Oyo loss widens to $335 million

Oyo, which is laying off staff across the globe including India as it struggles to rein in costs, said losses in its home market went up to $83 million in FY19 from $50 million in FY18.

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The company is closely tracking developments linked to the Covid-19 outbreak in China, the biggest international market for the company, Oyo Hotels & Homes director Aditya Ghosh said.
NEW DELHI: Oyo Hotels & Homes reported a consolidated loss of $335 million for the year ended March 2019 compared with a year-earlier $50.5 million loss as the SoftBank-backed company struggled with ballooning operational spends while expanding at a rapid pace across multiple geographies.

This is in line with the numbers provided in a valuation report filed by the Gurugram-headquartered company with the Registrar of Companies in November last year. Oyo attributed the significant jump in its consolidated losses to “inherent costs of establishing new markets” and international expansion, especially in areas such as China.

The company reported consolidated revenue of $951 million, up from $ 21 million in the previous fiscal, while India revenue was $604 million. Oyo, which is laying off staff across the globe including India as it struggles to rein in costs, said losses in its home market went up to $83 million in FY19 from $50 million in FY18.


‘India Accounted for 63.5% of Revenue’
Operating expenses for the 12-month period rose almost five-fold to $1.27 billion from the year earlier. The company said India accounted for 63.5% of overall revenue with nearly 36.5%, or $348 million, being contributed by the operations outside the country, primarily China.

The valuation report had projected net losses of $332 million and consolidated revenue of $900 million for FY19. Oyo said the current year will mark a turnaround.

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“The numbers from the valuation report were provisional financials for financial year 2019. And what we have released today are the audited numbers for financial year 2019,” said Rohit Kapoor, CEO, Oyo India and South Asia, on a conference call.

“2020 is the year when we are looking at accretive growth and making sure that all the metrics that are required to run a business — which are not just for 2020 but last well beyond — are being put in place,” Kapoor said. “The systems and processes are being strengthened every day.”

The FY19 results come in the wake of the company reportedly battling allegations ranging from anti-competitive practices to graft and tax evasion, among others, with its $10 billion valuation tag also coming under the scanner.

Oyo has rejected accusations of any wrongdoing.

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The company is closely tracking developments linked to the Covid-19 outbreak in China, the biggest international market for the company, Oyo Hotels & Homes director Aditya Ghosh said.

“India and China are our two biggest markets and a significant portion of our rooms come from these two markets,” Ghosh said. “The coronavirus outbreak is something that no one expected and we are tracking this on a day-to-day basis. It has only been a few weeks. Frankly, as the leadership team, we are absolutely focused on making sure that our own colleagues, employees and stakeholders are safe.”

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He acknowledged that the disease outbreak would have an impact on Oyo.

“Absolutely, there will be… maybe for the short term,” he said. “But if I zoom out a little bit on our business in China, it has grown and as the market has matured. We expect that we will continue to reduce our losses and we will improve our revenues and move towards the path of profitability.”

Oyo said its portfolio currently comprises more than 43,000 hotels with more than 1 million rooms. The hospitality chain operates in more than 800 cities in 80 regions, including India, the US, Europe, UK, Middle East, Southeast Asia, and Japan.
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