With 15x YoY growth, OYO Rooms now claims to be profitable

According a recent report shared by the OYO Rooms team, the company claims to have reached a unit level profitability, which means, on an average, they are making profit on every room sold. Currently, the average booking rates of the rooms range from Rs 1,400 to 1,800. Ritesh Agarwal, Founder and CEO of OYO, says that their team has delivered a 15x YoY growth with 2.3 million booked room-night transactions in the first quarter of 2016.

Ritesh added that over 95 per cent of their traffic comes via their own sales channels. Delhi, Hyderabad, Kolkata, and Gurgaon are believed to be the key cities driving profitability. The team now plans to grow deeper in their key business and triple their inventory by the end of this year.

In the recent past, as an answer to the different customer complaints that were raised against the budget hotel aggregator, the team had taken a step back and worked out on weeding out the unnecessary and built strong technical and manpower backing to deal with the issues. Today OYO has clocked over five million app downloads. In January, the team also launched OYO Bazaar, a marketplace for hotel supplies in Delhi and Gurgaon.

The key purpose of this initiative is to leverage its ability to generate bulk business and drive better cost-effectiveness for partners. OYO uses its platform to provide partner-hotels access to best quality products required for day-to-day running of hotels. Ritesh adds that it takes away procurement hassles enabling the hotelier to focus on core hospitality business development.

The SKUs were basically limited to the linen category only and as of March, the team launched a refurbished website in Haryana, Punjab, Himachal Pradesh and Delhi. They added 10 suppliers and 180 SKU’s across linen-items, LED lights, and maintenance services.

The team intends to make this platform a one-stop solution for hotels to order any item required for smooth operations. The number of SKUs listed in the platform is slated to touch 500 SKus in the next couple of months, and the category coverage will also increase to include cleaning supplies, crockery, bathroom wares, and room and kitchen appliances.

The industry

According to several reports, the budget hotel aggregation market is believed to be somewhere between $20 billion and $40 billion. Apart from OYO, Treebo, Wudstay, Zip Rooms and Stayzilla are major players in the domain. Even biggies like Paytm are entering the space. Qik Stay says that it’s looking at capturing close to one-fourth of this market size. Its expected revenue for FY17 is Rs 180 crore.

The newer players are not only giving OYO a stiff competition, but they are also making veterans like MakeMyTrip and Goibibo tighten their belts.