Is OYO the next WeWork?

Oyo is learning that lightspeed growth is fraught with peril. The Indian budget hotel startup might be tapping the brakes on meteoric expansion plans to focus on profitability, better serving its main funding source, SoftBank and its suffering Vision Fund, and better prepare for an anticipated IPO. Another SoftBank-funded unicorn, shared-workspaces provider WeWork, recently aborted its planned IPO amid losses and criticism of management.

Oyo, with what it says is about 43,000 “hotels” worldwide and a valuation reported at US$10 billion, recently report a US$335 million loss for fiscal 2019, yet a 450% increase in revenue reaching US$951 million. As a result, it has announced staff reductions of approximately 1,200 in India (about 10%) and 500 in China to sustain the business.

Founder Ritesh Agarwal has stated its dynamic pricing model is not living up to expectations and that the group is working hard to add more data points to improve pricing decisions. It also has a lot of fence-mending to do with owners to improve public perception.Today’s tech-focused, quick-to-market model does have its challenges.

From: HOTELSMag, Jeff Weinstein