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The Jumbo Circus Going On In OYO With The Ring Master Ritesh Agarwal

Everyone gets success in life but only few are able to handle and digest it.

The proverb goes pretty well with Ritesh Agarwal Founder of OYO also known as OYO rooms.

OYO Rooms, also known as OYO Homes & Hotels, is the world’s third-largest, one of China’s top two and the fastest growing hospitality chain of leased and franchised hotels, homes & living spaces. Founded in 2013 by Ritesh Agarwal, OYO initially consisted mainly of budget hotels. Over a span of 6 years, the startup expanded globally with thousands of hotels, vacation homes and millions of rooms across hundreds of cities in India, Malaysia, UAE, Nepal, China, UK, Philippines, Japan, Saudi Arabia, Indonesia, Vietnam, United States and more. The company’s investors include SoftBank Group, Greenoaks Capital, Sequoia India, Lightspeed India, Hero Enterprise, Airbnb and China Lodging Group.

Ritesh Agarwal was born in Bissam Cuttack,of Odisha state, India and brought up in Titilagarh. At the age of 13, he started selling SIM cards. Agarwal graduated from St. Johns Senior Secondary School and moved to Delhi in 2011 for college. He dropped out of college, which made him eligible for the Peter Thiel Fellowship.

Agarwal started a budget accommodation portal, Oravel Stays, for booking budget hotels. It was accepted into the accelerator program by the VentureNursery in September 2012 and later was one of the winners of the 2013 Thiel Fellowship program and received a grant of $100,000. The company was launched as OYO Rooms in May 2013.

Now lets look back behind the scenes of OYO

1. OYO has been reported by several people who have installed their app to be a victim of spam by OYO now and then updates and push notifications.

Internet & Social media is full of such complaints.

2. India’s OYO valued at $10B after founder purchases $2B in shares.

Where Did the founder received such heavy amount and on what basis?

3. Oyo’s preparing to list in next 2-3 years, eyes up to $18 billion valuation.

OYO has a very poor EBITDA Score, The losses are increasing and widening every now and then.

4. Oyo in talks to raise another round at valuation of $12.5bn, deal likely to be anchored by Softbank.

Softbank has made major investments in loss making companies in India. Till date softbank has not made any major profits against these investments and only trying to over take the Indian startup eco-system with its funding, Other way, this could be seen is to trying to control and hold major shares in the Indian economy by the Japanese giant and also the control of prospective customer’s and client’s data. 

5. Total of 10 funding rounds by OYO till date.

6. Agarwal opted to increase his 10% stake to 30% via a Cayman Islands company called RA Hospitality Holdings, according to The Wall Street Journal.

Why Ritesh Choose Cayman Islands company which is a kind of heaven for people stealing and evading taxes. How come & What Role RA Hospitality Holdings is playing in the entire deal. On What grounds RA Hospitality Holdings is giving so much of fund to Ritesh to increase his own share-holding in the company rather than buying the shares for themself.

7. Oyo has raised a whopping $1.6 billion in equity funding to date, reaching a valuation of $5 billion at its last funding round.

In Indian’s startup eco-system, most companies talk about funding and valuation, and no one talks about the profits. The companies valuation may have gone 100-1000 folds but the losses are also widening at the same ratio. These so called funded startups are never able to come out of their losses and thus lack sustainability model. At the time flipkart was sold for 13,000 Crore to Walmart, It was still a loss making company.

8. OYO is active in 800 cities in 80 countries, with more than 23,000 hotels in its portfolio. The Indian hotels are protesting against OYO and its hotel business.

9. Internet is full of management and fraud complaints of oyo, just type oyo fraud and you can see thousands of pages where people have made complaints against oyo services and its management.

10. Hotels body seeks police probe against OYO

11. Bengaluru police book OYO CEO Ritesh Agarwal for allegedly cheating hotelier

12. Many Partner hotels threaten to cut ties with OYO

13. Protests Against OYO In Pune As Hoteliers Demand Outstanding Dues

14. OYO hotel manager arrested for raping woman guest in Gurgaon

15. Boycott of bookings by hotels will invite legal action: OYO,

OYO has threatned many hotels for not accepting the booking via its platform for legal action, is this a kind of threat OYO giving to hotel owners? Any contract is applicable only when agreed by both the parties, One party can not impose their contract terms on other. Is OYO trying to do business at the GUN-POINT of legal action?

16. Total Acquitisations made by OYO is 7

17. OYO net loss marginally widens to Rs 360 crore in FY18; revenue rises

18. OYO estimates FY19 net loss down to 10% of overall sales, In value terms, however, Oyo’s losses are estimated to have risen to ₹511.8 crore in 2018-19 from ₹360 crore in 2017-18

The basic theory behind this bad game of discounts, cash-backs is lack of sustainability model and also unfair and unethical practices to kill the competition in the market.

Lets assume that there are 10 apps for hotel booking now, OYO offering the best discounts gaining customer attention and traction due to heavy discounts. Maximum customers using oyo apps and thus other apps being ignored and evading from the marketing, in the next coming years oyo will be a single player in the market without any competition and thus will come in the market with above average pricing which it is offering now, the pricing could be many times folds as it is offering now, without any competitor now oyo will have a dominance in the market and this is all possible only because of blind funding in the market to kill the competition so that after few years, they can rule the market without any competition, this at all can not be termed as a healthy and ethical competition and business practices.

Only because of such practices now a days most startups are not able to sustain more than 5-10 years in the market. There was a time when business families like TATA, Birla, Oberoi, Ruia setup some industry and even till date are running in the market but now a days startups comes and disappear from the market in another 5-10 years spoiling the entire market and destroying the customer mindset.

They are badly hampering and customer behavior and mindset by offering beyond controlled discounts and thus spoiling the entire market.

Another factor that we could clearly see that most startup companies in India are heavily funded by Chinese & Japanese giants which will slowly but clearly get hold of a strong position in the Indian economy as well as control most of the user data who are either using or going to use the services of such apps.

Our entire information, buying habits, location tracking, financial data, financial standings are in control of these investors who are making investments in these loss making startups for the sake of this data to control Indians in the near future.

No matter which so called unicorn company you talk about, the end point of every startup is Losses more than their revenues, which is a very threatening and alarming situation for the startup eco-system in India.

Recently Inventiva also wrote a story on PayTM, India’s most widespread wallet services, paytm also reported that, they had a loss of more than 4000+ crores in 2019 and yet making huge investments in several entities & arms and also planning to buy the stakes in India’s one of the largest private sector bank YES Bank

This story is still developing and will be updated soon

Disclaimer: This article is written by an individual writer of Inventiva with its own research and depicts the individual thoughts. Inventiva, Its parent company, founders & directors or any other person associated and employed by Inventiva can not be held responsible for any facts, information mentioned in the article. 

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