Oyo's losses are up six times; while its India numbers have improved, the firm is looking to focus on profitability and quality of services
Oyo’s losses ballooned more than six times year-on-year in FY19 to $335 million, possibly triggering the recent layoffs and streamlining of business in the startup. The company said revenues increased more than four times, from $211 million in FY18 to $951 million last fiscal. A lion’s share of that came from India. The domestic operations brought in $604 million while the rest came predominantly from China. The India operations lost $83 million. Gross margins from the India operations increased to 14.7 percent last fiscal from 10.6 percent in FY18.
The company seems to be focussed on sustainable growth and not reckless expansion. In a call with reporters, Oyo board member Aditya Ghosh said the company will not immediately expand to new markets. It has also stopped operations in about 200 Indian cities. The company is also focusing on quality of services. It had drawn flak from consumers for poor services at some of its premises.
More recently, a New York Times report highlighted Oyo’s toxic work culture spurred by a growth-at-any-cost outlook. That has changed. “As we work towards improving our financial performance, ensuring strong-yet-sustainable growth, high operational and service excellence and a clear path to profitability will be key to our approach in 2020 and beyond. The company’s increased focus on corporate governance and building a high-performing and employee-first work culture will also drive this next phase of growth,” Abhishek Gupta, global CFO at OYO Hotels & Homes, said in a statement.
(This story appears in the 13 March, 2020 issue of Forbes India. To visit our Archives, click here.)