Company continued to hold on to close to $ 1 bn cash, tracked to runway very closely: Oyo founder Ritesh Agarwal to employees

NEW DELHI: SoftBank backed Oyo Hotels & Homes founder Ritesh Agarwal has told employees in India and other global markets that ‘the company has continued to hold on to close to a billion dollars of cash, including all group companies, and at the same time has tracked to runway very closely.’

Agarwal was talking to employees in India, US, Japan, China and other markets in a ‘fireside chat’ session alongside board member Troy Alstead and India CEO Rohit Kapoor.

“The management’s focus is to make sure that we give a very well designed, IPO ready company, available for our shareholders and our board members to make the right decision,” he said as per the transcript of the session seen by ET.

Agarwal said the right time to go ‘out’ is a decision of the board to make.

“From the management side, we’ll be ready to make sure that we build a company that is ready to go public. And we will look at various things like the market situation, opportunities outside and so on, that the board will consider and then potentially help advise on the timeline,” he added.

Kapoor said the chain is seeing a 30% month on month growth from August onwards. “And we are back to about 40-45% of our used room nights in India. But the good news is our gross margins are back to more than where they used to be because of the way we have redesigned the P&L of the company completely…. Today, we stand at almost 90% prepaid model for partners.. Completely different model of revenue share, completely different model of operations. The operating cost in our books today is zero, the hotel operating costs,” he added.

Following the onset of the pandemic in India, and stating its hotel revenues had been adversely impacted, Oyo cited ‘force majeure’ and suspended payments of monthly benchmark revenue or any other amounts payable to hotel owners on the minimum guarantee model in India. Oyo proposed a revenue share model under which it will charge them 10% of net revenue generated on accommodation besides other sales and marketing costs, channel charges and customer acquisition expenses.

In September, Oyo Hotels & Homes announced its employees on the leave with limited benefits plan in India will have to either opt for a voluntary separation programme from the company or continue with the existing plan till February, 2021. “We don’t quite know when our occupancies and revenues will recover to pre Covid levels. In such a situation, we do not foresee any more roles opening up anytime soon,” Oyo had said in a blog post.

Oyo’s global chief human resources officer Dinesh Ramamurthi had told ET Oyo India had to place approximately 2000 on roll employees on the leave with limited benefits plan in April.

Agarwal said in the fireside chat that the company made a decision in March this year that it will focus on two core businesses: hotels and holiday homes and that holiday homes have become a ‘large meaningful’ part of its revenues, bottom line profits and room numbers.

“Today, we manage close to 400,000 rooms as a part of our Oyo Vacation Homes business if I include all our brands, Belvilla, Dancenter, Traum and Ferienwohnungen that have become part of our family. …very few people know how big the Vacation Homes business is becoming. And it’s becoming increasingly important from an Oyo global perspective,” he added.

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