Oyo says that it is now focusing on investing and franchise building rather than chasing short-term goals like profitability.

Oyo commits Rs 1400 cr to India biz aims to become worlds largest hotel chain by 2023
Atom Hospitality Tuesday, March 12, 2019 - 16:04

OYO Hotels and Homes has announced a commitment of Rs 1400 crore ($ 200 million) for its India and South Asia business, as it looks to expand its business, improve customer experience and ensure increase in continued asset owner success. Oyo says that the idea is to further deepen and widen presence across the home country while focusing on aggressive capacity building.

The company today also announced the addition of Collection O hotels to its existing portfolio of the budget-to mid-segment hotel chain brands while introducing an in-app SOS button that activates on check-in- a first in the hospitality industry. Currently, over 93% of Oyo’s sales are from repeat or word-of-mouth customers

“Key priorities as identified by the business for the year include delivering superior quality of product and service for every Oyo brand with a focus on safety and security, winning hearts and minds while expanding our presence deep and wide, a focused fast-paced growth while making partnering with OYO the most attractive entrepreneurial opportunity for asset owners, a greater and deeper engagement among all OYOpreneurs and continuously evolve to become the most-loved hotel brand, ” Aditya Ghosh, CEO, India and South Asia  said in a statement.

While it claims that its losses as a percentage of realised value is reducing year-on-year from 44.5% in FY 2016-17 to 20.3% in FY 2017-18, Oyo says that it is now focusing on investing and franchise building rather than chasing short-term goals like profitability. In FY 2018-19, OYO estimates further improvement in the economics of close to 50%, with losses going down to 10.4% (Estimates).

Currently, Oyo has a presence in 10 countries, over 500 cities, and over 515,000 rooms, while in India, it is present in over 259+ cities, 8700+ buildings (hotels and homes) and 173,000+ rooms. Oyo Hotels’ sales run-rate at December ended 2018 was at $1.8 billion - growing 4.3x Y-O-Y and of this India was a large part at $1.2 bn, growing at 3x with 50% PAT improvement annually.

 With seven brands catering to the budget to mid-scale hotel segment, Oyo aims to further grow its corporate customer base this year and has already signed over 16000+ corporates. Its recently launched Collection O is an offering that aims to be a mid-scale business hotel that caters to this burgeoning segment

Integrating Technology

 Oyo has also piloted SoS button in over 25 cities in India, which activates on check-in and includes options to contact the police as well as OYO’s 24X7 Safety Response Team (SRT). It now also ensures that before every booking, a transparent online booking process with real photos of the property allows guests to verify each building inside out 

STRATEGY 2023

Oyo is now looking to become the world’s largest hotel chain by 2023 and one of the most impactful consumer brands in India and South Asia.  This is in line with OYO’s strategy to expand and capture as much of the opportunity in existing markets, while also identifying new markets where it can meet the demand-supply gap to make the most impact.

“With a healthy balance sheet, OYO Hotels & Homes will focus on capacity building and look at opportunities for both organic and inorganic growth as long as it helps us in the company’s mission. Capacity building is key, as the company aims to allocate resources and support needed to make our collective vision for 2023 a reality,” Oyo said in a statement.

 “We are staring at a social revolution that manifests itself in terms of how a truly global brand out of India is not just reimagining hotels & reinventing living spaces, but in the process, enabling an entire ecosystem of micro, small and medium entrepreneurs as well as ancillary industries. All while creating hundreds of thousands of jobs opportunities. Having generated over 100,000 jobs in India alone through over 26 OSI’s, we are committed to making sure that the hospitality sector remains a driver of innovation and employment in the country with OYO Hotels and Homes as a key enabler of the same,” Ritesh Agarwal, Founder and Group CEO, added.

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