Hospitality major Oyo is set to report its first-ever profit in the second quarter of the financial year 2023-24, according to an email from CEO Ritesh Agarwal to the company's top management. The projected profit after tax (PAT) is expected to surpass Rs 16 crore (Rs 1 crore = $120,175).
Agarwal noted that the company achieved operational profitability in the financial year 2022-23, with an adjusted EBITDA of approximately Rs 277 crore. This progress was attributed to a focus on core markets, centralisation of key functions, cost-optimisation initiatives, divestment, and rationalisation of non-core businesses.
The company's revenue from operations increased by 14% to Rs 5,463 crore in 2022-23, up from Rs 4,781 crore in 2021-22. Oyo also managed to reduce its losses to Rs 1,286 crore during this period. It's adjusted gross profit margin rose to 43% of revenue and its adjusted gross profit increased by 23% to Rs 2,347 crore in FY23 from Rs 1,915 the previous year.
The firm reduced its number of hotels from 18,037 in FY22 to 12,938 in FY23 as part of a quality-focused strategy. Despite this reduction, Oyo maintained the largest footprint in terms of hotels in India and Southeast Asia compared to other short-stay accommodation providers as of June 2023.
According to Agarwal, Oyo's gross booking value (GBV) increased by 25%, reaching almost Rs 10,000 crore. The GBV from the hotel business accounted for nearly Rs 6,172 crore of this total, marking a year-on-year growth of 35%. The GBV per storefront on hotels also saw a record increase of 82% to Rs 399,000 in FY23, up from Rs 219,000 the previous year.
In his email, Agarwal emphasized Oyo's shift from a value-first offering to an experience-first offering for customers. Initiatives like 'Spotless Stays' and 'Super Oyo' have already been piloted across more than 250 hotels, leading to a 35% improvement in customer satisfaction scores.
Oyo sees significant potential in future growth markets such as the U.S. and the U.K. The CEO also revealed that the company turned cash flow positive in the fourth quarter of FY23, ending the quarter with surplus cash flow of nearly Rs 90 crore.
Earlier this year during an employee townhall, Agarwal had projected that Oyo expects to achieve an adjusted EBITDA of nearly Rs 800 crore in FY24.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.