Hospitality unicorn Oyo Hotels and Homes founder Ritesh Agarwal said the company has more than $1 billion in cash, which is enough to run its business for at least three more years without raising capital and clarified that the company does not plan to exit any of its markets at present, despite the collapse in the hotel business globally following the coronavirus outbreak.
“We have the necessary capital runway beyond 3-4 years, considering the cost restructuring and the minimal revenue estimates that we expect. We do not anticipate raising any more capital,” Agarwal said.
Oyo, which has a footprint in 80 countries, has of late been cutting costs to conserve cash. Towards this end, the company cut thousands of jobs, reduced salaries, and put employees on furlough.
A significant part of Oyo’s capital allocation has gone into the Indian, European, and South-East Asian markets and strategic investments have been made in the US and China, Agarwal said. Now, the company aims to invest heavily in the staycation and long-stay category.
The hospitality unicorn, which banks heavily on hotel stays and vacation homes, saw its revenue drop by more than 60% from March. However, the company said it is seeing some recovery in China and some European countries, which have started reopening their economies after flattening the curve of transmissions.
Oyo was registering occupancy rates of 60-65% in China before the coronavirus outbreak. However, the figure in the country, its second-biggest market after India, dipped to below 20% during the crisis and is now at about 50%.