After having spent the past few years aggressively expanding its operations beyond the country’s shores, Softbank-backed Oyo Hotels and Homes is now setting its eyes on turning profitable in its home market of India.
The company’s executives also disclosed detailed financials for the fiscal year 2018-19, with the period seeing the start-up’s revenues surge but accompanied by sharper rise in losses.
Oyo saw its consolidated revenue jumping to $951 million in FY19 from $211 million in the previous year, but losses surged nearly seven-fold to come in at $335 million in 2018-19 from $44 million a year earlier. Of this, the company’s Indian operations contributed $604 million in revenue, with losses standing at $84 million.
Most of its losses during the period have come from aggressive expansions in overseas markets, company officials like board member Aditya Ghosh said. China and other international markets currently in development and investment mode, accounted for 75 per cent ($252 million) of losses during the year.
For instance, Oyo’s net loss grew from 25 per cent of revenue in FY18 to 35 per cent of revenue in FY19, this increase has been driven by expansion costs. Mature markets like India, however, are seeing rapid improvement in margins.
“While consistently improving operating economics in mature markets... Where it’s already seeing an improvement in gross margins, the company is determined to bring in same fiscal discipline in emerging markets,” OYO said in a statement.
Ghosh added during the press conference that the company will also focus on turning profitable in its home market of India, where its margins improved 4.1 per cent in 2018-19.
“As we work towards consistently improving our financial performance, ensuring strong yet sustainable growth, high operational and service excellence and a clear path to profitability will be our key to our approach in 2020 and beyond,” Abhishek Gupta, Global CFO of OYO Hotels and Homes, said.
Oyo currently has over 43,000 hotels on its platform with an inventory of over 1 million rooms spread across 80 countries. In India, the company has 18,000 hotel partners and an inventory of 270,000 rooms.