As OYO prepares for its public listing, the continued satisfaction of its hotel partners and winning back dissatisfied partners will play a key role in determining how its business performs.
As travel tech major OYO prepares for its much-awaited public listing, the continued satisfaction of its hotel partners and winning back dissatisfied partners will play a key role in determining how its business performs and, by extension, how its stock holds up.
The company has recently been affected by some of its hotel partners publicly complaining, filing cases, and even writing to the regulator.
The moot question here is: Has IPO-bound OYO regained the trust of its hotel partners which it also addresses as Patrons?
Let's take a closer look at its patron policies through its draft red herring prospectus (DRHP) filed with SEBI.
With over 157,000 storefronts worldwide, the 40 reported cases against the company or its directors translate to less than 0.02 percent of its storefronts. OYO sources say that majorly of these originate due to shifting from minimum guarantee to revenue sharing arrangement. As per DRHP, at its peak, 14.7 percent of hotels had a minimum guarantee. This number is down to nearly zero now.
After bingeing on growth and expansion, the company seems to have refocused its priority to course correct on the hotel partner front.
Revenue growth is by far the biggest and most meaningful value proposition that OYO claims to provide its hotel partners worldwide. Its DRHP tries to prove it by showing the median revenue growth for a storefront after 12 weeks of a hotel joining the OYO platform.
The highest revenue uplift for storefronts is in the European Vacation Homes Business at 2.4 times, while India is still at a healthy 1.9 times increase in revenue.
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