 per cent, during the same period, Ghosh said. 

Ghosh in a presentation on Tuesday said it was due to "better economics, limited marketing spends, and operating leverage”.  

On Tuesday, OYO said it is in the process of ramping up its executive stays brand SilverKey, from the current 55- to 400-plus assets by end of the current calendar year, with a presence from the current 10 cities.  With an average tariff that ranges between Rs 1,800 and Rs 2,500, the brand targets the frequent corporate travellers who undertake trips that require multiple-day schedules.   

OYO recently announced a commitment of Rs 1,400 crore for its India and South Asia business, as part of its strategy to further double its expansion plans. 

For OYO CEO Aditya Ghosh, the brand is not just about logo but about what the fundamentals of the business are

OYO’s India presence has expanded to 259-plus cities, over 8,700 buildings, including hotels and homes, and 173,000-plus rooms. 

OYO will convert some of its own assets and the ones owned by corporates as part of the expansion. The company’s average occupancy rates across all its properties stand at an average 60 per cent. It’s 90 per cent for some brands such as SilverKey, said Ghosh. 

“We will be relaunching and repositioning some of the existing brands. The brand is not just about logo, it’s about what the fundamentals of the business are,” said Ghosh. 

OYO also has offers from some of the corporates in India and overseas to manage guesthouses owned by it.  Ghosh claimed that in the last 90 days, OYO has seen “a 3 percentage point improvement in delighted customers versus happy customers.” 

He also pointed out that close to 93 per cent of the company’s guests are repeat ones, reflecting on the brand’s stickiness. He was responding to queries on the quality of some of its properties in some of the suburban localities.  

On Monday, global homestay major Airbnb said it has invested close to $200 million in the SoftBank-backed company.  The move is set to give a major boost to Airbnb’s India operations, as it would get instant access to 10,000 OYO Homes properties.  Airbnb’s strong global footprint and access to local communities will open up new opportunities for OYO to strengthen and grow.