Oyo projects losses in India, China until 2022

SOFTBANK-BACKED Oyo Hotels and Homes’ internal projections showed it may not make a profit in India and China until 2022, even as the India-based hotel chain revealed a six-fold rise in losses during fiscal year 2019.

The losses highlight rapid expansion by Oyo into China, the United States, the United Kingdom and other markets, which has made the six-year-old startup one of the world’s biggest hospitality brands by room count.

A valuation report filed with local regulators showed “management certified” financial projections for each of Oyo’s markets including its mainstay India and China units.

Oyo’s India business will likely make losses until 2021, after which it could report a net profit after tax of Us$45.2mil (Rm188.78mil) in 2022, which could expand by nearly 13 times to Us$586.9mil in two years, the projections showed.

An Oyo spokeswoman had no immediate comment on the projections and it was not immediately clear when the projections were made.

Overall, Oyo reported a net loss of 23.85 billion rupees (Rm1.4bil) in the year to March 2019, compared with a loss of 3.6 billion rupees a year earlier, according to the valuation report filed with India’s ministry of corporate affairs. Revenue from operations surged to 64.57 billion rupees from about 14.13 billion rupees a year earlier.

Oyo said in a statement the report contained only “certain provisional financials” for the year ending March 2019. “These are not the final audited financials and the same will be issued later by the company along with the annual report that we issue every year.”

The report, prepared by a valuer in Gurugram, where Oyo is headquartered, said the financials for the year to March 2019 were unaudited and the figures were provided by Oyo’s management.

The growing losses at Oyo come as its major investor Softbank struggles to raise funding for a second investment fund, after the failed listing of office-rental company Wework and amid questions about the path to profitability of other marquee investments like Uber.

Softbank, which has invested nearly Us$1bil in Oyo through its Vision Fund, this month reported its first quarterly loss in 14 years, dragged down by an Us$8.9bil hit at the Vision Fund.

Oyo’s operating expenses grew nearly five-fold year-over-year to 61.32 billion rupees, while total expenses hit 90.28 billion rupees,