Skift Travel News Blog

Ankit Gupta, the India CEO of hospitality technology platform Oyo, and Mandar Vaidya, the head of Oyo’s European operations, will both be moving on from the company.

“Ankit Gupta and Mandar Vaidya moved on from their roles six months ago in March 2023. We are proud of their achievements at Oyo and are thankful for their leadership. Both roles were already transitioned six months ago to Varun Jain, as chief operating officer India, and Gautam Swaroop, as CEO OYO Vacation Homes, respectively,” an Oyo spokesperson said in response to Skift’s query.

Both Gupta and Vaidya are set to embark on their entrepreneurial journey with Gupta expected to announce his start-up soon, a source told Skift.

Gupta, who earlier had been the CEO of Oyo’s Hotels and Homes, was appointed India CEO last year.

This February Oyo had reshuffled its management with Abhinav Sinha taking up the role of global chief operating officer and chief product and technology officer. Sinha, who has been with Oyo since 2014, was taking over the role from chief technology officer Ankit Mathuria, who left the company in June 2023.

Oyo’s proposed IPO launch is expected to take place around the Indian festival of Diwali, which falls on November 12 this year. The company that had earlier planned its initial public offering at $1.1 billion, reduced the size of the offering to between about $400 and $600 million

In May, Chinese hospitality company H World Group sold one-fifth of its holding of Oyo to United Arab Emirates-based family offices and institutional investors for around $9 million.

Rating agency Moody’s Investors Service had said it expects Oyo to generate between about $50 million and $55 million in EBITDA this fiscal year.

With plans to support the surge in business travel, Oyo has also announced its plans to double the number of premium hotels in India in 2023.

The company entered the premium resorts and hotels category with the launch of its new brand-Palette in July. The move comes as a part of Oyo’s ongoing efforts to make its premium property portfolio more versatile.

The company had said that the Palette resorts would be located in popular leisure destinations across India, while also catering to business leisure or blended travelers looking for quick getaways and staycations.

Buyout fund Cinven and Canadian pension fund CPPIB have hired Morgan Stanley and Evercore to prepare an initial public offering for Hotelbeds, Expansion newspaper reported on Friday citing unidentified market sources.

Hotelbeds, a company based in Palma de Mallorca which sells hotels rooms to wholesale customers such as travel agencies and tour operators, is worth between 4.5 billion and 5.5 billion euros ($4.89 billion-$5.97 billion), Expansion said.

Cinven and CPPIB, which bought Hotelbeds from German tourism group TUI in 2016 in a deal worth 1.17 billion euros, could opt for a direct sale, the newspaper said.

Spokespeople at Hotelbeds, Cinven, CPPIB, Morgan Stanley and Evercore did not immediately return messages seeking comment.

($1 = 0.9209 euros) (Reporting by Inti Landauro; editing by Jason Neely)

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Red Sea Global, a company fully owned by Saudi Arabia’s Public Investment Fund, is exploring the possibility of a public market offering, with plans to launch as early as 2026.

The company is currently examining various options for a public market event, including an initial public offering or the establishment of a real estate investment trust (REIT), CEO of Red Sea Global, John Pagano, stated in an interview with Bloomberg.

Even as he did not provide specifics on advisers, banks, or valuation, Pagano said the company is currently holding preliminary discussions with banks and stakeholders.

He said the company plans to go public by 2026 or 2027, after the hotels have been in operation for around two years, with a proven record of occupancy, cash flow, and profitability. The priority for the company now is to create a revenue stream that supports its value.

Pagano said the concept of public real estate companies has mostly disappeared from a property markets standpoint on a global scale. Instead, real estate investment funds are becoming increasingly popular because of their tax efficiency and accessibility to a wider range of investors.

Flagship Projects for Saudi Arabia’s Vision 2030

Red Sea Global was formed by merging two state-controlled developers by the Saudi sovereign wealth fund in 2021, where Amaala was taken over by the Red Sea Development Company.

Formerly known as The Red Sea Development Company, Saudi Arabia’s flagship tourism project developer rebranded to Red Sea Global last year.

Speaking to Skift earlier, Pagano had called the Red Sea Project and Amaala, the flagship projects for Saudi Arabia’s Vision 2030. He said the developments would be instrumental in opening the country up to global visitors.

By 2030, the two projects are expected to create 120,000 jobs — 70,000 direct and 50,000 indirect.

Amaala is expected to span over 4,000 square kilometers and house 25 hotels and around 900 luxury residential villas, apartments, and estate homes upon its completion in 2027.

The first phase of development is anticipated to conclude in mid-2024 and offer over 1,300 hotel rooms across eight resorts.

During the Skift Global Forum East in Dubai last year, Nicholas King, the group chief development officer of Red Sea Global, had revealed that the first three hotels at the Red Sea Project would open in 2023, followed by the next 13 in 2024.

India-based hotel ownership and asset management platform Samhi Hotels has refiled draft papers with the Indian stock market regulator Securities and Exchange Board of India (SEBI) to raise an initial public offering (IPO) of around $120 million.

The Goldman Sachs-backed company that operates hotel chains like Marriott, Hyatt and IHG in India, had earlier filed a draft red herring prospectus with SEBI in September 2019 to raise around $238 million.

Samhi had obtained the markets regulator approval in November 2019, to float the initial share-sale, but the company at that time did not go ahead with the launch.

Last week, while reporting the Yatra earnings, Skift had talked about the subdued sentiments in the Indian stock market, as a result of which many companies wanting to launch their IPOs were said to be in a “wait-and-watch” mode.

Hospitality platform Oyo too disclosed last week that it is reducing the size of its proposed initial public offering to between $400-$600 million, a steep reduction from its earlier plan of $1.1 billion.

The company would be using net proceeds from the IPO towards the repayment of debt of the firm and its subsidiaries, payment of interest and other general corporate purposes.

As of February 2023, Samhi Hotels has the third-largest inventory of operational keys (owned and leased) in India. The company has a portfolio of 3,839 keys across 25 operating hotels in 12 cities, including Bengaluru, Hyderabad, National Capital Region, Pune, Chennai and Ahmedabad.

The company is also the largest owner of the Fairfield by Marriott and Holiday Inn Express brands in India. For the financial year ended March 2022, the company reported an increase of 90 percent in revenue to $40 million, as against $21 million in the previous fiscal.

Tek Travels, a wholly-owned subsidiary of Indian travel distribution platform TBO.com, has fully acquired BookaBed, a business-to-business (B2B) accommodation wholesaler for an undisclosed amount.

Last year in April, Tek Travels had acquired a 51 percent stake in BookaBed.

Headquartered in Switzerland’s Zug, Bookabed is said to be one of the largest online business-to-business booking engine in Ireland.

With this acquisition, TBO further deepens its European footprint into Ireland and UK, the company said in a statement.

BookABed now becomes TBO Ireland & UK and Karl Tyrell, the CEO of BookaBed, will continue in his role.

Over the course of the year, the breadth and depth of BookaBed will be fully integrated into the TBO platform which today lists over one million properties worldwide, a statement read.

BookaBed had said last year that it would increase its market share in Ireland and the UK by leveraging TBO’s global application programming interfaces (API) business, and TBO Academy that trains and educates travel agents and travel trade partners.

“Since integrating with TBO, we’ve had greater ability to engage the Irish and UK markets stronger and deliver increased value to our customers. We will continue to service our customers and will advise our customers on how the new brand will roll out over the coming months,” Tyrell said.

TBO said the development reflects the aggressive growth plans it has set globally. The company said it would continue to step up investments and look at partnerships to expand, hire and improve customer experience in an effort to simplify and empower the travel ecosystem.

In 2021, TBO had submitted draft papers with the Indian market regulator to raise $253 million through an initial public offering (IPO) of shares and has received the go ahead to raise funds.

Oyo, the India-based budget hotel chain and booking platform, plans to double its premium segment hotel count in Indonesia from around 200 properties to over 400 by the end of 2023.

Announcing its plans to double its portfolio, Oyo on Friday said the demand for premium accommodation options is expected to grow significantly in Indonesia in 2023.

The hospitality operator said it is targeting a mix of business and leisure destination such as Jabodebek, Java and Bali, Sumatra, Kalimantan, and Sulawesi.

Currently, Oyo offers accommodation in the mid-premium segment through Townhouse Oak, Townhouse, Collection O and Capital O.

Indonesia is one of the most mature markets for Oyo in terms of scale and unit economics, according to Ankit Tandon, global chief business officer and CEO, Southeast Asia and Middle East.

Indicating a steady rebound in business travel after pandemic induced travel restrictions ebbed in Indonesia, Tandon in his blog last month noted that Oyo has served 253 corporates in 2022 compared to only 75 corporates in 2021 recording a 237 percent year-on-year growth. 

Oyo said it has intensified its efforts to identify premium properties across all key regions and efforts are in full steam to onboard and equip them with latest technological tools, increase their visibility and in turn improve their revenue.

“We will identify premium properties and equip them with the latest tech tools to improve their revenue and visibility,” Founder and Group CEO Ritesh Agarwal said in a social media post.

In 2022, Indonesia saw around 633 million to 703 million domestic tourist trips while the tourism ministry said it is targeting up to 7.4 million international tourist arrivals and 1.2-1.4 billion domestic tourist movements in 2023.

“Our focus on expanding the premium hotel portfolios in line with the government’s plans to strengthen hotel industry to meet the requirements of the growing number of inbound and corporate tourists looking for well-priced mid-segment and premium hotels,” Tandon said.

A report by property consultancy firm JLL noted that green shoots are emerging for the hotel sector with occupancy levels expected to reach above 50 percent this year.

JLL also predicts an investment of $300 million in 2023 in this sector, which is the highest since 2013.

Oyo said it plans to play the role of a catalyst in this growth with a three-pronged strategy – maximising local market potential, technological innovation to address market pain points and strong collaboration with industry stakeholders.

Having entered Indonesia in 2018, Oyo has since recorded 15 times growth and its bookings from May-November 2022 rose 90 percent compared to same period in 2021. 

The hospitality tech company that looks to go public in the Indian stock market with its long-anticipated initial public offering (IPO), has set a deadline of mid-February to refile its draft red herring prospectus with the Indian stock market regulator.

Keen to pursue its long-anticipated initial public offering (IPO), hospitality tech company Oyo has said it would be refiling its draft red herring prospectus with the Indian stock market regulator Securities Exchange Board of India (SEBI) by mid-February.

While the company refused to offer any estimation of the time it expects SEBI to take for the approval, a source close to the company said Oyo hopes to get the approval by April 2023.

“After the approval comes in, Oyo will gauge market conditions and the path to profitability and then decide on launching the IPO,” the source said speaking to Skift.

Asked to hint at a timeline for the launch of the Oyo IPO, the source said it would well be within this year.

The market regulator had on December 30 asked Oyo to refile the draft prospectus, updating all the relevant sections such as risk factors, key performing indicators, outstanding litigations and basis for offer.

The company had earlier indicated that the process of refiling the document could take up to 2-3 months.

Oyo’s last submission to SEBI was the updated financial results of the first half of financial year 2022-23.

Updating its draft red herring prospectus with results for the first half of the 2023 financial year in November, Oyo had reported that its adjusted earnings before interest, taxes, depreciation, and amortization for the second quarter grew eight times from $860,000 in the first quarter to $7 million primarily driven by a 23 percent quarter-on-quarter rise in gross booking value per hotel.

The letter from the market regulator to Oyo read, “The disclosures contained in the present draft red herring prospectus do not take into account the material changes/disclosures arising from updated financial statements as filed through
addendums leading to revised period for disclosures which in turn leads to necessities to make material updates in risk factors, basis of offer price, outstanding litigations and update other relevant sections of the prospectus.”

Sharing the progress on the refiling exercise, an Oyo spokesperson said, “We are working on updating all key sections simultaneously. Responsibilities have been divided among different teams,
with senior company leaders driving the collaboration with the book running lead managers, essentially the initial public offering bankers, the lawyers and the auditors. We are keen on refiling the draft prospectus by mid February if not earlier.”

The Indian market regulator’s move seems to be in line with its expectation of higher levels of transparency in the initial public offering process.

Lately, it has asked companies to share additional key performing indicators and the basis for pricing of IPOs. In its meeting with bankers in December 2022, SEBI had also shared steps it is taking to reduce the IPO processing time which has increased to 113 days.

Oyo, in preparation for its upcoming IPO in 2023, is doing a major reorg of its organizational structure and cost base. It has announced it is letting go of 600 employees out of a total of about 3700, mostly in its product and tech teams. From the company:

“Oyo is downsizing its product and engineering, corporate headquarters and the Oyo vacation homes teams, while it adds people to the partner relationship management and the business development teams. Oyo will downsize 10% of its 3700-employee base, which includes fresh hiring of 250 members and letting go of 600 employees…The downsizing in tech is also happening in teams which were developing pilots and proof of concepts such as in-app gaming, social content curation and patron-facilitated content. Additionally, members of projects which have now been successfully developed and deployed such as ‘Partner SaaS’ are being either let go or are being redeployed in core product & tech areas such as AI-driven pricing, ordering and payments.”

OYO, as a part of its integration of various functions of its European vacation homes business progresses, is downsizing in some parts of the business to increase efficiency and harness synergies, the statement added. The startup has also reassessed its corporate headquarter base and is merging roles and flattening team structures.

Surf Air Mobility plans to list directly on public markets in the U.S. after ending a planned $1.4 billion special purpose acquisition company, or SPAC, listing.

The California-based aviation company still plans to merge with regional airline Southern Airways Express as part of an initial public officer (IPO), Southern CEO Stan Little confirmed. Surf Air Mobility did not say when it planned to list but has filed a confidential registration statement, or S-1, with the Securities and Exchange Commission.

Surf Air and Southern plan to use their merger to accelerate the introduction of hybrid-electric passenger aircraft. Little has previously said that the combination would provide the capital it needs to take delivery of 100 Cessna Caravans from manufacturer Textron, and convert them to hybrid-electric propulsion beginning in the 2024-25 timeframe.

In May, Surf Air Mobility unveiled plans to list via a $1.4 billion SPAC deal with blank-check company Tuscan Holdings. The two companies mutually terminated that agreement on November 14, with Surf granting Tuscan 600,000 shares plus a termination payment of either 35,000 more shares or $700,000 in cash. Tuscan will liquidate following the end of the merger agreement.

SoftBank Group has reportedly cut the valuation of Indian hotel-booking platform Oyo by more than 20 percent, Bloomberg reported on Thursday quoting people familiar with the matter.

According to the report, the Japanese investor, who owns 45 percent of Oyo, cut its estimated value for initial public offering-bound Oyo to $2.7 billion in the June quarter from an earlier $3.4 billion. In 2019, Oyo had been valued at $10 billion.

The $2.7 billion valuation is lower than the $3.23 billion that Oyo has been able to raise through primary and secondary equity and debt funding rounds from investors. 

Calling the valuation markdown a speculation and “patently incorrect,” Oyo said that having clocked $1 million in earnings before interest, taxes, depreciation, and amortization in its fiscal 2023 first quarter, there is no rational basis for a markdown.

“A 41 percent gross profit margin and a 45 percent increase in gross booking value per hotel per month compared to the last financial year are dramatically improved results and the strong performance trajectory is expected to continue,” Oyo said in a statement.

Earlier this week, Oyo updated its initial public offerings application to the Indian regulatory body — Securities and Exchange Board of India (SEBI). The company originally planned to raise around $1.16 billion through the initial public offering, seeking a valuation of around $12 billion.

Oyo said that SEBI has given the company permission to file updated financials till the September 2022 quarter and Oyo would initiate the approval process post the filing of its audited numbers. “We have not decided the exact timing for the IPO and the IPO valuation is also highly speculative,” Oyo added.