India-based hotel startup Oyo Hotels & Homes has seen a key financial figure rebound to 20% below pre-pandemic levels after falling as much as 60% earlier in the year, Chief Executive Ritesh Agarwal said.
Speaking at The Wall Street Journal’s Tech Live conference on Tuesday, Mr. Agarwal said the figure, which Oyo labels “gross margin,” was at its lowest around April, when business dried up globally amid the Covid-19 pandemic. Oyo defines the gross margin as the revenue that comes to the company after subtracting expenses at individual hotels within its network.
Oyo, which counts SoftBank Group Corp. among its major investors, rapidly grew to become one of the largest hotel brands in the world in recent years, listing over 1.2 million hotel rooms as of the start of 2020. When the coronavirus spread around the world, though, its business plunged along with the entire hotel industry.
Globally, Oyo has shrunk to around 1 million rooms, Mr. Agarwal said. Much of the decline has occurred in China, which has been a particularly tough market for Oyo amid the pandemic, he said.
The pandemic was “especially a big challenge for us,” Mr. Agarwal said, because the company had been growing so fast, nearly tripling its revenue in some years.
Oyo’s rebound has been buoyed by travelers staying in small hotels and vacation homes in Southeast Asia and Europe, Mr. Agarwal said. In Denmark, for instance, occupancy at vacation homes was previously lower than 75%, he said. Now, Oyo’s vacation home occupancy in the country is 99%.
The company isn’t profitable. Asked if it would need to rely on additional fundraising, Mr. Agarwal said Oyo has substantial amount of cash on hand. “We feel comfortable we have the capital to build our business for the forthcoming years,” he said.
Write to Eliot Brown at [email protected]
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