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OYO - a comprehensive analysis of the company's financials fundings and future

OYO is near to become a public company and understanding the company's background and business model to exploring its industry, promoters, and financial details. Delve into insights about OYO's funding, shareholders, and how it stacks up against its peers. Whether you're a potential investor or just curious about OYO's journey, this article is your go-to resource.

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Overview

 Ritesh Agarwal founded Oyo, which is a platform that connects people who want to rent out their homes or properties.

The platform allows travelers to search for accommodations by providing details such as the destination. oyo operates in markets such as gig economy travel and hospitality tech, and it serves in both B2C and B2B spaces.

Oyo appears to be quite similar to AirBnB, but it is not. Oyo operates as a hotel aggregator and franchise that partners with existing small and large hotels to standardize rooms by their brands, as opposed to AirBnB, which is a peer-to-peer platform.

AirBnB itself is an investor in Oyo, along with AirBnB. Oyo has 54 institutional investors, including Softbank Vision Fund Light Speed India, and Softbank is the largest institutional investor in Oyo.

With 3 seed rounds, 2 early-stage investments, 11 stage funding events, and 1 debt financing oyo has completed 17 funding rounds with the total funding collected by Oyo being $ 3.24 billion with $ 1.5 billion as the largest round.

Business Model of OYO 

Oyo acts as an intermediary for hotels, forming partnerships and providing comprehensive facilities to ensure specific standards are met. This includes necessities like clean rooms, basic amenities, and standard services. Oyo establishes specific quality benchmarks to which partner hotels must adhere, ensuring that guests have a consistent experience across all Oyo properties. Furthermore, Oyo offers digital marketing services to help businesses improve their online visibility, making it easier for potential guests to find and book rooms. Oyo welcomed over 180 million guests from more than 120 countries in December 2019, hosting an average of 7.5 million guests per night and making each stay a one-of-a-kind experience.

Customer segments of OYO

 Leisure travelers seek a break from their hectic lives and desire a vacation experience.

 Family travelers in large groups seek spacious and comfortable accommodations for their stay.

For business travelers, Oyo now offers commercial spaces, allowing customers to book offices and spaces specifically designed for business purposes.

 Adventure travelers, who seek exhilarating experiences, are drawn to Oyo for its offerings that cater to their preferences for activities such as hiking and participating in adventurous sports.

Value propositions

●     Affordable

●     Standardize accommodations

●     Personalised room

●     App with good UI and UX

●     Simple and easy bookings

 

To improve their value of propositions oyo has unique services  

Oyo Silver Key - Oyo Silver Key is for corporate travelers, Silver Key stands out as a special service designed specifically for executives and corporate clients, providing executive apartments with private, large layouts and a variety of facilities. These furnished apartments provide modern conveniences and are specifically designed to fulfill the needs of business travelers looking for personalized stays of both short and long lengths.

Oyo Townhouse - Oyo Townhouse is an excellent option for young travelers. They give cool services to meet your modern wants. The rooms feature unique beds, good amenities, and Netflix-enabled TVs. You can also order meals with a smartphone app.

Oyo Studio - Oyo Studio Stays allows you to reserve rooms for internships, jobs, and business travels. You can rent a room by yourself or with a friend.

Oyo B Direct - Oyo B Direct is ideal for business stays. They simplify things by providing invoices that are ready for GST reimbursement.

Oyo residences - Oyo residences are comfortable private residences built for your vacation. 

Oyo Flagship - Oyo Flagship is like renting an entire block or flat. It feels like home while also providing hotel luxuries. The staff is nice, and the inside is adorned with fascinating themes and phrases on the walls. It's a unique and comfortable experience. 

Weddingz. in - Weddingz. in is a cool service that Oyo has collaborated with banquet hall vendors. You may quickly reserve wedding venues at the best prices using their simple booking system. 

Oyo Wizard - Oyo Wizard offers a subscription model. Members receive unique discounts, incentives, and cashback advantages. Oyo also offers popular packages and hot bargains to travelers.

 

In the Financial year 2022-23, consolidated revenue from operations is INR 54,639.45

million against INR 47,813.62 million during the Financial year 2021-22.

Revenue model

 

Commission

According to sources, OYO charges a commission of 22% to its hotel partners. This commission fee applies to every booking, and the commission rate may vary from place to place.

Franchise Fees

OYO follows a franchise model, where partners are required to pay a certain amount to the franchisor. In other words, OYO charges its partners a franchise fee for using its brand, technology, and operational support. This is also a significant source of revenue for OYO.

Margins 

OYO negotiates with its partners to get a lower pricing on their property. It then sells the rooms to customers at a higher cost, earning a profit on the difference between the discounted rate and the selling price of the accommodation.

 OYO Wizard Membership

Wizard Blue - The Blue plan costs INR 99 for a 6-month membership

Wizard Silver - The Silver plan costs INR 199 for a 1-year membership

Wizard Gold - The Gold plan costs INR 399 for a 2-year membership

 

Revenue From Other Services

OYO provides extra services to guests such as breakfast, transportation, laundry, and other amenities. It charges extra costs for each of these services. As a result, it provides significant money for OYO. It also generates revenue by charging consumers for premium offline services and facilities.

Despite being such an efficient business model we also can’t ignore that OYO also has managed to reduce their losses in fiscal year 2023 to INR 1,287 crore from INR 1,942 crore in FY22. The firm generated a revenue of INR 5,464 crore over the same time. 

Geographics 

Perhaps there is hardly anyone who hasn't heard the name of OYO Hotels, and this has happened due to its expansion. The beginning of Reliance Jio took place on December 27, 2015, and since then, there has been an internet revolution in India. Almost everyone is now familiar with various online businesses. Whenever someone thinks of booking a hotel in today's time, OYO is the first name that comes to mind because OYO has set multiple affordable rates. From its inception in April 2013 to becoming the world's third-largest and fastest-growing chain of leased and franchised hotels, homes, and living spaces, OYO has made significant progress. For those who may not be aware, OYO stands for 'On Your Own. 

OYO operates over 43,000 properties and 1 million rooms in 800 cities across 80 countries. OYO operates in some of the following regions:

Asia includes countries such as India, China, Indonesia, Malaysia, Nepal, the Philippines, Japan, Sri

Lanka, and Vietnam.

Europe includes countries such as the United Kingdom, France, Spain, Italy, Germany, the Netherlands, and Belgium.

Americas includes the United States, Brazil, Mexico, and Canada.

The Middle East includes the United Arab Emirates, Saudi Arabia, and Oman. 

Industry Research 

The hotel business in India has seen a tremendous transition in recent years, owing to the rise of online room booking systems. OYO Hotels & Homes, a pioneering operator in this space, has had a significant impact on the industry landscape.

In India, the business of hotels and hospitality operates in a very unique manner. Consumer behavior in India depends on their income, and there are various categories within the middle class. According to a report by People Research on India's Consumer Economy (PRICE Research), there are four income categories for households in India: 

●     Affluent households earn more than ₹30 lakhs per year.

●     Middle-class households earn between ₹5 lakhs and ₹30 lakhs annually.

●     Aspiring households earn from ₹1.25 lakhs to ₹5 lakhs annually.

●     Destitute households earn below ₹1.25 lakhs annually. 

Before the debut of OYO, individuals booked very few hotels because hotel booking was not usual for the average person. However, since OYO's debut, the hotel and hospitality industries have seen substantial changes. Initially, hotel booking was essentially a franchise industry, with huge hotel chains operating both 5-star and 3-star properties. But OYO has brought about significant changes in this market.

The hotel and tourism industry is regarded as one of India's top 10 sectors. As a consequence of its contribution, the Hotel and Tourism industry garnered about US$ 9.2 billion in FDI between April 2000 and March 2016, according to the Department of Industrial Policy and Promotion.

Occupancy and Average rate (2011-12 to 2015-16) – Fig 1

                                    Source: Indian Hotel Industry Survey 2015-2016 – FHRAI

In 2015-16, the average rate of growth in operating performance indicators was Rs. 5,128, which was the highest since 2009-10. Similarly, occupancy rates increased to 62.1% in the prior fiscal year.

  Source of Revenue (2011-12 to 1015-16) – Fig 2

Source: Indian Hotel Industry Survey 2015-2016 – FHRAI

Departmental Expenses as a proportion of Total Revenue fell for the third consecutive year, mostly due to a fall in Rooms and Other Expenses. However, F&B Expenses rose to an all-India average of 64.1%, a significant rise over the previous year. 

Foreign Tourist Arrivals (FTA) has been increasing steadily over the years, with a growth rate of 16.3% per annum. In terms of FEE, there has also been significant growth, with an estimated increase of 14.2% in 2013 and a projected annual growth rate of 10.5% by 2023.

From 2001 to 2013, the number of foreign tourist arrivals in India increased at a rate of 16.3% per annum, reaching 6.97 million in 2013, while foreign exchange earnings from tourism also showed strong growth, reaching 17,737 million US dollars in the same year

 The hospitality sector is a billion-dollar industry. It includes housing, food services, leisure, entertainment, amusement, and travel industries. These organizations provide comfort and entertainment for guests. The hospitality sector is seeing growth due to increased global travel for many purposes, including tourism, business, events, and sports.

Hospitality is a fascinating and hard industry that requires understanding the many needs and desires of people from various backgrounds and objectives. Low room occupancy, particularly in areas. Incoming tourism was low, and hotels with bank problems were struggling due to pre-crisis borrowing. 

OYO's company is expanding rapidly, and this expansion may assist OYO in the future as it prepares for its IPO. Despite market expectations that OYO may not recover its losses, the firm continually cuts its losses every year.

Promoters & Shareholding Pattern of the Company

 The promoter of OYO Rooms, Ritesh Agarwal, holds 24.94% and SoftBank holds the highest number of shares at 46.62 %, According to the DRHP filed with the market regulator, SVF India Holdings would sell shares worth up to INR 1,328.5 crore through the offer for sale. 

 A1 Holdings Inc., which owns 1.81%, plans to sell a share for INR 51.6 crore. While China Lodging Holdings (HK) Ltd would sell a stake worth INR 23.13 Cr Equity Shares. It presently has a 0.81% investment in the hospitality unicorn. 

●     Dinesh Ramamurthi (Trustee of Oravel Employee Welfare Trust): Not specified

●     Sequoia Capital India Investments IV: 3.24%

●     Lightspeed Venture Partners IX, Mauritius: 2.74%

●     Star Virtue Investment Limited: 1.81%

●     AirBnB Inc: 1.36%

●     Other Shareholders (cumulative holding): 3.86%

●     Ritesh Agarwal (Founder): 24.94%

●     RA Hospitality Holdings (OYO’s holding entity): Not specified

●     SoftBank: 46.62%

●     A1 Holdings Inc: 1.81%

●     SVF India Holdings: Not specified

●     China Lodging Holdings (HK) Ltd: 0.81%

 

 

Oyo Rooms stated that the Registrar of Companies (ROC) had authorized Oravel's conversion from a private limited company to a public limited company. Consequently, its name will be changed from Oravel Stays Private Limited to Oravel Stays Limited.

OYO would award 4,333 bonus equity shares to 12 equity stockholders with a face value of INR 10. 

The conversion of a private limited company into a public limited company is required for the firm to ask the public to subscribe to its shares through an IPO. This looks to be a preparatory step for the travel and leisure company's upcoming IPO. A private limited business cannot have more than 50 shareholders, hence it is necessary to change to a public limited company before issuing shares.

The overall IPO size is projected to be Rs. 8,430 crore. This would include a fresh issue of Rs.7,000 crore and an offer for sale of Rs.1,430 crore. SVF India Holdings, a Softbank Vision Fund subsidiary, would tender shares worth Rs.1,329 crore in the OFS.

 

Peer comparison

Here are the top competitors of Oyo 

Treebo:

Type: Online chain of standardized budget hotels

Founded Year: 2015

Funding: $83.7M

Location: Bengaluru, India

Stage: Series D

Key Features: AC rooms, WiFi, breakfast, toiletries, bed & bath linen.

 

FabHotels:

Type: Online aggregator of standardized budget hotels

Founded Year: 2014

Funding: $71.7M

Location: Gurugram, India

Stage: Series C

Key Features: Regular training, auditing of hotel staff, tech-enabled lodging.

 

RedDoorz:

Type: App-based platform providing hotel accommodation through a franchising model

Founded Year: 2015

Funding: $140M

Location: Singapore

Stage: Series C

Key Features: Free WiFi, satellite TV, sanitized washrooms, and toiletries.

 

Bloom:

Type: Chain of standardized budget hotels for travelers

Founded Year: 2011

Funding: $55.3M

Location: Delhi, India

Stage: Series B

Key Features: Free Wi-Fi, complimentary breakfast, custom-built cloudbeds.

 

Zo Rooms:

Type: Chain of standardized branded budget rooms

Founded Year: 2014

Funding: $46M

Location: Delhi, India

Stage: Series B

Key Features: Standardized rooms, free WiFi, LCD TV, complimentary breakfast.

 

Roomoncall:

Type: Online branded budget hotel chain

Founded Year: 2015

Funding: $2.47M

Location: Gurgaon, India

Stage: Seed

Key Features: Online discovery & booking of hotel accommodations.

 

Ulo Hotels:

Type: Chain of standardized budget hotels

Founded Year: 2016

Stage: Unfunded

Location: Chennai, India

Key Features: Search, compare, and book hotel rooms.

 

QikStay:

Type: Asset-light chain of budget hotels

Founded Year: 2015

Funding: $545K

Location: Gurgaon, India

Stage: Seed

Key Features: Asset-light model, standardized budget hotels.

Other Hotel Chains:

 

V Resorts:

Type: Asset-light resort chain

Founded Year: 2010

Funding: $19.5M

Location: Noida, India

Stage: Series A

Key Features: Boutique resorts, asset-light model, revenue share basis.

 

WooStays:

Type: Online branded premium and luxury hotel chain

Founded Year: 2015

Location: Delhi, India

Stage: Funding Raised

Key Features: Premium and luxury hotel offerings.

 

Valuation & financials of the company

With a startling valuation of Rs. 36,000 crore, Oyo is a dominant force, accounting for 75% of the total value of India's listed hotel business.

 

FINANCIAL SUMMARY OR HIGHLIGHTS/ PERFORMANCE OF THE COMPANY

Latest news about oyo

 OYO TO OPEN 400 NEW PROPERTIES IN MAJOR SPIRITUAL HOTSPOTS

In response to a remarkable 350% surge in searches for Ayodhya on the OYO platform in the past year, driven by the imminent opening of the grand Ram Mandir on January 22nd, 2024, the city has consistently topped OYO app searches. On New Year's Eve, Ayodhya witnessed a remarkable 70% surge in OYO app users, surpassing popular leisure destinations like Goa (50%) and Nainital (60%). To accommodate the growing number of pilgrims, OYO has introduced 50 homestays, offering around 1,000 rooms strategically located near key landmarks for convenient access to religious sites. In collaboration with the Ayodhya Development Authority and the Uttar Pradesh State Tourism Development Corporation, OYO aims to ensure smooth operations. Ritesh Agarwal, Founder and Group CEO-OYO, expressed his anticipation for the monumental surge in spiritual tourism, highlighting the significance of the Ram Mandir opening. He emphasized OYO's commitment to providing comfortable and affordable accommodation options across sacred sites like Puri, Shirdi, and Varanasi, fostering a welcoming haven for spiritual journeys. 

Conclusion

Despite operating deficits since 2012, OYO has grown. If cash burn is excluded, OYO's IPO, which is priced at 8,430 crore, will result in a 7,000 crore new issue. Its shares are now trading at 88 on the unlisted market. OYO is also working on marketing ahead of its planned IPO. Another marketing approach involves OYO's creator, Ritesh Aggarwal, appearing on Shark Tank, which is anticipated to boost the company's image. The firm is largely focused on the IPO, which might protect OYO from losses comparable to mid-cap companies such as Paytm and Zomato.

The path of OYO, as well as that of its creator, has been pretty inspirational. The successful IPO of OYO would provide a huge boost to the Indian economy and hotel industry. It is evident that OYO is actively developing on a worldwide scale, and the firm will most likely require funding from the public market. This not only benefits OYO but also boosts India's startup environment. It can cause a revolution in India and the larger Indian startup ecosystem.

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