IPO-bound OYO has decided to focus on core markets as well as other markets such as China and U.S., the company said in a filing with the markets regulator.
The company said it was planning to come out with a $1.2-billion IPO.
Notwithstanding the impact of COVID on operations, the company had grown its business to more than 1.5 lakh store fronts – an industry term for hotels, homes, stay destinations and rooms – during the pandemic. In pre-pandemic times, OYO had expanded to all major markets, but post COVID, the company swiftly shifted its focus to its core growth markets where it had already established largescale presence.
It is also eyeing emerging opportunities in growth markets such as China and United States.
According to OYO’s draft red herring prospectus, such markets exhibit similar characteristics to its core growth markets and are ripe for disruption through technology.
The company said its demonstrated strength and established market position would drive a measured growth in these markets.
According to the DRHP, while OYO’s earlier business model focussed on fixed revenue commitments to patrons, it is now aiming to bring down the number of such contracts to almost zero.
As a result, more than 99% of its store fronts no longer have contracts with minimum guarantees or fixed payout commitments.
Any investment, capital expenditure, store-front employee cost or operational expenses are incurred by the property owners or operators, thereby making the company more capital-efficient.
The recent changes have accelerated adoption of technology across the line of company’s operations.
It now nearly manages its entire interaction with business partners through online modes and technology-based marketing channels like OYO Saathi re-seller model and OYO 360 self-sign up model.
As per the DRHP, such factors have contributed towards a rapid expansion in business network and increased its store-front supply in a cost-effective and scalable manner.
Investments in building technology have enabled further automation and improved quality of services to its customers which have contributed towards improvement in unit economics, which have grown from 5.1% in FY20 to 18.4% in FY21, as per the DRHP.
