Skift Take
Ritesh Agarwal revolutionized the budget hotel industry in India. Oyo has transcended its status as a brand to become a shorthand for budget-friendly hotels.
Key Points
- Ritesh Agarwal started Oyo at 20, making it a leading budget accommodation platform.
- Oyo has faced controversies, including fines and disputes with hotel owners.
- The company achieved its first net profitable year in fiscal 2024 but saw a valuation drop in the latest funding round.
Summary
Ritesh Agarwal, founder and CEO of Oyo, launched the budget accommodation platform in 2013 at the age of 20. Despite facing numerous controversies and financial hurdles, Oyo has grown into one of the largest hospitality chains. Agarwal's public presence has increased, especially with his role on Shark Tank India. The company recently withdrew its IPO application to focus on refinancing but achieved its first net profitable year in fiscal 2024. Oyo's latest funding round saw a valuation drop, highlighting ongoing financial challenges.
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The story of Ritesh Agarwal, founder and group CEO of Oyo, is pure Bollywood material: A small-town kid from Rayagada, Odisha in eastern India, drops out of college to chase the entrepreneurial dream. In India, where education is considered incomplete without a college degree, this is almost revolutionary.
At just 20 years old, Agarwal launched Oyo Rooms in 2013 as a platform for booking budget accommodations. His focus on affordable hotels quickly transformed Oyo into one of the largest hospitality chains, making Agarwal the poster boy of Indian start-ups.
Today, when he’s not dishing out business wisdom, you can catch him judging on Shark Tank India. Since his TV debut, the once-reticent Agarwal has become a social media regular. Despite so many irons in the fire, Agarwal’s focus is still very much on Oyo.
Of course, Oyo has had its share of controversies, from being fined $200,000 by California regulators to receiving a cease and desist order from Washington. Oyo also faced backlash from 10,000 hotel owners in India, who alleged that Oyo takes up half or more of the revenues through fees that are not disclosed at the time when the hotels join Oyo.
The company that had plans to go public for almost 3 years now, withdrew its IPO application in May, citing a need to complete refinancing first. The IPO is still on the table, just on hold for now. In a May town hall, Agarwal announced that Oyo achieved its first net profitable year in fiscal 2024, with an adjusted EBITDA of $107 million.
He also revealed that private investors are knocking on Oyo’s door, and a small equity round at a $3-4 billion valuation might be in the cards to reduce debt.
Recently, Oyo raised $175 million in a down round, primarily led by Patient Capital, a Singapore-based entity established by Agarwal. However, the latest funding round has seen Oyo’s valuation drop to $2.4 billion, which is below the total capital raised, estimated to be around $3.3 billion.
Ritesh Agarwal at Skift India Summit
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