Oyo checks out from unviable ventures, assets

Bengaluru | New Delhi: Oyo Hotels & Homes is exiting from unviable ventures and assets in a bid towards consolidation and profitability, multiple people familiar with the development told The Economic Times.

Oyo has surrendered some co-working spaces across India and cut back on its co-living, rental housing business — Oyo Life — over the past 2-3 quarters to staunch losses and focus on its core hotels business, the sources said.

Oyo gave up two co-working spaces spread across 65,000 square feet in Hyderabad, besides others in Gurugram, Bengaluru and Mumbai, they added.


Under Oyo Life, the SoftBank Group Corp.-backed budget hospitality chain permanently closed over 4,000 beds across locations in the previous 2-3 quarters and converted over 1,700 beds to Oyo Rooms, they said.

Responding to ET’s queries, Ankit Gupta, CEO, Frontier, Oyo India and South Asia, said the company had “optimised” its supply network and exited properties that were unprofitable or had been significantly impacted by the change in demand. Gupta, however, said that the numbers cited for Oyo Life were “inaccurate” and denied that some of the inventory had been converted to Oyo Rooms.

In the co-working segment, Gupta confirmed that the company had exited some properties that were impacted by the Covid-19 pandemic and had become unviable in the long run. “Having said that, we have also added a few centres in Noida and Bangalore in the past few months to sustainably grow this business. The co-working industry was severely impacted due to the prolonged impact of Covid-19. Oyo’s own initiatives in co-working were not spared,” he said.

Gupta also confirmed that the Ritesh Agarwal-owned startup had exited some co-working spaces in Hyderabad that were not profitable as demand trends in specific micro-markets had changed due to the virus outbreak.

A senior Oyo executive told ET on condition of anonymity that the company was realigning its businesses and had shut down loss-making properties.

“We are still identifying more properties as the focus is on profitability,” he said.

Another person familiar with the developments added that the missive was to let go of all bleeding assets and properties to become sustainable.

Gupta said Oyo had implemented a ‘strategic’ plan to optimise its supply partnerships, not only for hotels but also for other businesses. “This is more an optimisation exercise than one that cuts back or shuts down arrangements. Given the impact of Covid-19, we’ve evaluated our offerings from a lens of quality, scalability, cost viability and profitability & taken decisions to exit properties where we are not able to create value for our partners,” he added.

Another industry insider said Oyo was “clearing its mess” in the hotel business. “It does not want to expand into other categories much. 2020 was a washout year for the industry as people stayed back at home. Both hotels and the co-living business of Oyo took a hit due to work-from-home arrangements,” he added.

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The pandemic took a toll on many co-living and co-working operators, who had to reorganise their businesses. Oyo is one of them, another person said. “They had to shut down multiple properties across markets,” he added.