Ritesh Agarwal, founder and CEO, said OYO is focused on execution
He said that the team remains fixated on growth
OYO said it has seen a 3.8x YoY growth in revenue in Aug 2019
One of the shining stars of Masayoshi Son’s Vision Fund portfolio, OYO Hotels and Homes, has been expected to yield rich returns for the company. SoftBank has poured in billions in the company, however, a public listing doesn’t seem like the happy exit which it will get with OYO.
In an interview with CNBC, Ritesh Agarwal, founder and CEO of OYO said, “OYO has no plans for an IPO because we are focused on execution.” The execution being referred to is the rapid expansion spree of OYO.
The six-year-old company has a portfolio of more than 35,000 hotels and 125,000 vacation homes, and over 1.2 Mn rooms across 80 countries and 800 cities. Its verticals vary from holiday homes, casino hotel and coworking spaces to budget hotels, corporate stays and more.
Recently, while announcing plans to raise $1.5 Bn funding, OYO said it has seen a 3.8x YoY growth in revenue in Aug 2019 (vs. Aug 2018), with 1.2 Mn rooms under management across hotels and homes. The company said it has a strong balance sheet of $2 Bn across group companies, a significant part of which will be further invested in the business.
Agarwal reportedly said that for the last three years, the company has cut its losses in half every year while increasing its revenues. “We are comfortable we are on the right path,” Agarwal said.
Regarding profitability, Agarwal said it is “only a matter of time before getting there.” He said that the team remains fixated on growth, penetrating new markets while creating a strong brand name in the US.
OYO’s path to profitability is under the spotlight, especially after the mayhem caused by the IPO of WeWork and Uber. The windfall start to Uber’s public listing and WeWork’s postponement of IPO plans and ouster of CEO have created further trouble for the Japanese conglomerate SoftBank.
Last month, Son in a private gathering of portfolio companies told chief executives to focus on profitability now and build the business accordingly. Son told portfolio company leaders that public investors aren’t going to tolerate gimmicks, like super-voting rights or complicated share structures, that privilege founders over other stakeholders.
Son has been facing a huge wave of criticism for his WeWork investment and is unhappy with how short his accomplishments till date have fallen off his goals. But Agarwal says, “Masa is one of the most visionary leaders of our generation. He invested in Alibaba, Yahoo Japan. We remain inspired by him. I attribute a lot of our growth to him.”
Agarwal said when OYO was expanding in China, Son’s team played an instrumental role in the launch. Agarwal and Son’s relationship is well-known, with Son holding large stake in OYO as well as recently helping Agarwal in financing a buyback in the company.
However, as surprising as it is to know OYO is not looking for an IPO, the company’s path to profitability is marred with unhappy hoteliers and controversies.