With Global Expansion, Oyo Posts $335M in Losses

INTERNATIONAL REPORT—Oyo Hotels & Homes reported $951 million in its full-year earnings, a significant increase—4.5x increase in total revenue—year-over-year, according to audited financial results for the fiscal year 2019 (April 2018 through March 2019).

The fiscal year marked its transition from an India-centric business to a global organization. Nearly 36.5% or $348 million of the tech-driven hospitality company’s fiscal revenues were from outside India. A year ago, this was a small part of its overall business. India contributed nearly 63.5% or $604 million of revenues and recorded 2.9x year-over-year growth in the market.

Oyo’s gross margin in India increased from 10.6% in fiscal year 2018 to 14.7% in fiscal year 2019. Losses for the company increased from 25% in 2018 to 35% in 2019.

“The increase in net loss per cent is attributable to our global expansion as we have grown from being a predominantly single country operation to launching multiple geographies. New markets entry results in front-loading of setup costs and manpower investments while the revenue trails resulted in higher losses in the beginning,” according to a statement from Oyo Hotels & Homes. “As we scale in our mature markets, we have demonstrated consistent improvement in our economics in mature markets like India, and expect to follow a similar pattern in other markets. Our net loss reduced from 24% to 14% in India in 2019.”

Oyo’s replicable playbook has played a pivotal role in helping the brand grow globally at a rapid pace. According to the company, its model levers include the following:

  • Build disruptive technology capabilities
  • Partner with independent hotels
  • Build large network
  • Create customer entrenchment
  • Deliver RevPAR increases
  • Expand into new geographies

Since China and other international markets were in development and investment mode, Oyo noted this contributed to $252 million (75%) of the $335 million losses for 2019, while these markets constituted only 36.5% of the global revenues. Oyo plans to continue to make growth investments in multiple new markets in the next fiscal year as well.