Skift Travel News Blog

Short stories and posts about the daily news happenings around the travel industry.

Online Travel

Oyo Still Keen to Pursue IPO Setting Mid-February Deadline for Refiling

1 week ago

Keen to pursue its long-anticipated initial public offering (IPO), hospitality tech company Oyo has said it would be refiling its draft red herring prospectus with the Indian stock market regulator Securities Exchange Board of India (SEBI) by mid-February.

While the company refused to offer any estimation of the time it expects SEBI to take for the approval, a source close to the company said Oyo hopes to get the approval by April 2023.

“After the approval comes in, Oyo will gauge market conditions and the path to profitability and then decide on launching the IPO,” the source said speaking to Skift.

Asked to hint at a timeline for the launch of the Oyo IPO, the source said it would well be within this year.

The market regulator had on December 30 asked Oyo to refile the draft prospectus, updating all the relevant sections such as risk factors, key performing indicators, outstanding litigations and basis for offer.

The company had earlier indicated that the process of refiling the document could take up to 2-3 months.

Oyo’s last submission to SEBI was the updated financial results of the first half of financial year 2022-23.

Updating its draft red herring prospectus with results for the first half of the 2023 financial year in November, Oyo had reported that its adjusted earnings before interest, taxes, depreciation, and amortization for the second quarter grew eight times from $860,000 in the first quarter to $7 million primarily driven by a 23 percent quarter-on-quarter rise in gross booking value per hotel.

The letter from the market regulator to Oyo read, “The disclosures contained in the present draft red herring prospectus do not take into account the material changes/disclosures arising from updated financial statements as filed through
addendums leading to revised period for disclosures which in turn leads to necessities to make material updates in risk factors, basis of offer price, outstanding litigations and update other relevant sections of the prospectus.”

Sharing the progress on the refiling exercise, an Oyo spokesperson said, “We are working on updating all key sections simultaneously. Responsibilities have been divided among different teams,
with senior company leaders driving the collaboration with the book running lead managers, essentially the initial public offering bankers, the lawyers and the auditors. We are keen on refiling the draft prospectus by mid February if not earlier.”

The Indian market regulator’s move seems to be in line with its expectation of higher levels of transparency in the initial public offering process.

Lately, it has asked companies to share additional key performing indicators and the basis for pricing of IPOs. In its meeting with bankers in December 2022, SEBI had also shared steps it is taking to reduce the IPO processing time which has increased to 113 days.

Hotels

Oyo Hits Reorg Button: Lays Off 600 Employees Across Tech and Product

2 months ago

Oyo, in preparation for its upcoming IPO in 2023, is doing a major reorg of its organizational structure and cost base. It has announced it is letting go of 600 employees out of a total of about 3700, mostly in its product and tech teams. From the company:

“Oyo is downsizing its product and engineering, corporate headquarters and the Oyo vacation homes teams, while it adds people to the partner relationship management and the business development teams. Oyo will downsize 10% of its 3700-employee base, which includes fresh hiring of 250 members and letting go of 600 employees…The downsizing in tech is also happening in teams which were developing pilots and proof of concepts such as in-app gaming, social content curation and patron-facilitated content. Additionally, members of projects which have now been successfully developed and deployed such as ‘Partner SaaS’ are being either let go or are being redeployed in core product & tech areas such as AI-driven pricing, ordering and payments.”

Exterior of an Oyo Hotel in London
Exterior of the Oyo Sino Hotel in the Shepherds Bush neighborhood of London.

OYO, as a part of its integration of various functions of its European vacation homes business progresses, is downsizing in some parts of the business to increase efficiency and harness synergies, the statement added. The startup has also reassessed its corporate headquarter base and is merging roles and flattening team structures.

Tags: india, ipo, layoffs, oyo

Online Travel

India Competition Watchdog Hits MakeMyTrip and Oyo With $47 Million in Sanctions

3 months ago

India’s competition watchdog has fined online hotel-booking company MakeMyTrip Group about $27 million (₹223.48 crore) and hotel chain Oyo about $20 million (₹168.88 crore) for anti-competitive behavior.

The Competition Commission of India (CCI) has been investigating the companies since 2019, after a hotel body alleged that MakeMyTrip gave biased preference to SoftBank-backed Oyo on its sites and mobile apps.

OYO and MakeMyTrip said they were reviewing the order. Both companies said they believed their business practices were fair and lawful.

Some backstory, first: In October 2015, MakeMyTrip blocked its main competitor in the budget category, Oyo, from displaying listings on its site and apps.

MakeMyTrip had boycotted Oyo to nurture its attempt at branded budget booking properties, GoStays, and because it didn’t like how Oyo was using deep discounting to woo travelers to book directly instead of via agencies.

But the record-breaking growth, fueled by record-breaking funding, appeared to prompt MakeMyTrip to change its mind about the fight.

Smaller Oyo competitor brands, such as Fab Hotels and Treebo, disappeared from MakeMyTrip’s sites and apps.

In 2019, a major hotel lobby, the Federation of Hotel and Restaurant Associations of India (FHRAI) alleged that there were deals between Oyo and MakeMyTrip that gave preferential treatment to Oyo and thus were restricting market access to rivals such as Fab Hotels and Treebo and some other independent hotel operators with franchises in these brands.

“The Commission is of the view that the commercial arrangement between OYO and MMT-Go which led to the delisting of FabHotels, Treebo and the independent hotels, which were availing the services of these franchisors, was anticompetitive,” the CCI said in its order, accusing MakeMyTrip Group of misrepresentation the information on its site as being comprehensive and fair.

It was alleged that MakeMyTrip Group charged exorbitant commission brokerage fees to be listed for smaller players while offering Oyo comparatively favorable terms.

The commission held that MakeMyTrip and its sister brand GoIbibo held 63 percent of the domestic hotel online market share in 2017, which was the last time a new entrant, HappyEasyGo, debuted in the market.

Parity provisions in contracts, combined with discounting by online travel brands, were another area that the commission critiqued.

MakeMyTrip Group has put into contracts with hotel suppliers requirements for price parity hotel partners, where hotels can’t sell their rooms at any other online travel agency or on their own direct booking channels at rates below MakeMyTrip Group’s. Yet the online travel company retains its right to flex rates up and down to drive demand, such as offering rates below the average room rate.

It is likely MakeMyTrip Group and Oyo will appeal the regulator’s decisions.

Among their many complaints, the companies said in recent statements the investigation is devoid of any useful economic analysis and several concepts have been wrongly applied. MakeMyTrip Group also said it cannot be considered dominant in the online booking market when one looks at the bigger picture.

Online Travel

SoftBank Slashed Oyo Valuation 20 Percent

4 months ago

SoftBank Group has reportedly cut the valuation of Indian hotel-booking platform Oyo by more than 20 percent, Bloomberg reported on Thursday quoting people familiar with the matter.

According to the report, the Japanese investor, who owns 45 percent of Oyo, cut its estimated value for initial public offering-bound Oyo to $2.7 billion in the June quarter from an earlier $3.4 billion. In 2019, Oyo had been valued at $10 billion.

The $2.7 billion valuation is lower than the $3.23 billion that Oyo has been able to raise through primary and secondary equity and debt funding rounds from investors. 

Calling the valuation markdown a speculation and “patently incorrect,” Oyo said that having clocked $1 million in earnings before interest, taxes, depreciation, and amortization in its fiscal 2023 first quarter, there is no rational basis for a markdown.

“A 41 percent gross profit margin and a 45 percent increase in gross booking value per hotel per month compared to the last financial year are dramatically improved results and the strong performance trajectory is expected to continue,” Oyo said in a statement.

Earlier this week, Oyo updated its initial public offerings application to the Indian regulatory body — Securities and Exchange Board of India (SEBI). The company originally planned to raise around $1.16 billion through the initial public offering, seeking a valuation of around $12 billion.

Oyo said that SEBI has given the company permission to file updated financials till the September 2022 quarter and Oyo would initiate the approval process post the filing of its audited numbers. “We have not decided the exact timing for the IPO and the IPO valuation is also highly speculative,” Oyo added.

Business Travel

Oyo’s Homeground Boost From 1,250 New Corporate Customers

8 months ago

Oyo has said it has won 1,250 corporate clients in the past three months across India, as business travel recovers in the country.

The new wins come from small and medium enterprises, traditional business houses and conglomerates, startups and travel management companies. Film production houses have also emerged as a key customer category, it said in a blog post on Wednesday.

The company added that it had engaged with 2,800 offline travel agents since January 2021.

Top cities include Bangalore, Hyderabad, Mumbai, Chennai, Ahmedabad, Kolkata, Pune and Delhi.
Its Business Accelerator division has serviced over 6,600 corporate clients since January 2021, it added.

“The appetite for business travel has returned strongly since the frequent change in travel restrictions has ebbed, making travel planning for business trips more certain and predictable. For a lot of our corporate customers, conducting business over virtual meetings was a stop gap and sub-optimal solution,” said Ankit Gupta, CEO of OYO, India.

Compared to leisure bookers, the startup’s business customers receive curated stay options, personalised customer support and integration with their accounting system.

The extra boost comes as Oyo delays its IPO — potentially until 2023. Earlier this month Oyo acquired Dubrovnik, Croatia-headquartered Direct Booker, which has 3,200 homes.

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