India's Oyo Hotels has $1b to see it through until an IPO
High-flying company took direct hit from COVID-19, and forced into tough decisions
Mumbai: Ritesh Agarwal, founder and CEO of Oyo Hotels, told employees the Indian startup is making progress in recovering from the coronavirus fallout and has about $1 billion to fund operations until an initial public offering.
The 27-year-old entrepreneur made the comments in a fireside chat with Oyo board member Troy Alstead, after the once high-flying company endured months of layoffs and losses as COVID-19 hammered its business. Oyo is one of the largest startups in the portfolio of SoftBank Group Corp., reaching a valuation of $10 billion before the downturn.
Agarwal said the company's focus is on getting revenue per available room to 60-80 per cent of pre-pandemic levels across all markets. India, China, Japan and Southeast Asia are making progress in reaching that range, he added.
Far from comfort zone
"We are still not at the best place, a lot more work to be done," Agarwal said, according to a transcript of the discussion seen by Bloomberg News. "We continue to hold close to a billion dollars of cash, including all our group companies."
Alstead, the former chief operating officer of Starbucks Corp., is an independent director.
Oyo's breakneck expansion, encouraged and financed by SoftBank founder Masayoshi Son, led to operational missteps and soured partnerships. The company ended up laying off or furloughing thousands of employees, cutting its overall headcount by two-thirds to about 10,000.
Agarwal told employees he has not felt any pressure from outside shareholders as he has cut back during the pandemic. Investors have "very strong" representation on the board and directors give input on the business, he said.
The founder, who in a highly unusual move borrowed $2 billion to buy shares in his own company, hinted he wants to get the business in shape for a public offering."Our management's focus is to make sure that we have a well-designed, IPO-ready company, available for our shareholders and board members to make the right decision," he said.