OYO CEO Talks IPO, Funding As Hotel Startup Fights To Recover

After expansion woes and COVID-19 setbacks, Indian-based OYO – a hotel chain heavily backed by Japan’s SoftBank Group – is on its way back, the CEO says. Bloomberg News reported that Ritesh Agarwal, Oyo’s founder and CEO, recently told employees that the Indian startup has about $1 billion in cash, is recovering from the effects of the pandemic and is still looking toward an initial public offering (IPO).

“Our management’s focus is to make sure that we have a well-designed, IPO-ready company, available for our shareholders and board members to make the right decision," Agarwal said in a recent fireside chat, according to a transcript Bloomberg reviewed.

While OYO has never been profitable, losses widened last year as the SoftBank-backed company expanded in China at the urging of SoftBank, which Bloomberg said led to mistakes and soured partnerships. OYO had expanded heavily into China in 2018 and 2019, making that country its second-largest market behind India. But on the heels of OYO's heavy losses, COVID-19 slammed the travel industry worldwide. During the summer, SoftBank sent officials to help OYO get back on its feet.

The startup was particularly hard hit in Japan, where OYO is in a joint venture with SoftBank's domestic telecoms unit. The company had to close offices in Japanese provincial centers and laid off many of its employees worldwide, including most of those in the United States. All told, OYO has slashed its workforce by about two-thirds (10,000 employees), per Bloomberg.

But things are apparently looking up. Bloomberg quoted Agarwal as saying in his fireside chat that OYO is now working to get revenue per available room up to 60 percent to 80 percent of pre-pandemic levels. India, China, Japan and Southeast Asia are making progress in reaching that range, he added.

“We are still not at the best place; a lot more work has to be done," Agarwal said. But he added that “we continue to hold close to a billion dollars of cash” to fund operations.