OYO’s rise: World’s largest hotel chain by 2023 from seventh largest now; to invest $200 million in India business

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Updated: March 12, 2019 3:59:55 PM

OYO said that it aims to focus on investing and franchise building to leverage around $3.6 trillion global accommodation market opportunity instead of chasing short-term goals like profitability.

We are committing over Rs 1,400 crores for technology investments, renovation, and managing investments for the calendar year,” OYO’s Founder and Group CEO Ritesh Agarwal said.

Popular chain of hotels and homes OYO is looking at becoming world’s largest chain of hotels in four years from being the seventh largest as of now on the back of strong business fundamentals even as it aims to strengthen its presence in South Asia and other markets. The company today announced committing $200 million (around Rs 1,400 crore) for its India and South Asia presence in 2019.

Focused on gaining share of mind and heart across India, South Asia and key markets the world over, the company is on track to becoming the world’s largest hotel chain by 2023, OYO said in a statement.

“Today, as the world’s seventh-largest hotel chain, we are firmly moving towards our goal of bringing these great experiences to guests worldwide. India and South Asia is our home market and the management strongly believes that we are firmly on the path of becoming one of the largest consumer brands in the nation. This is backed by OYO being the largest chain by rooms and sales, a leader in occupancy. We are committing over Rs 1,400 crores for technology investments, renovation, and managing investments for the calendar year,” OYO’s Founder and Group CEO Ritesh Agarwal said.

OYO also announced the addition of a new mid-market brand Collection O to its existing brands including OYO Townhouse, OYO Home, Capital O, Collection O, SilverKey, Palette Resorts, and OYO Life. It also launched an in-app SoS button for emergency assistance.

Distant Profitability

OYO had reported over 3X jump in India revenues from Rs 120 crore in FY17 to Rs 416 crore in FY18 while the net loss went slightly up to Rs 360 crore in last fiscal year from Rs 355 crore in the preceding year. However, it said that the focus will be on investing and franchise building to leverage around $3.6 trillion global accommodation market opportunity instead of chasing “short-term goals like profitability”.

The company said its losses, “as a percentage of realised value (OYO Hotels’ sales run rate) (is) reducing year-on-year from 44.5% in FY 2016-17 to 20.3% in FY 2017-18. In FY 2018-19, OYO estimates further improvement in the economics of close to 50%, with losses estimated to go down to 10.4%,”

OYO said that it has expanded to more than 259 cities in India so far, adding over 81 cities last year. OYO Hotels’ sales run-rate globally at December ended 2018 stood at $1.8 billion with $1.2 billion coming from India alone even as 93% revenue came from from word of mouth. Globally, the company is present in more than 500 cities in 10 countries.

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