Indian Hotel Platform Oyo Rolls Back Global Expansion Plans

Indian hotel platform Oyo is scaling back its international ambitions as it pulls out of the U.S. and European markets and severs its Latin American partnership, the Financial Times (FT) reported on Monday (March 1).

The unicorn startup, which was founded in 2013, recorded monthly losses of $15 million last year as the worldwide pandemic shuttered most hospitality businesses and grounded international and vacation travel. The company has slashed its global workforce of 30,000 by more than 65 percent, and its biggest backer, SoftBank, reduced Oyo’s valuation to $3 billion — $7 billion less than 2019.

“Growth will be moderate in comparison to what it was earlier,” Ritesh Agarwal, Oyo founder and chief executive, told FT. The company’s previous global ambitions of getting a stronghold in China, the U.K. and the U.S. would be scaled back.

Oyo, which launched in China in 2017, was among the country’s biggest hotel franchises. It rolled out in the U.K. in 2018 and the U.S. in 2019, according to FT. Its European expansion came about with the $415 million acquisition of @Leisure.

At one time, the company said it had 1.2 million rooms available in 80 countries. Oyo expanded by collaborating with independent entrepreneurs who needed help competing against big franchises. The platform’s swift expansion was causing some big issues even before the pandemic hit, per FT.

Oyo’s original policy guaranteed hotel partners a minimum monthly payment, but that proved impossible once COVID-19 took hold. The company has now moved to a revenue-sharing model. FT reported that the company’s financial year-end was March 2020, but results have not yet been reported. In 2019, Oyo recorded a net loss of $335 million, significantly more than in previous years.

Oyo Japan, which was formed by a joint venture between Oyo and SoftBank’s domestic telecoms unit, got additional funding from SoftBank in August to help it stay afloat during the pandemic. In December, Agrawal said Oyo was considering an initial public offering, even though it had never been profitable.