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.
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.
Revenue: -21%; Net loss: NA (FY19-21 CAGR)
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.