India: Hospitality brand OYO has posted losses of $335 million for the year ending in March 2019, representing a 544 per cent loss increase from its 2018 figure of $53 million.
The hospitality group claimed that most of this growth was due to the cost of international expansion, primarily into their secondary market of China. The late date of the financial posting is due to the Indian legal system, which has less immediate requirements for corporate financial disclosure.
This expansion has come under criticism, especially with recent news of massive layoffs within the core Indian and Chinese markets. The policy of aggressive expansion and high losses has evoked comparison to fellow SoftBank portfolio company WeWork.
These financials did reveal certain positives, however. Primarily, revenues for the company tripled in the posted results, going from $211 million to $951 million.
Furthermore, the company’s Indian results foreshadow the building of a strong base. The company’s losses dropped by ten per cent in the country, while revenues grew 2.9 times to $604 million.
The Indian market’s share of OYO’s global revenues has dropped to 63.5 per cent, demonstrating a diversification of the company’s market.
Board member Aditya Ghosh said: “We are on the path to profitability. We haven’t set a timeline for profitability, but revenues are growing, losses have halved and margins are looking healthy.”
The company’s downsizing has been in areas that represented low revenues for the company, according to India CEO Rohit Kapoor. Its gross margins have risen to 14.7 per cent from ten per cent the previous year.
Its Middle Eastern rental segment, however, has been a target of layoffs with Dubai based Gallery Suites offering to purchase the company’s investment.