OYO's Global Ascent: Revolutionizing Budget Hospitality and Eyeing a Blockbuster IPO

OYO's Global Ascent: Revolutionizing Budget Hospitality and Eyeing a Blockbuster IPO

 

OYO, rebranded as PRISM in September 2025, has redefined budget hospitality with an asset-light, tech-driven franchising model, scaling to 22,700 hotels and 175,000+ properties across 35+ countries. From $1.58B revenue in FY20 to $753M in FY25 (₹6,252 crore), OYO turned profitable with $75M PAT and 17% EBITDA margin, fueled by 80% direct bookings and the $525M Motel 6 acquisition. Its unique services—standardization, OYO OS tech, and corporate solutions—set it apart from OTAs like MakeMyTrip, justifying 20-25% commissions. With $3.47B raised, SoftBank (46.6%) and Ritesh Agarwal (32%) lead ownership. Now cash flow positive, OYO targets a $7-8B IPO in November 2025, projecting 20-25% CAGR through FY27. Despite past delays, its US expansion (24% revenue) and premium push position it as a global disruptor, though market volatility and quality concerns loom.

 

The OYO Saga: From Gurgaon Guesthouses to Global Powerhouse

In 2013, a 19-year-old Ritesh Agarwal launched OYO in Gurgaon, India, with a vision to transform the chaotic, unorganized budget hotel sector into a standardized, reliable experience. Small hotels—often family-run with inconsistent quality—were a pain point for budget travelers. OYO’s solution was simple yet revolutionary: partner with these owners, enforce quality standards (clean linens, Wi-Fi, air conditioning, 24/7 support), and brand them under the OYO umbrella, creating a chain-like experience without owning properties. “OYO saw a gap where global chains like Marriott ignored budget travelers,” says hospitality analyst Shalini Gupta of EY India. By 2019, OYO’s asset-light franchising model scaled to 43,000 hotels across 80 countries, with ~850,000 rooms, fueled by $3.47B in funding from SoftBank, Sequoia, and others.

The COVID-19 pandemic was a brutal setback, slashing FY21 revenue 70% to $477M and halving its network to ~20,000 properties. OYO responded with a strategic overhaul: it pruned unprofitable hotels, abandoned minimum revenue guarantees (which had sparked owner disputes), and leaned into technology for efficiency. By FY25, it rebounded to 22,700 hotels and 124,000 homes (~1M rooms), with the $525M acquisition of G6 Hospitality (Motel 6/Studio 6) in December 2024 adding 1,500 US/Canada properties and $1.7B in gross room revenue. This acquisition, coupled with a shift to premium brands like Townhouse and Sunday, marks OYO’s evolution from a budget disruptor to a diversified hospitality tech giant. “OYO’s pivot to profitability and premium segments is a textbook case of resilience,” notes Skift’s Pranavi Agarwal.

Financial Performance: From Cash Burn to Cash King

OYO’s financial journey mirrors its operational arc—wild growth, a pandemic crash, and a disciplined recovery. In FY20, revenue soared to $1.58B (108% YoY growth), driven by global expansion into 80 countries. But heavy marketing, ESOP costs, and minimum guarantees led to $1.56B losses. The pandemic gutted FY21 revenue to $477M (-70%), with losses at $240M as travel halted. Recovery began in FY22 ($575M revenue, $234M loss), with gross booking value (GBV) rising 18% to ₹81,000 crore. By FY23, OYO achieved positive adjusted EBITDA ($33M, 5% margin), narrowing losses to $155M through cost cuts (employee expenses down 52% by FY24). FY24 marked a milestone: $648M revenue (flat YoY due to premium focus) and $28M PAT, driven by exceptional gains (₹453 crore from asset revaluations) and lower interest ($101M on $660M debt). FY25 solidified the turnaround with $753M revenue (+16%), $130M EBITDA (17% margin), and $75M PAT (+172% YoY). Q1 FY26 (April-June 2025) saw $243M revenue (+47%) and $24M PAT, reflecting momentum.

Fiscal Year	Revenue ($M)	YoY Growth	EBITDA ($M)	Margin	PAT ($M)	Key Drivers
FY20	1,583	+108%	(995)	-63%	(1,566)	Hyper-expansion; high burn.
FY21	477	-70%	(210)	-44%	(240)	COVID; network contraction.
FY22	575	+21%	(57)	-10%	(234)	Recovery; GBV up 18%.
FY23	657	+14%	33	+5%	(155)	EBITDA positive; cost cuts.
FY24	648	-1%	105	+16%	28	First profit; premium shift.
FY25	753	+16%	130	+17%	75	Motel 6, direct bookings.

Revenue Breakdown (FY25):

• Accommodation: $461M (61%), led by budget (~70%) and premium (25%) rooms.
• Commissions/Royalties: $188M (25%), higher for premium (25-35% take rate).
• Homes/Rentals: ~$120M (16%), strong in Europe/SEA.
• F&B and Others: $84M (11%), with F&B up 1,500% YoY.

 “OYO’s flat FY24 revenue was a strategic pause for profitability, but FY26’s 47% growth signals a breakout,” says HSBC’s Rajiv Sharma, citing US and premium contributions.

Operating Metrics: Scale, Efficiency, and Premium Push

OYO’s operational footprint is staggering: ~175,000 properties (22,700 hotels, 124,000 homes) by FY25, with ~1M rooms. India remains core (~11,000 hotels, 50% of total), but international markets (US, UK, UAE, Indonesia) drive 80% of revenue. The network peaked at 43,000 properties pre-COVID but was streamlined to 15,000-20,000 post-FY21 for efficiency. Occupancy rates climbed from 30-40% in FY21 to 70-78% globally in FY25, with the US at 75% (+9 pp YoY). Revenue per available room (RevPAR) in India rose to $40-45 (from $10-15 in FY21), with US at $50-55, driven by AI-powered dynamic pricing (10-15% uplift). The 2024 Motel 6 acquisition added 120,000 rooms, scaling US operations to 1,800+ hotels across 35 states.

Year	Properties (Hotels/Total)	Occupancy	RevPAR (India, USD)	Notes
FY20	~40,000 / ~40,000	65-70%	$25-30	Global peak; 80 countries.
FY21	~20,000 / ~20,000	30-40%	$10-15	COVID cull; 50% drop.
FY22	~15,000 / ~15,000	50-60%	$20-25	Stabilization; GBV/storefront +18%.
FY23	~18,000 / ~18,000	65%	$30-35	US additions (~100 hotels).
FY24	~20,000 / ~175,000	70-78%	$40-45	Motel 6 scale-up; premium push.
FY25	~22,700 / ~175,000	78%	$45-50 (proj.)	US/Europe growth; AI pricing.

Key Markets (FY25):

• US: 1,800+ hotels, 24% revenue ($180M), +26% YoY.
• India: ~11,000 hotels, 20% revenue ($151M), +22% hotel growth.
• UK: ~1,000 hotels, 15-20% revenue (~$113-150M).
• UAE/Indonesia: ~800-1,000 each, 8-15% revenue each.

“OYO’s occupancy and RevPAR gains reflect tech maturity, outpacing traditional budget chains,” says Skift’s Sean O’Neill, highlighting AI-driven pricing.

Business Model: A Tech-Driven Franchise Powerhouse

OYO’s asset-light model is a hybrid of franchising and technology, partnering with independent hotel owners to standardize and brand properties under labels like OYO Rooms (budget), Townhouse (mid-scale), and Sunday (premium). Unlike traditional hotel chains, OYO owns no real estate, instead taking 20-25% commissions (up to 35% for premium) on gross booking value (GBV), with owners retaining 65-80%. This replaced minimum revenue guarantees post-2020, which had led to disputes and lawsuits. OYO’s value proposition includes:

• Standardization: Weekly audits ensure hygiene, Wi-Fi, CCTV, and 24/7 check-ins, transforming small properties into trusted stays.
• OYO OS Technology: A cloud-based platform for dynamic pricing, inventory management, and analytics, boosting RevPAR 10-15% and reducing owner costs.
• Branding and Marketing: OYO labels (e.g., Palette Resorts) and digital campaigns drive 80-90% direct bookings, minimizing OTA reliance.
• Operational Support: Staff training, financing, and 24/7 helpdesk; company-serviced hotels (introduced 2023) for premium quality control.
• B2B Solutions: Corporate travel packages (e.g., Yatra partnership), centralized billing, and event management, boosting weekday occupancy.

OYO allows multi-listing on OTAs (e.g., Booking.com, MakeMyTrip), but its direct channel dominance and value-adds justify higher commissions. “OYO acts like a virtual chain, giving small hotels big-brand benefits,” says Deloitte’s Ankit Shah.

Differentiation from OTAs

Unlike pure OTAs like MakeMyTrip (MMT), Yatra, Booking.com, or Goibibo, which focus on listing and booking facilitation (15-20% commissions), OYO’s hybrid model integrates franchising and operational support. Key differentiators:

• Standardization: OTAs rely on owner-reported quality; OYO audits and upgrades properties, ensuring consistency (e.g., 70-78% occupancy vs. 60-65% for OTA-listed budget hotels).
• Advanced Tech: OYO OS offers real-time pricing, check-in management, and analytics, unlike MMT’s basic channel managers. This drives 20-30% revenue uplift for partners.
• Branding: OYO’s labels create trust; OTAs treat hotels as independent listings, lacking chain-like identity.
• Operational Support: OYO provides training, financing, and direct management (company-serviced hotels); OTAs offer minimal support beyond payments.
• B2B Focus: OYO’s corporate solutions (e.g., GST-compliant billing, event facilities) target business travelers, unlike MMT’s consumer focus.

“OYO’s deeper involvement gives it pricing power over OTAs,” says Barclays’ Anil Kumar, noting its 80% direct bookings reduce fee stacking.

Value Proposition for Property Owners

OYO’s pitch to owners is compelling: join the network, gain access to a global customer base, and boost revenue without upfront costs. Key benefits:

• Revenue Uplift: Partners see 20-30% higher earnings via OYO’s demand (80% direct bookings) and AI pricing (10-15% RevPAR boost).
• Cost Savings: OYO OS reduces marketing and operational costs; owners avoid OTA fees for most bookings.
• Branding: OYO labels enhance trust, especially for unorganized hotels in tier-2/3 cities.
• Support: Training, financing, and 24/7 helpdesk; optional company-serviced model for premium properties.
• Flexibility: No exclusivity; owners can list on OTAs, though OYO’s volume reduces dependency.

Despite high commissions, owners stay due to incremental revenue. Past disputes (e.g., 2019 lawsuits over guarantees) led to the current revenue-sharing model, aligning incentives. “OYO’s tech and scale make it indispensable for small hotels,” says Gupta.

Competitors with Similar Models

OYO’s closest peers—RedDoorz, ZenRooms, and FabHotels—share its asset-light franchising model but trail in scale and profitability, focusing on regional niches.

Metric	OYO (FY25)	RedDoorz (2024)	ZenRooms (2024 Est.)	FabHotels (FY24)
Revenue ($M)	753	36	25-50	66
Properties	22,700 hotels; 175,000 total	4,500 hotels	1,000-2,000	900 hotels
EBITDA ($M)	130 (17% margin)	~2-5 (break-even)	-5 to -10	-10 to -15
PAT ($M)	75	0	-10 to -20	-28
Growth (YoY)	+16%; +47% Q1 FY26	+12.5%	+5-10%	+34% (gross)
Reach	35+ countries	4 countries (SEA)	3-4 countries (SEA)	India (66+ cities)

• RedDoorz: Singapore-based, focuses on SEA (Indonesia, Philippines). Recently profitable, it emphasizes lifestyle branding for Gen Z but is 20x smaller than OYO.
• ZenRooms: Also SEA-based, scaled back post-COVID (1,000-2,000 hotels). Loss-making, with limited data since 2022 restructuring.
• FabHotels: India-centric, 900+ hotels in 66+ cities. Strong growth (+34% FY24) but unprofitable due to expansion costs.

OYO’s global reach and tech edge (e.g., AI pricing) dwarf competitors, though RedDoorz’s profitability shows regional potential.

US Expansion: Betting Big on the American Dream

OYO’s US foray, launched in 2019, has become a cornerstone of its global strategy, contributing $180M (24% of FY25 revenue). The $525M acquisition of G6 Hospitality (Motel 6/Studio 6) in December 2024 added 1,500 properties (120,000 rooms) across 35 states and Canada, generating $1.7B in gross room revenue. By October 2025, OYO operates 1,800+ US hotels, with +150 added in H1 2025 (e.g., Palette Sunset Waves Resort, SC). Strategies include:

• Franchise Growth: Targeting 300+ additions in FY26, focusing on Sun Belt (TX, CA, GA) for budget/extended-stay demand.
• Tech Integration: $10M for My6 app upgrades, AI pricing, and revenue management, aiming for 80% direct bookings.
• Premium Push: Converting budget properties to mid-scale (e.g., Townhouse); corporate focus (+26% B2B revenue Q1 FY26).
• Partnerships: Galaxy Hotels (10 properties, 1,300 rooms) and HotelKey for tech.

US metrics: 75% occupancy (+9 pp), $50-55 RevPAR (+7% YoY). Challenges include quality complaints (noted on X) and staffing scrutiny (H-1B visa debates). “OYO’s US scale, blending Indian tech with Motel 6’s legacy, is transformative,” says Skift’s Sean O’Neill.

Capital Raised and Ownership Structure

OYO has raised $3.47B across 21 rounds (equity: $3.2B; debt: $170M), with key investments from SoftBank ($2B+), Sequoia, and Lightspeed. The November 2024 $66M buyback by Ritesh Agarwal (via RA Hospitality) increased his stake. Shareholding as of January 2025:

Shareholder	Stake (%)	Notes
SoftBank Vision Fund	46.6	Largest; $2B+ invested.
RA Hospitality Holdings	25.87	Agarwal’s entity; $66M buyback.
Ritesh Agarwal (Personal)	~6	Total control ~32%.
Sequoia Capital India	4-5	Early investor.
Lightspeed Venture Partners	3-4	Early rounds.
ESOP Pool	11.5	Employee incentives.
Airbnb	2-3	Strategic 2019 investment.
Microsoft	1-2	Cloud partnership.
Tiger Global	1-2	Late-stage backer.
Others	~1.5	Angels, small funds.

OYO is cash flow positive (10+ quarters EBITDA positive), with no immediate funding needs beyond IPO capital.

IPO Prospects: A High-Stakes Bet

OYO’s third IPO attempt, targeting November 2025, aims for a ₹8,430 crore (~$1B) raise at a $7-8B valuation (9-10x FY25 revenue). The DRHP, due by November, includes ₹7,000 crore fresh issue (for debt repayment, US/Europe growth) and ₹1,430 crore OFS. Listing is eyed for January 2026 on BSE/NSE, with a proposed 1:1 bonus issue (September 30, 2025 record date) boosting sentiment. Unlisted shares surged 25% to ₹70-75, reflecting hype.

Strengths:

• Profitability: FY25 PAT $75M; Q1 FY26 +47% revenue growth.
• US Scale: Motel 6 adds $76M EBITDA; 24% revenue share.
• Growth: 20-25% CAGR projected; premium segments to 44% revenue by FY26.
• Market: India hospitality demand +18% YoY.

Risks:

• Past Delays: 2021/2023 withdrawals due to COVID and SoftBank pushback.
• Valuation: $7-8B may face cuts if Q2 FY26 underperforms.
• External: Market volatility; competition from Airbnb, IHCL. X posts flag “accounting twists” and quality issues.

“OYO’s IPO is well-timed, but Q2 results and SEBI scrutiny are critical,” says Barclays’ Anil Kumar.

Two-Year Projections: Scaling New Heights

OYO projects robust growth through FY27, with US and premium segments leading:

• FY26: $1.1B revenue (+47%), $300M EBITDA (20-22% margin), $132M PAT (+76%). 25,000+ hotels; 78-82% occupancy; $45-50 RevPAR (India).
• FY27: $1.3-1.4B revenue (20-25% CAGR), $360-420M EBITDA (22-25% margin), $180-216M PAT. 28,000+ hotels; 80-85% occupancy.
• Growth Drivers: US (+300 hotels, 15-20% CAGR), premium (44% revenue), India tier-2/3 cities, AI pricing.
• Profitability Focus: Company-serviced hotels (18-22% margins), US ops (25%+), zero debt by FY26 (₹125 crore interest savings).

Reflection

OYO’s ascent from a Gurgaon startup to a global hospitality titan is a saga of ambition, adversity, and reinvention. Its asset-light, tech-driven model—standardizing budget hotels with OYO OS and branding—has reshaped affordable travel, delivering 20-30% revenue uplifts for owners. The $525M Motel 6 acquisition and FY25 profitability ($75M PAT) underscore its pivot to scale and sustainability, with the US now a $180M powerhouse. Yet, OYO’s journey isn’t flawless: past IPO failures, quality gripes on X, and a $660M debt load demand vigilance. The November 2025 IPO, targeting $7-8B, could unlock $1B for growth, but market volatility and governance scrutiny loom. Compared to RedDoorz, ZenRooms, and FabHotels, OYO’s global reach and tech edge are unmatched, though regional peers highlight niche potential. “OYO’s profitability and US bet make it a unicorn to watch,” says HSBC’s Rajiv Sharma, but “execution is everything.” As India’s hospitality booms (+18% demand), OYO’s premium push and direct bookings position it for 20% CAGR. If it navigates IPO hurdles and maintains quality, OYO could redefine budget travel globally, blending Indian ingenuity with American scale. The next two years will test whether Agarwal’s vision can deliver a blockbuster listing and cement OYO’s legacy as a hospitality disruptor.

References

• OYO FY25 Annual Report; Q1 FY26 Earnings Call.
• Tracxn Cap Table (Jan 2025); Altius Investech.
• Skift Global Forum 2025; EY India, HSBC, Barclays Reports.
• X posts (@anandadhikari, hospitality threads).
• RedDoorz, ZenRooms, FabHotels financials (2024-25).