IPO-bound hospitality major OYO has ventured into agri stays, after a successful pilot in Kevadia, Gujarat. The startup will now focus on rural tourism, with the aim to bank on infra in the form of hotels, homestays and agri-stays.
In a series of tweets, OYO founder Ritesh Agarwal said, “Rural Tourism led by agri-home-stays will create additional sources of income for our farmers, which is an opportunity waiting to be unlocked to its true potential. OYO recently piloted such agri-farm stays in homes in Kevadia, Gujarat, which has garnered positive feedback from both guests & farmers. We hope with govt’s encouragement, support from industry peers, we can also help start such stays in other parts of the country.”
Homestays in India have been popular for a very long time. Now, as adventure seekers look for authentic ‘desh ki mitti’ experience, farm/ agri stays (essentially a homestay on a farm) are blossoming across the country. Popular agri stay destinations in India include Punjab, Kerala, Goa, Uttarakhand, among others.
According to Allied Market Research, the global agritourism market size was valued at $42.5 Bn in 2019 and is estimated to reach $63 Bn by 2027.
The agri stay pilot project for OYO comes amid the company’s IPO and a weak Gross Booking Value amid the pandemic. In the hospitality business, gross booking value (GBV) is a key indicator of the demand a hotel or the company attracts and its revenue flow. Hit by the Covid-19 pandemic, OYO’s gross booking value plunged by 67% to INR 6,638.89 Cr in the last financial year, from INR 20,088.37 Cr in FY20.
GBV from hotels and homes is defined as amounts payable by customers for bookings, post the deduction of cancellations and gross of discounts (such as loyalty points and OYO discounts) across all distribution channels, including OYO’s website, mobile app, call centres, third-party online travel agencies (OTAs) and other offline channels.
In October 2021, Oravel Stays, the parent company of OYO filed for an INR 8,430 Cr IPO that would include fresh shares worth INR 7,000 Cr and an offer for sale through which many existing investors are expected to offload their shares, amounting to INR 1,430 Cr.
As it awaits a SEBI approval for the IPO, OYO’s business has witnessed a downward trend with falling revenues. Continued losses and rising debt remain major concerns of the hospitality major. And to bring its business back on track and make its way to profits, it may have to make massive efforts going ahead, one of which is venturing into agri stay hospitality.