The largest budget hotel chain in India OYO has been aggressively expanding across the globe during the past year, with an aim to become the world’s largest hotel chain. But for once, let’s just talk about the home country of this empire.
This Gurugram based company has reported its financial performance for FY18, and the figures go on to validate the empire with efficient growth.
The revenue of the Ritesh Agarwal founded Indian enterprise grew 3.5X in FY18 from Rs 120 crore in FY17 to Rs 416 crore. At the same time, the losses of the company increased by a mere 1.4 per cent from Rs 355 crore to Rs 360 crore.
Further for FY19, the company again projects a 3X jump in revenue to Rs 1,500 crore. This growth chart of revenue counts a hike in transactional fees from customers and merchant fees from franchise owners. The revenue sharing mechanism adds to OYO India’s income.
The occupancy rates for the hotel chain itself has taken a 3X leap in FY18 from 13 million to 39 million on an annual basis. These rates are counted on the basis of nights stayed in a room in India.
The marginal increase in loss, CFO of OYO India Abhishek Gupta tells ET, is due to technology, team building expenses and investment in newer categories.
In India, last year it had entered new verticals like OYO Living, Auto Party, and launched a loyalty programme OYO Wizard. Now, it is also looking to enter into co-working spaces with Innov8 acquisition.
If the Indian arm is able to maintain this growth rate as it predicts it would, it will be well on its way to becoming an efficient full stack realty leasing startup.
However, what is concerning about this growth is the fact that the hotel associations have warned OYO regarding the illegal and exploitative malpractices of the company that severely harms the entrepreneurial well being of hoteliers. Even the other hoteliers in the industry complain of exorbitant discounts.
To answer these concerns the company does claim to follow through on contacts, and not engage in malpractices, but it still remains a grey area.
One thing that has become certain, is that the company is spreading its wings both vertical-wise and geographically. A high profile hire of former Indigo president Aditya Ghosh as India and South Asia CEO was made to maintain this growth, oversee the expansion and figure out holy grail – unit economics.