OYO Hotels Gears Up for an IPO After Tough Times for Hospitality

We’ve seen various companies in the hospitality industry reveal plans to go public this year. Whether it’s through a traditional IPO or a SPAC merger, hospitality companies look at going public as an opportunity to grow. Last year, Airbnb (ABNB) had great success with its IPO, and its share price skyrocketed from $68 to $146 on its first day of trading. Its market cap even surpassed that of hotel giants Marriott and Hilton.

OYO Hotels and Homes is one hospitality company that plans to go public this year. Owned by Oravel Stays, the India-based company has hotels around the world, including the U.S. OYO has also formed new partnerships in the leadup to its IPO.

Originally consisting of budget hotels and homes, OYO Hotels was founded by CEO Ritesh Agarwal, who was only 19 years old at the time. In 2019, the company saw great success, scaling faster than any other hospitality company in the world. The hotel chain, present in more than 80 countries and offering over 43,000 hotels and 150,000 vacation homes, also claims to be the world’s third-largest hotel chain. It expanded its operations to the U.S. in 2019 and has locations across the country.

In recent years, OYO has had its struggles with both the COVID-19 pandemic and complaints. The Wall Street Journal reported in Jan. 2021 that the number of OYO Hotels had more than halved within a year. OYO tends to purchase homes and hotels around the country, or partner with the original owners to use their buildings for hospitality services.

Some of those home and hotel owners complained about never being paid when partnering with OYO, which reportedly used the COVID-19 pandemic as an excuse. The company also had to lay off thousands of employees due to the pandemic. Earlier this year, OYO was seeking a reported $600 million in debt financing from banks and investors to help the company recover from its losses.

OYO plans to go public later this year but hasn't announced a specific date yet. On Sep. 15. 2021, the company announced it had switched from a private limited company to a public limited company.

Pending approval from the Indian Ministry of Corporate Affairs, OYO, or Oravel Stays Private Ltd, will switch its name to Oravel Stays Ltd. This will allow OYO to file its public listing request with the Securities and Exchange Board of India (SEBI). The hospitality company is hoping to raise more than $1 billion once publicly listed, with a valuation of $14 billion–$16 billion.

Last month, Microsoft showed its support for the hotel chain, investing $5 million into the company. It’s speculated that OYO could have a more involved partnership with Microsoft in the future.