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Hospitality

Oyo's net loss widens; bulk of the losses due to international expansion, says CEO Rohit Kapoor

Updated : February 18, 2020 06:27 AM IST

Homegrown hospitality brand Oyo's consolidated net loss has ballooned to USD 335 million as compared to USD 44 million in FY18. The company as of today has around 43,000 hotel partners and a million rooms on its inventory.

Detailing the financials of the company, Rohit Kapoor, CEO of Oyo India and South Asia said, “In FY18, India was the only market we were in practice. Towards the end of FY18, we started entering new markets. FY19 is where all the international expansions happened. So, the bulk of the losses that you see in the USD 335 million comes from international expansion.”

Kapoor also spoke about the three types of markets that Oyo looks at.

“Phase 1 markets where we have entered, we are investing people, technology, resources and also developing the market and acquiring asset partners at that point in time. So, there is a lot of investment, for example, LATAM, US, Japan fall in that category. Phase 2 is where we have built some scale. We are starting to look at gross margins and improving our profitability and gross margins in those markets -- South East Asia and China. Phase 3 is markets where we have been there for a while and we have an established position. The whole idea is to move the whole market towards the path to profitability; India is a classic example there," he said.

Speaking about the India market, Aditya Ghosh, Member - Board of Directors of Oyo said, “India has three great pieces of news for us. One, the losses have come down from 24 percent to 14 percent. Second is we have had a 3x revenue growth. But the most important bit is that gross margins have improved from 10 percent to 14.7 percent. So, what is showing is that as each market matures, it follows this pattern and you are moving from establishing something to gross margin improvement to a path to profitability. So, the business model is working and then that gives the confidence that as long as we can hunker down and kind of do more of the same and keep improving, we are on this firm path of profitability.”
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