Hold on to your hats because change is in the air in the hospitality industry! The parent business of the well-known OYO brand, Oravel Stays Ltd, recently made a shocking announcement: they plan to report their first profitable quarter in Q2FY24, with a predicted profit after tax (PAT) topping Rs 16 crore. This isn’t simply thrilling; it’s also a crucial part of OYO’s narrative. Please fasten your seatbelt as we explore the fascinating intricacies of this remarkable turnaround and what it means for the business.
Credits: Republic World
FY23 – The Year That Sparked the Revolution
Picture this: OYO, the industry disruptor, achieved operational profitability in the fiscal year 2023. It’s not a dream; it’s real. With an Adjusted EBITDA of approximately Rs 277 crore, OYO proved it was serious about turning the tide.
Skyrocketing Revenues and Taming Losses
The road to profitability for OYO wasn’t all roses. The company outperformed FY22 with a startling 14 percent increase in operating revenue, which increased to almost Rs 5,463 crore in FY23. Additionally, OYO wasn’t simply interested in revenue development; they also wanted to tame the losses dragon. And they succeeded in doing so, reducing their losses to Rs 1,286 crore, demonstrating their unwavering dedication to financial restraint.
Powering Up Profit Margins
But wait, there’s more. OYO didn’t stop at revenue and loss numbers. They cranked up their gross profit margins like a turbocharged engine. In FY23, the Adjusted Gross Profit Margin revved up to a dazzling 43 percent of total revenue. And if that wasn’t impressive enough, the Adjusted Gross Profit surged by a whopping 23 percent, racing ahead from Rs 1,915 crore in FY22 to Rs 2,347 crore in FY23. Talk about financial horsepower!
Where Customer Experience Takes the Wheel
Beyond the spreadsheets and balance sheets, OYO is shifting gears toward a customer-centric experience. No longer just about value, it’s now about creating memorable stays. Initiatives like ‘Spotless Stays’ and ‘Super OYO’ are blazing the trail. ‘Spotless Stays’ isn’t just a catchy name; it’s a game-changer, elevating customer satisfaction scores by a jaw-dropping 35 percent. There are now over 1,000 hotels tagged as ‘Super OYO’ across 140 Indian cities, promising a superior experience. And if that’s not enough, OYO’s premium portfolio, ‘Palette,’ is here to redefine luxury. Customer service ratings for OYO hotels in India have soared to 4 out of 5 in 2023, up from 3.5 in 2022. It’s a true hospitality revolution!
A Glimpse into the Crystal Ball
Hold on to your seats; we’re not done yet. Moody’s, the global ratings agency, sees sunny skies ahead for OYO. They’re forecasting OYO to stay in the black for FY24, expecting a roaring EBITDA of around $50-$55 million, even after accounting for shared-based payment expenses. Why the optimism? It’s a perfect storm of factors, including a hospitality industry demand comeback, a growing army of storefronts on OYO’s platform, and relentless cost-cutting.
And if Moody’s wasn’t enough, Fitch, another heavyweight ratings agency, has also jumped on the optimism train. They not only upgraded OYO’s rating but also predict a double win for FY24 – a positive EBITDA and Cash Flow from Operating Activities. Fitch points to a sharper reduction in operating costs, a rebound in travel and tourism demand, and steady gross margins as the drivers of this dual victory.
Meet the Players in this Drama
OYO: Founded in 2013 by the visionary Ritesh Agarwal, OYO has been the David taking on the Goliaths of the hospitality industry. From budget to premium, it’s transformed how we travel and stay.
Oravel Stays Ltd: The wizard behind the scenes, Oravel Stays Ltd, calls the strategic shots, steering OYO’s financial ship. And, of course, it’s captained by none other than Ritesh Agarwal, the man with the plan.
Finally, OYO’s path to financial success has been nothing short of amazing. It is a tale of creativity, self-control, and an unshakable dedication to providing extraordinary visitor experiences. The impact of OYO’s success goes beyond financial measurements and includes new industry benchmarks and a global shift in the expectations of what a stay should be. Get ready for the OYO era, a new phase in hospitality.