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Will OYO shut down unprofitable businesses with SoftBank’s deadline?

01/08/2020| 3:20:03 PM| 中文

About 8,000 hotels that OYO runs under franchised arrangements are not a part of these targets.

Taking lessons from failed IPO of coworking space provider WeWork and valuation downturn, Japanese investment conglomerate SoftBank has now tightened its noose on its major Indian investment, hospitality unicorn Oyo.

Reports have now surfaced that SoftBank has given Oyo deadline of March 31, 2020, to phase out contracts/businesses, which are not EBITDA-profitable. This has been attributed to the plans of Oyo to list publicly in the US in 2022-2023. However, this is in contradiction to Oyo chief Ritesh Agarwal’s public statements of having no plans to go public.

But the ET report has said that Oyo is now working on meeting the deadline by SoftBank to turn its business profitable. The company reportedly has a deadline of March 2020 to post positive EBITDA for its self-operated hotels and July 2020 as the deadline for positive EBITDA of its ancillary businesses.

It is to be noted here that Oyo’s self-operated business includes Oyo Townhouse, Silverkey, Collection O, Oyo Flagship and Oyo Homes, etc. These are nearly over 800 properties, where it reportedly makes investments with leasing arrangements with the owners of the properties.

Ancillary businesses include Weddingz.in, which it acquired in 2018 etc. The idea here is to shut down ancillary businesses that do not report an operating profit before end-July.

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TAGS: SoftBank | OYO
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