SoftBank-backed Oyo Hotels and Homes may not make a profit in India and China until 2022 based on internal projections, Reuters reported.
The India-based hotel chain revealed that it incurred a six-fold rise in losses during fiscal year 2019, while its revenue more than quadrupled over the same period, said the report.
Projections show that Oyo’s India business will likely make losses until 2021, after which it could report a net profit of US$45.2 million in 2022, which could expand by nearly 13 times to US$586.9 million in two years, according to the report.
In January to March 2019, Oyo reported a net loss of Rs23.9 billion (US$332 million), compared with a loss of Rs3.6 billion last year, the valuation report showed. On the other hand, revenue rose to Rs64.6 billion from Rs14.13 billion in 2018.
“These are not the final audited financials, and the same will be issued later by the company along with the annual report that we issue every year,” Oyo said in a statement.
The valuer who prepared the report told Reuters that the financials for the year to March 2019 were unaudited and provided by Oyo’s management.
The projections also showed that Oyo’s China unit could post a US$394.9 million profit in 2022, which could then grow to US$1.65 billion by 2024, representing a four-fold jump in net profit in two years.
Oyo’s growing losses comes as its major investor SoftBank struggles to raise funding for a second investment fund following its failed public offering of office-rental company WeWork and Uber’s losses.
This month, SoftBank, which has invested nearly US$1 billion in Oyo through its Vision Fund, reported its first quarterly loss in 14 years.