OYO Records Clean Profit in FY25 with 172% Surge – A Decade in the Making

OYO, the homegrown hospitality unicorn once synonymous with cash burn and controversies, has achieved a historic milestone. In FY25, the company reported its first full-year clean profit after tax (PAT) of ₹623 crore, marking it as the most profitable Indian startup this year. This represents a 172% jump from ₹229 crore in FY24, signaling a strong turnaround in its financial and operational fundamentals.

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From Struggles to Stability: OYO’s Journey

Founded by Ritesh Agarwal in 2013, OYO set out to standardize India’s fragmented budget hotel sector. Originally launched as Oravel Stays in 2012, it rebranded as OYO—short for “On Your Own”—with a simple promise: affordable, quality stays with consistent amenities like clean linens, AC rooms, and free Wi-Fi.

However, rapid global expansion across Asia, the Middle East, Europe, and the U.S. between 2018 and 2020 came at a cost. Operational inefficiencies, quality control lapses, and partner dissatisfaction plagued the model. The COVID-19 pandemic worsened matters, forcing layoffs, property closures, and deep financial losses.

The Depth of the Crisis

Between FY20 and FY23, OYO faced severe headwinds:

Net Losses: Peaked at ₹13,122 crore in FY20, narrowing to ₹1,287 crore by FY23.
Revenue Collapse: Global income fell by nearly 70% in FY21.
Valuation Drop: From $10 billion in 2019 to about $2.4 billion by 2024.
Cost Cuts: Employee benefits were slashed by 63% in FY21, with massive layoffs.

These figures highlight the gravity of OYO’s financial and operational challenges during this period.

How OYO Engineered Its Turnaround

The comeback began with a strategic reset:

Shift to Franchise Model: Moved to an asset-light, commission-based approach (20–30% per booking), improving margins.
Cost Rationalization: Reduced total expenditure by 16% between FY23–FY24, including a 50% cut in employee-related costs.
Market Focus: Prioritized India, Southeast Asia, and select European regions, pulling back from overextended markets.

Premiumization and Brand Diversification

OYO moved beyond budget stays, introducing premium collections like Townhouse, Sunday Hotels, and Studio Stays, targeting business travelers, families, and long-term guests.

Other key moves:

Company-Serviced Portfolio grew, driving higher revenues.
Direct Bookings: 48% Q4 FY25 U.S. revenue came via OYO’s app and website, reducing reliance on third-party platforms.
Brand Suite Expansion:
- OYO Life – Rentals
- OYO Home – Homestays
- Collection O – Premium budget offerings

Strategic Acquisitions

OYO’s M&A activity strengthened its global position:

G6 Hospitality (Dec 2024): Owner of Motel 6 and Studio 6 brands; contributed ₹350 crore to EBITDA in FY25.
Checkmyguest (Aug 2024): Expanded OYO’s European homestay and long-term rental footprint.

Strong FY25 Financial Performance

Revenue: ₹6,463 crore (+20% YoY)
Adjusted EBITDA: ₹1,132 crore (+27% YoY)
Gross Booking Value: ₹16,436 crore (+54% YoY)
EPS: ₹0.93 (up from ₹0.36) – 158% jump

These numbers underscore OYO’s structural shift from cash burn to profitability.

Rebranding and Cultural Pivot

To shed its “couple-friendly” tag, OYO introduced a check-in policy in Meerut requiring proof of relationship/marriage. While controversial, this aligns with its goal to attract families and long-stay spiritual travelers. The policy’s wider rollout will depend on local norms and partner discretion.

What Lies Ahead?

OYO’s transformation highlights a key startup lesson: survival isn’t about speed; it’s about adaptability and discipline. Profitability is a big win, but the real challenge now is sustaining growth without losing agility.