The OYO journey: The hospitality giants relentless pursuit of vision

The indian hospitality has been a commanding force in the indian economy. It has witnessed several changes over the course of few decades, from local tents to guest houses, offline hotel bookings to the online ones, it has seen it all. And with the rise in tourism and government’s focus with Swadesh Darshan Scheme, PRASHAD" Scheme, Chalo India Campaign, to expand the indian tourism sector, the indian hospitality sector cannot be left behind.

One person forecasted this boom long ago and made a business to witness the 2 lakh 68 thousand crore growth in the indian hospitality sector in next 5 years.
His business which was started in 2012 was so successful at the start that it became an unicorn in next 6 years, the world’s third-largest hotel chain by 2019 with presence in over 80 countries and achieved 100 million downloads in 2021.

I am talking about OYO.

Business Overview-

OYO (Oravel Stays Limited) started its business as a hotel aggregator where it used to lease hotel rooms and rent them under its brand name OYO.

Later, it changed its business model from an aggregator model to a franchise model. OYO provides a platform that partners with small hotels and improves their services in terms of branding, technology, and management. In return, it takes a small cut from the bookings made.

OYO operates in over 80 countries, including India, China, the US, the UK, and Southeast Asia, with a network of thousands of hotels, homes, and living spaces.

Business model-

It’s a unique business model represents the first hotel chain to be integrated with OTA-like distribution capabilities, then company's initial acceptance requirements and its upfront investment in modernizing each hotel before it joins the OYO network.
OYO has an asset-light model, wherein it partners with hotel owners and provides branding, operational support, and technology solutions to improve occupancy and revenue. The business model primarily consists of:

1. Franchise Model: OYO takes commission on bookings from independent hotel owners after signing up an agreement, who operates under the OYO brand
2. Lease Model: OYO refurbishes properties after leasing them and operates them directly.
3. Technology & Services: OYO provides its partner hotels with tech services like property management, revenue management, customer acquisition, and marketing.
4. OYO Homes & Vacation Rentals: With OYO Life & OYO Homes, OYO also offers short-term rental services & vacation homes.
5. OYO Workspaces: A co-working space initiative aimed at professionals and businesses.

Industry Impact-

Before OYO came in people after reaching their destination relied on local agents due to uncertainties and unbranded nature of this industry. This saw emergence of various players such as Airbnb, Fab hotels etc.

According to a report by Axis capital the indian hotel industry shall witness a 12% CAGR in demand for 2024-27 compared to only 9% CAGR in supply, indicating a favourable demand-supply dynamic. Also the market size was valued around 2 lakhs 76 thousand crore and is expected to reach around 5 lakhs crore by 2030.
The hotel industry is anticipated to witness significant expansion, with a projected revenue of nearly 80 Thousand Crore  (US $9.13 billion)  by 2024. The results point to a strong expansion trajectory and a predicted annual growth rate (CAGR 2024–2028) of 5.41%. The market volume is predicted to rise further if current trends continue, with an anticipated value of nearly 97 thousand crore (US $11.27 billion) by 2028. 

Earlier the Indian budget hotels were not properly organised with poor quality rooms, untrained staffs, dirty curtains & poor mattresses, but OYO’s disruptive approach has significantly impacted the hospitality industry & standardized budget accommodations has gained widespread acceptance, revolutionizing the way people perceive affordable travel and hotel stays.

Funding & Acquisations-

OYO has done 21 funding rounds as of 2025 and raised  30 Thousand 2 Hundred 94 Crore from 80 investors so far with 62 institutional & 18 angel investors, with the likes of Softbank vision fund, Greenoaks, Lightspeed India, and others.

A summary of its prominent funding rounds:-

Financial health-

OYO in its initial years witnessed exponential growth and did rapid expansion. Hotels after hotels and with funding from Softbank & other investors it was growing massively. However the only thing which was bothering the investors was its numbers since OYO was yet to earn profit.

Income statement Analysis-

OYO’s revenue grew from 0.5 cr in 2013 to a peak of 14,113 Cr in 2019, showcasing a CAGR of 451%. But declined to 4,157 Cr in 2020-21, probably due to the impact of COVID19. Post which it reached revenue of 5,541 Cr. In FY2023-24 with a CAGR of -3%, showcasing an overall decline.

OYO’s EBITDA margin faced negative numbers over the years and started improving post 2019. In 2023-24 it recorded its first positive EBITDA margin with 23%.

The net profit/loss trend is even more volatile. OYO reported a net loss of INR 13,038.7 crore in FY 2019-20, which improved to a net loss of INR 3,823.5 crore in FY 2020-21

But in FY 2023-24 it recorded its first net profit of INR 229.6 crore, and it's prospect looks bright for FY25 as well with a profit of 132 Cr in Q1 FY25.

Balance Sheet-

In OYO's balance sheet, assets decreased  from INR 14,109 crore in FY 2019–20 to INR 6,443.5 crore in FY 2023–2024. Property, plant, and equipment, goodwill, and intangible assets are examples of non-current assets that have significantly decreased. The asset base has shrunk, as witnessed by the decline in current assets.

Cashflow Statement-

In FY 2023–2024, the CFO activities improved significantly from a (INR 6,765.1) crore in FY 2019–20 to a positive INR 598.2 crore, showcasing OYO’s ability to produce cash from its main business. The CFI was positive showing reduction in capex and strategic asset sale.

Along with net profit margin which showed an improvement, the Return on Assets (ROA) and Return on Equity (ROE) have similar result, suggesting that OYO is utilizing its assets and equity more effectively.

Valuation & IPO saga-

After receiving several funding from investors like Softbank, greenoaks capital, Sequoia capital it expanded its business and in 2016 it reached a valuation of 3900 crores. Growing and expanding in 2019 it reached its peak valuation of 72,000 crore.

But then Covid19 hit and its business & valuation faced severe downturn. Its revenue fell by 69% & valuation reached 44,000 crore.

When it planned to file the DRHP for its IPO in 2021, it was valued around 90,000 crore. However with not much support from the market with regards to its valuation for a loss making firm & the likes of Paytm & zomato, OYO had to re-think its plan to go for an IPO.

OYO looked to improve its profitability and gave another shot at the IPO this time at a valuation of 53,000 crore but with poor market sentiments, Russia-ukraine war, high interest rates & tight liquidity in the capital market, OYO failed again to launch a successful IPO due with this valuation & zero profitability.

The Y0Y valuation scenario of OYO :-

About Management-

OYO Peer Analysis:-

OYO's main competitors include traditional hotel chains like Taj Hotels and IHCL (Indian Hotels Company Limited), as well as other budget hotel aggregators like FabHotels and Treebo. While Taj Hotels and IHCL are well-established with strong brand recognition and high-quality services, they cater to a more premium segment. In contrast, FabHotels and Treebo focus on the budget segment, similar to OYO, but with a more localized approach.

Sources: SharesCart, Company Annual Filings, Investor Presentation

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