OYO Pre IPO & IPO Outlook: Capitalizing on the Booming Short-Stay Accommodation Market

 Oravel Stays Ltd., widely recognized by its brand name OYO, operates a global online hotel booking platform, Oyorooms.com. The platform offers affordable accommodation options with amenities such as air-conditioned rooms, clean linens, breakfast, WiFi, cable TV, and private washrooms. Customers can conveniently book rooms through OYO's mobile application, known for offering value-for-money stays.

Currently, OYO manages over 43,000 properties with a portfolio of 1 million rooms spread across 800 cities in 80 countries. This expansive global presence includes markets like India, Malaysia, the UAE, Nepal, China, Brazil, Mexico, the UK, Philippines, Japan, Saudi Arabia, Sri Lanka, Indonesia, Vietnam, and the United States, making OYO a leading player in the hospitality sector.

The company has attracted investments from major global entities such as SoftBank Group, Didi Chuxing, Greenoaks Capital, Sequoia India, Lightspeed India, Hero Enterprise, Airbnb, and China Lodging Group. These strategic investments have fueled OYO's rapid growth and expansion into international markets.

Originally incorporated as Oravel Stays Private Limited on February 21, 2012, under the Companies Act, 1956, OYO began its journey in New Delhi and has since grown into a global brand. With its anticipated IPO, many investors are showing interest in OYO Pre-IPO shares, given its strong backing and broad market presence. The company's continuous innovation and vast property network make it a promising player in the evolving hospitality landscape.

Learn about Oyo IPO:

OYO initially filed its Draft Red Herring Prospectus (DRHP) in September 2021, aiming to raise Rs. 8,430 crore through its IPO. This amount included Rs. 7,000 crore from fresh equity share issues and Rs. 1,430 crore from an offer for sale by existing shareholders. However, SEBI rejected the filing, leading to speculation that the company would refile the DRHP in February 2023. Instead, OYO confidentially submitted its revised IPO papers, signaling a reduced issue size in the range of $400-600 million. This revised OYO IPO plan focused entirely on a primary issuance, with the key goal of repaying its outstanding debt.

Despite these efforts, OYO has since withdrawn its draft IPO filing for a second time. The company is now exploring alternative funding options and is in talks with investors for a new round of funding. This round is anticipated to value the company at approximately $2.3 billion, a significant reduction of over 74% from its peak valuation of $9 billion. The drastic drop in valuation reflects the challenges OYO has faced in navigating regulatory hurdles and market conditions. The outcome of these discussions will likely impact the timing and structure of the next OYO IPO attempt.

Learn about Oyo Industry:

The short-stay accommodation market, a key segment within the travel and tourism industry, is experiencing rapid growth. This segment caters to stays of up to one month, encompassing a wide range of accommodations, including hotels, homes, guesthouses, bed & breakfasts, and campsites. These options appeal to a diverse set of travelers, from business professionals to leisure seekers, as well as those embracing newer trends like workcations and staycations. On-demand uses such as weekend getaways and group gatherings have also contributed to the expansion of this market.

Several factors are driving the growth of the short-stay accommodation sector, including an overall increase in travel, rising domestic tourism, and the development of new use cases for short stays. Despite the significant disruption caused by the COVID-19 pandemic, which saw widespread lockdowns, reduced customer confidence, and restrictions on travel, the industry is projected to recover and grow at a compound annual growth rate (CAGR) of 6.3% from 2021 to 2025. This resurgence is fueled by an increased focus on hygiene, a higher level of trust in brands, and the incorporation of digital solutions to reduce contact, catering to evolving customer preferences.

In addition to accommodation spending, customers frequently incur additional costs for non-room services like food and beverages, as well as other ancillary services provided on or near the premises. As OYO pre IPO discussions gain traction, investors are eyeing the company’s potential to capitalize on these market trends, with OYO's extensive presence in short-stay accommodations positioning it as a key player. With the OYO pre IPO offering on the horizon, the company's ability to adapt to shifting customer demands and macroeconomic factors will be crucial for its future success.