OYO Sees Room for Growth, Plans to Dou­ble In­ven­tory

The Economic Times - - Disruption: Startups & Tech - Anu­meha.Chaturvedi@ times­group.com

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

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