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Rooms and reservations: what Oyo’s DRHP tells and does not tell us about its business

The Oyo Pier Hotel on February 21, 2021 in Denbighshire, UK.

Synopsis

A tech platform for small hotels executing a scalable, high-margin, revenue-sharing business model and addressing a large global opportunity — sounds exciting. Oyo has only about 1% of the unbranded small hotels, homestays, and other short-stay facilities under its brand. So, the prospects of growth and profitability are high. But a scan of the fine print presents some points to ponder.

Oyo’s IPO pitch is simple: In the worst year for the hospitality industry, we became lean and fit. Now, with travel opening up, we are in a position to reap the benefit for all the streamlining we have done.The scrapping of minimum guarantee for hotel partners; retreat from the highly loss-making China and US markets; reduction of the workforce to a fourth of its peak; and shutdown of self-operated hotels have made Oyo’s business fairly simple.

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