Oyo’s Journey Of Profits And Losses. What’s New To The Table?
Reports say that Oyo's loss has risen seven folds, however, there are no brakes in revenue. But, is everything transparent?
Oyo’s profit and loss has been talked quite a lot. However, how is the company faring actually?
- Hospitality chain Oyo had reported the widening of its consolidated net loss to $335 million for the financial year that ended on March 2019. This was mainly due to international expansion
- However, Oyo’s loss in its oldest market – India, has narrowed to 14 percent revenue in the last fiscal from 24 percent in the lats fiscal
Oyo Hotels and Homes would be continuing its expansion into international borders like that of Latin America, China, and the UK. This was as per the Oyo’s senior executives, even when its losses had surged sevenfold last year.
Oyo will also focus on turning profitable in its home market, that is India. Here, the margins have improved 4.1 percent in 2018-19. This was as per Oyo board member Aditya Ghosh, where he said it in a conference call with journalists, to discuss the audited financial results for FY19.
However, Ghosh went ambiguous on when could Oyo could start making profits.
As of now, Oyo’s consolidated loss has ballooned to around $335 million in 2018-19, from $44 million in FY18. Currently, Oyo has around 18,000 hotels partners and an inventory of 270,000 rooms across India.
Oyo’s consolidated revenue had jumped to $951 million in FY19 from $211 million in the previous year. This included $604 million in revenue from India operations. Approximately $348 million was being contributed by overseas operations, mostly China.
The hospitality chain mostly operates on a franchise model, where it takes over a hotel asset, by renovating the space and selling individual rooms under the Oyo branding. Oyo says that it has around 43,000 hotel partners and a million rooms on its inventory. However, its net loss as a percentage of revenue has grown to 35 percent in FY19 from 25 percent last year.
But, in India Oyo had narrowed its losses to 14 percent revenue in FY19 from 24 percent a year ago. Additionally, Oyo’s gross margin in India has improved to 14.7 percent in FY19 from 10.6 percent a year ago.
This audited financial performance comes up at a time when Oyo has been laying off employees across India and overseas. Oyo describes this retrenchment process as a right sizing and restructuring exercise that happened over the last couple of months.
In fact, a few corporate clients have also opted out of Oyo. Senior executives in Oyo said that Oyo’s corporate business has grown around 80 percent in FY19. They have around 7500 clients aboard.
Last year in 2019, Oyo claimed to have generated around 90 percent of its revenue from repeat customers and organic users, Repeat customers added to nearly 73 percent of total revenue.
Also Read:
Oyo India Records $604 Million Sales, Losses Down To 14%
