Once valued at $10 billion, Oyo Rooms has closed a new funding round that sees its valuation drop to $2.5 billion. The Indian startup, which operates a network of budget hotels across the country, has finalized raising around $100-125 million from investors according to sources familiar with the deal.
This represents a major decline from Oyo’s valuation just a few years ago, showing the difficult market conditions facing the hospitality industry in recent times. In 2019, the company was perceived to be worth $10 billion but challenging business conditions forced a rethink.
Oyo had ambitious plans for an IPO but withdrew its application from capital markets regulator SEBI twice in the last four years, signaling struggles to list on the public markets. The latest funding round follows the shelving of IPO plans last month as growth slowed.
Founded in 2013, Oyo operates a platform that allows hotel owners to offer standardized amenities and accept online bookings through its mobile app. It uses technology solutions to maintain service quality and prices across budget accommodations. However, the firm has scaled back its international operations in recent times.
According to its CEO and founder Ritesh Agarwal, Oyo turned a net profit of $12 million in the last fiscal year—a sign the business is moving in the right direction. Investors will hope this round leads to a path towards profitability and recovery following pandemic disruptions.