We are focused on our mission of making #LivingTheGoodLife a reality for over 3.2 billion middle-income people around the world, says Ritesh Agarwal, founder and group CEO, OYO Hotels & Homes.
Founded in 2013 with a single hotel, OYO Hotels & Homes has been on an expansion mode widening its footprint to 80 countries. Earlier this year, founder and group CEO Ritesh Agarwal made news for buying back shares worth $2 billion from existing investors. Agarwal talks to FE’s Asmita Dey about company’s financials and focus areas. Edited excerpts:
It has been a while since the OYO-Airbnb deal has been announced. How has the collaboration shaped up? What opportunities did it create for OYO?
We are happy to have Airbnb as an investor and our partner. Airbnb’s strong global footprints and access to local communities open up new opportunities for OYO Hotels & Homes to strengthen and grow. Thousands of OYO’s vacation homes across the globe can now be listed on Airbnb.
How has FY19 been in terms of numbers? Were you able to notch revenues (India) of over Rs 1,400 crore as estimated? What is your revenue target for FY20?
Our financial results for FY2018-19 are yet to be filed with the Registrar of Companies. However, CY2019 has been promising. We are happy to share the company has seen a 4.4 times year-on-year growth in revenue in June 2019 (vs June 2018), with over 1 million rooms under management across hotels and homes globally and over 270,000 rooms in India alone. We also had a stellar 2018 in India with more than 1,72,000 fully controlled and leased keys as at December 2018 with realised value run-rate of $1.2 billion.
By when are you eyeing profitability?
We are not profitable at a group level as we have been investing in technology, talent and hotel infrastructure improvements in our buildings. The losses as a percentage of NRV (net realised value) have been on a steady and significant declining curve.
Could you shed some light on your overseas IPO plans?
We are focused on our mission of making #LivingTheGoodLife a reality for over 3.2 billion middle-income people around the world. That is our focus in the foreseeable future. We don’t have any further comments.
How much cash are you burning now? Which are the most cash-heavy markets in your kitty?
I would like to clarify that unlike e-commerce businesses, we do not spend a lot on customer acquisition. Our investments are mainly in three areas — capex, talent acquisition and technology.
You bought back shares worth $2 billion from Lightspeed and Sequoia? What led you to this move? How much has your stake in OYO increased to post this buyback?
The company’s strong growth, improved margins, superior improvements in customer experience gave me the confidence to take this decision. The $2-billion primary and secondary management investment round is spearheaded by me with support from financial partners, subject to regulatory and shareholder approval. The capital will be utilised to maintain our strong market position in India and China, strengthen our footprint in southeast Asia, Middle East, growing our business in Europe and the US while creating a niche for our vacation homes business globally.
You seem to be on an international expansion spree. Which other countries are you looking to enter further in the near future? Any plans to raise further funds to propel your foreign foray?
Currently, we have over 23,000 hotels and 125,000 vacation homes across 800 cities in 80 countries globally. There are many countries which are still on the drawing board and we are evaluating the business potential. At the moment, we are continuing to grow our footprints in SEA, ME, Europe and the USA. We have a healthy and strong balance sheet and are committed to continue making forward-looking investments. We have nothing further to announce at the moment.