Oyo loss widens to $335 million in FY19, revenue jumps over four-fold to $951 million

Homegrown hotel chain operator Oyo Rooms, also known as Oyo Homes & Hotels, reported over six-fold jump in its consolidated loss at $335 million during financial year 2018-19, weighed down by higher operating expenses and rise in costs due to expansion in multiple geographies. The SoftBank-backed company had posted consolidated net loss of $52 million in FY18.

The figures were in line with the company's "provisional financials" filed by it with the Registrar of Companies in November last year.

The Gurgaon-headquartered company, however, reported an over four-fold jump in its revenue at $951 million for FY19, as against $211 million in the previous year.

"The inherent costs of establishing new markets, including those related to talent, market-entry, operational expenses among others, resulted in an increase in OYO's net loss percentage in the near-term, which grew from 25 per cent in FY18 to 35 per cent of revenue in FY19 to $335 million," news agency IANS quoted the company as saying.

Founded by Ritesh Agarwal, the six-year-old start-up said that China and other international markets contributed about 75 per cent, or $252 million, to total loss posted in FY19. In India, the company's loss declined to $83 million, or 14 per cent of revenue in FY19. In FY18, the net losses stood at 24 per cent of its revenue.

Oyo's revenue from India stood at $604 million in fiscal 2018-19. Outside India, primarily China, the company's revenue stood at $348 million, which was 36.5 per cent of the total revenue.

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"In mature markets like India, the focus of the company is to maintain strong brand preference while ensuring we have a clear path to profitability, enabled by accretive growth, operational excellence and strong gross margin. In this context, this FY19, business operations in India contributed to nearly 63.5 per cent or $604 million of this consolidated figure as the business clocked a 2.9x (y-o-y) growth," it said.

The company, which currently operates over 43,000 hotels with over a million rooms in 800 cities in 80 nations, said its expansion in China and other international markets contributed to net loss percentage in the near-term, which grew from 25 per cent in FY18 to 35 per cent of revenue in FY19.

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As per reports, Oyo has cut its workforce by 15-20 per cent in India and about 5 per cent in China - its two main markets out of the 80-odd countries where it operates. Last month, Rohit Kapoor, CEO (India and South Asia) at Oyo Hotels & Homes, told Business Today that about 2,000 people have been laid off in the Indian operations. In addition, the hotel chain has exited from nearly 200 cities in India, and is currently focussing on 400 cities.

Currently, Oyo largely operates under three models - franchisee, leased and owned assets. The rooms under the franchisee model accounts for the largest number of its inventory of nearly 3 lakh rooms in India. In this model, Oyo takes full inventory of rooms from the hotel owners, and generates demand for them. In some instances, partners have accused Oyo of following unfair business practices.

By Chitranjan Kumar