OYO IPO
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OYO IPO Details
OYO founder Ritesh Agarwal was once on a backpacking trip in India. The experience taught him that travellers don’t have a clarity on what to expect when it comes to picking budget hotels in India. Hence, in a bid to fill this gap in the hospitality industry, the 19-year-old founded OYO in 2013.
It is a digital platform that connects property owners or operators (including hotels and apartments) to travellers. Today, there are more than 1.5 lakh properties listed on OYO catering to a wide user base. Backed by marquee investors such as Softbank and strategic investment from Airbnb, OYO’s parent company Oravel Stays has expanded its footprint to 35 countries.
Now, this platform is all set to launch its IPO and make its debut on the stock exchanges.
Key highlights
- Helps property owners or operators to increase their revenue
- Strong and trusted consumer brand, which provides quality stays at compelling price points
- Earns on an average 20% to 35% of the total booking amount
- Focuses on India, Indonesia, Malaysia and Europe, which are its core growth markets
- In FY21, a major portion (78%) of its revenue came from outside India
All about the OYO IPO
Much like the rest of the hospitality and tourism industry, OYO too has faced a host of problems and challenges over the last one year. The pandemic-led restrictions on movement have dented its business. A sharp drop in revenue and occupancy rates forced the company to trim its workforce and control costs.
However, the pent-up demand for travel is expected to fuel recovery. After the restructuring, OYO is hoping to grow stronger and improve its bottom line.
Oyo has an asset-light model and doesn’t own any of the storefronts listed on its platform. The company hasn’t inked any contract with its patrons for minimum guarantees or fixed payment commitments. This has enabled it to be capital-efficient. Oyo earns on an average 20 to 35% of the total booking amount.
Financials:
Revenue: -21%; Net loss: NA (FY19-21 CAGR)
Strengths
- Has the largest footprint in terms of hotel storefronts in India and South-East Asia.
- Over 2,700 patrons globally had more than one hotel or home storefront listed on its platform.
- Caters to a wide range of customers including millennials, corporates, families and small and medium businesses.
- Has 90 lakh loyalty programme members which drive higher repeat rates.
- Around 78% of its revenue in FY21 on its direct channels came from repeat and new organic demand.
Risks
- New coronavirus variants could trigger a fresh round of restrictions on tourist movement.
- Incurred net losses in each year since incorporation.
- Failure to retain patrons and customers in a cost-effective manner.
- Legal proceedings involving Zostel.
- Operates in a highly competitive industry.
Good to know
Within the travel and tourism space, short-stay accommodation, which means stays up to a month, is one of the fastest-growing segments. It is expected to grow at a CAGR of 6.6% to $1.9 trillion between 2021 and 2030. With OYO expanding its footprint globally, it is well-positioned to benefit from this growth.
