External Article 8 February 2019
The business of budget hotels is hard, looking at Oyo’s latest financial report. But the startup, now five years in operation and bankrolled by SoftBank, appears to have the stamina to reach the breakeven point in the next few years.
One of the most intriguing chains in hospitality today is Oyo, the India-based enterprise started by a college dropout that has since raised more than $1 billion in funding. Its rapid expansion has stoked skeptics who continue to watch the operation closely, especially this week with news it had entered the U.S.. So it’s with great interest that the industry looks at Oyo’s newly released financial report for 2018, which shows it still has to expand a lot more in order to break even. Here are five key takeaways from the numbers.
1. BUDGET HOTELS ARE BIG MONEY
The jury is no longer out on whether budget hotels can rake in big money. Oyo roped in total sales of $1.8 billion from 75 million room nights globally last year, which translates to an average rate of $24, a true budget category as opposed to economy brands, such as Ibis or Holiday Inn Express.
It also proves that this segment can be scaled quickly and efficiently through automation and digitalization. From a single hotel in May 2013, Oyo has over 8,500 hotels with a total of 458,000 keys as at December 2018.