The internal forecasts of SoftBank-backed Oyo Hotels and Homes found that it could not make a profit in India and China until 2022, even as the hotel chain in India reported a six-fold increase in losses in fiscal 2019.
The losses are reflective of Oyo Hotels' rapid expansion into mainland China, the United States, the United Kingdom, and other bustling economic regions, rendering the six-year-old company one of the biggest hospitality brands in the world in terms of room count.
A recent valuation study sent to local regulators shows the financial projections for each of Oyo Hotels' regions, including its major India and China divisions, as "management approved."
The projections showed that Oyo Hotels' India business is likely to make losses by 2021, after which it could report a net profit after tax of $45.2 million in 2022, which could expand by almost 13 times to $586.9 million in two years.
An Oyo Hotels spokeswoman did not have any immediate remarks on the predictions and when the estimates were made it was not immediately clear.
Overall, Oyo Hotels reported a net loss of 23.85 billion rupees ($332 million) a year to March 2019, compared to a loss of 3.6 billion rupees a year earlier, according to the valuation report submitted to India's corporate affairs ministry. The company's operating revenue rose to 64.57 billion rupees ($900 million) a year earlier from around 14.13 billion rupees.
Oyo Hotels said the document included only "other temporary finances" for the year ended March 2019. "These are not the final audited financials and the organization must file the same later along with the annual report we give each year," the company said.
As its major investor SoftBank struggles to raise funding for a the second investment fund, the growing losses at Oyo Hotels come after the failed listing of office-rental company WeWork and in the midst of questions about the profitability path of other major investments such as Uber.
SoftBank, which through its Vision Fund has invested approximately $1 billion in Oyo Hotels posted its first quarterly loss in 14 years this month, dragged down by a fall of $8.9 billion at the Vision Fund.
The company's operational expenditure rose to 61.32 billion rupees almost five times a year, while total expenditure reached 90.28 billion rupees, the report showed.
Oyo Hotels, valued at $10 billion, allows hotels to be booked through its mobile app and charges a room revenue fee to partner hotels. It also franchises the name and provides a host of competitive network of services.
