OYO Sees Room for Growth, Plans to Double Inventory
New Delhi: OYO, a budget hotel aggregator backed by SoftBank, plans to double its inventory of 70,000 rooms to 1.5 lakh by the end of next year to cater to growing business and leisure travel in the country, founder Ritesh Agarwal told ET. It will add between 10,000 and 20,000 rooms this year. “We have been doubling our revenues yearon-year and within this year we will continue to grow our revenues by two-and-a-half times year-on-year. We will see more properties coming up in areas where occupancy rates are high,” Agarwal said.
OYO trimmed its losses to ₹ 325 crore in the 201617 from ₹ 496 crore in the previous year, according to a blog posting on its website by CFO Abhishek Gupta dated July 28. The company’s gross bookings run rate grew to ₹ 2,563 crore annually. “Last year in March, we announced that we had gotten into a net transaction profit, which means that for every ₹ 100 we sell, we were making ₹ 100-plus. Our gross margin has been 25% and net margin is at 16%,” Agarwal said. “Our belief is that in the hospitality space, long-term repeats play the biggest role.”
According to reports in April, OYO was closing a $250 million funding round led by SoftBank, which was half the amount initially proposed by the Japanese investor this year. Agarwal declined to comment on the funding and said OYO has the capital needed for its plans. “We believe that the model that we have created is an India-first innovative model. We don’t have crazy, competition-led expenditure,” Agarwal said. OYO is working on making bookings easier for customers and will provide more details of its properties. Each property will be given a unique number to distinguish it from neighbouring OYO properties and the signages are expected to display the address more clearly. More local residents will be allowed to use OYO as there was growing demand for this facility for various reasons.
The introduction of the goods and services tax on July 1, subsuming several indirect taxes, has not affected rates of OYO properties, Agarwal said. “We and most of our partners think the rates have been thought of very fairly. We have kept our prices similar to what it was before GST. I do not see the GST having very significant implications,” Agarwal said.
Co plans to double its rooms from 70,000 to 1.5 lakh; will add between 10,000 and 20,000 rooms this year