OYO’s rapid expansion contributed to a high loss in its surging revenue for FY19

OYO startup India finally now applies the brake to its speeding expansion carrier and decides to cut down its spending. The budget hotel and lodging startup incurred a loss of $335 million on $951 million in revenue globally for the financial year ending March 31, 2019.

The six-year-old startup is headquartered in India, which is currently operating in more than 800 cites in 80 nations with around 43,000 hotels and over a million accommodating rooms. The company’s aggressive expansion leads to the surge in revenue but also widened the loss that makes the startup grows more cautious.

Abhishek Gupta, Global CFO of OYO Hotels & Homes, in a statement said, “The six-year-old startup’s growing revenue, up from $211 million in the financial year ending March 31, 2018, is in line with the company’s ambitions to be in a clear path to profitability this year.”

“These markets constituted 36.5% of the global revenues. While consistently improving operating economics in mature markets like India, where it already sees an improvement in gross margins, the company is determined to bring in the same fiscal discipline in emerging markets in the coming financial year,” he added.

But according to the reports, the startup is incurring huge losses, and its consolidated loss increased to 35% in FY19 from 25% in FY18. In India alone, OYO had generated a revenue of $604 million for FY19 but has decreased its loss just by 10% to $83 million, which means the company is facing aggravated damage.

OYO has been responding to the issues faced for its aggressive expansion, and clearly, the startup was highly aimed at spreading the brand worldwide. Many analysts have also claimed that how OYO is expanding is not sustainable, but it didn’t stop.

In recent months, Oyo executives have acknowledged that the startup grew too fast and is confronting a number of “teething issues.” Oyo has laid off at least 3,000 employees, mostly in India, in last three months, as reported by Tech Crunch.

The company now begetting these losses has made up the mind to grow more cautiously, giving the aggressive expansion manner a slow. According to a report documented by the New York Times, OYO, apart from rebranding and renovating independent budget hotels is also engages in doubtful ways of registering new places.

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