Business
Has IPO-bound OYO regained trust of its hotel partners?
As travel tech major OYO prepares for its much-awaited public listing, the continued satisfaction of its hotel partners and winning back dissatisfied partners will play a key role in determining how its business performs and, by extension, how its stock holds up.
The company has recently been affected by some of its hotel partners publicly complaining, filing cases and even writing to the regulator.
The moot question here is: Has IPO-bound OYO regained the trust of its hotel partners which it also addresses as Patrons?
Let’s take a closer look at its patron policies through its draft red herring prospectus (DRHP) filed with SEBI.
With over 157,000 storefronts worldwide, the 40 reported cases against the company or its directors translate to less than 0.02 per cent of its storefronts. OYO sources say that majorly of these originate due to shifting from minimum guarantee to revenue sharing arrangement. As per DRHP, at its peak, 14.7 per cent hotels had minimum guarantee. This number is down to nearly zero now.
After bingeing on growth and expansion, the company seems to have refocused its priority to course correct on the hotel partner front.
Revenue growth is by far the biggest and most meaningful value proposition that OYO claims to provide its hotel partners worldwide. Its DRHP tries to prove it by showing the median revenue growth for a storefront after 12 weeks of a hotel joining the OYO platform.
The highest revenue uplift for storefronts is in the European Vacation Homes Business at 2.4 times, while India is still at a healthy 1.9 times increase in revenue.
The platform has several revenue enhancement tools, including machine-learning based dynamic pricing algorithms which use hundreds of parameters such as the supply and demand, seasonality and local trends to arrive at the optimal real-time price for a room and thus maximising partner revenues.
Another pricing tool is the Tariff Manager, which gives partners control over pricing based on their understanding of potential local demand. Currently, 45 per cent of OYO hotels use a tariff manager on a monthly basis globally.
It has introduced a prepaid e-wallet to simplify revenue collection and reconciliation process and moved from a monthly reconciliation process to now offering hotel partners daily payouts to improve their working capital flow.
It does consistent engagement with partners now via regular town halls. All of this has led to an increase in Patron satisfaction score from 30.1 per cent for the three months ended September 30, 2020, to a healthier 72.3 per cent for the three months ended March 31, 2021.
OYO now has over 2,700 hotel partners with more than one property signed up on its platforms. For India, this translates to 9.5 per cent of the hotel owners.
New hotels are joining the OYO platform via a self-onboarding tool, ‘OYO 360′, which automatically generates digital contracts based on property details and KYC documents provided by hotel partners.
In fiscal 2021, almost all the company’s contracts with new hotel Partners were signed and managed digitally, says the DRHP.
However, OYO still hasn’t been able to assuage all of its sceptics. Some traditional hoteliers still believe that the model of offering season wise pricing with minor discounts is the only way to keep the small hotels category viable.
Few others are still to come to terms with the abolition of the minimum guarantees which gave them certainty of revenues and are still in courts demanding compensation. There are signs of thawing though; according to company sources, close to 1,300 hotel partners facing issues in the past have joined back.
Given the buoyant IPO market, OYO’s public offering may sail through successfully, but the continued partner satisfaction will have a huge impact on its growth and hence its stock performance. A point OYO’s founder Ritesh Agarwal would do well to take note of.
Business
India Set To Lead The World In 6G, Says Telecom Minister Jyotiraditya Scindia
In a bold declaration at the inaugural address of the Indian Mobile Congress 2024 (IMC) on Tuesday, Union Telecom Minister Jyotiraditya M. Scindia has said that India will lead the world in the adoption of 6G.
In his address at the event, Scindia emphasized that India is now prepared to lead the world in the development of 6G technology.
India’s Technological Rise: From Following to Leading
“It is our belief and commitment that India, which followed the world in 4G and marched with it in 5G, will lead the world in 6G,” Scindia stated.
The minister highlighted India’s remarkable achievements in the telecommunications sector over the last ten years, the country has become a global leader in innovation and technology.
“It’s a fundamental change in approach towards technology development,” he said, attributing this transformation to Prime Minister Narendra Modi’s leadership.
Telecom Sector Growth Under PM Modi’s Leadership
“Prime Minister who has always put people at the heart of progress Sabka Sath, Sabka Vikas Sabka Vishvas aur Sabka Prayas combined with his second motto, One Earth, One Family and One Future. It is combination of these two mottos that leads India under PM Narendra Modi leadership one of the leading sectors in the committee of Nations,” Scindia said.
Scindia underscored government’s initiatives to bridge the digital divide, particularly through the BharatNet program, the world’s largest rural broadband connectivity initiative to connect every panchayat of the nation. Over the past three years, the government has invested more than USD 10 billion and laid 7 lakh kilometres of fiber across rural India.
Digital Payments and UPI: Pillars of India’s Digital Economy
He cited staggering growth in mobile and broadband connectivity, with mobile connections rising from 94 million to 1.16 billion, and broadband users growing from 60 million to 924 million in just a decade. India’s optical fibre cable (OFC) networks has expanded from 11 million kilometers to 41 million kilometres over the last ten years, he added.
The minister further said that this growth is accompanied by the success of India’s digital payment systems, the 4G stack, and the Unified Payments Interface (UPI), which serve as pillars of India’s digital economy are expected to contribute significantly to the global digital infrastructure.
Scindia further noted that the government’s efforts to ensure that policy frameworks keep pace with the rapidly evolving digital landscape. “The recent changes to the Telecommunications act 2023 is a case in point. It has been drawing light upon hither to undressed areas such as a high potential sector of satellite communications, addressing the challenges of the digital leader. The most important being cyber security. The telecom sector much like other growth critical sectors in India is aggressive, is ambitioushe said.
“The telecom sector much like other growth critical sectors in India is aggressive, is ambitious and its outlook in our Journey from Amritkal to Shatabdikal is to lead the world,” Scindia said. By mid-next year, India will have achieved 100 per cent saturation of 4G across the entire country, covering even the most remote villages, the minister said.
He emphasised PM Modi’s vision of India as a first mover in 6G technology, underscoring the nation’s resolve to lead the world in future telecom innovations.
“The attitude put forward by the prime minister of not just embracing, but raising ourselves to becoming the first mover in the 6G technology,” he added.
Business
Indian Markets Gave Better Returns Than China In Last 5 Years, Says Sebi Member
Sebi Whole-time Member Ananth Narayan G on Monday reminded investors that Indian equities have consistently delivered 15 per cent returns over the last 5 years whereas the same has been zero or even negative in China.
Terming the Indian markets “sone pe suhaga” for delivering higher returns for lower risks, Narayan also flagged a few areas of caution for investors and asked them to be conscious of the risks.
“There’s a lot of talk about China markets over the last few days. But over the last five years, while Indian markets have given around 15 per cent compound annual growth rate consistently, Chinese markets are nowhere close to that. It’s almost zero. In fact, in some cases, like in Hong Kong, it’s actually negative,” Narayan said.
Speaking at an event marking the start of the Investor Awareness Week at NSE, Narayan said FY24 was a “remarkable” year for India, with the benchmark indices returning 28 per cent and the volatility just 10 per cent.
“That’s like ‘sone pe suhaga’. It’s like the best of all worlds: low risk and very high return,” Narayan said, underlining that there are side effects of this as well.
Making it clear that it will not be the same going forward and investors should not assume it to be a one-way street, Narayan said such handsome returns can lead to complacency and pointed to a lot of youngsters opening up demat accounts to join the bandwagon.
Educating people about risks is very important, Narayan said, giving the analogy of driving a car. “There has to be a light push on the accelerator to get more investors to provide risk capital for the economic growth, we also need to be aware of risks and use the brakes if need be.” He said that 40 per cent of the small and midcap scrips have shot up by 5 times in the last five years, because of an imbalance between inflow of investor money and supply of new paper.
On its part, the capital markets regulator is trying hard to ensure that fund-raising clearances are done early so that there is a steady stream of quality paper supply in the market.
From a broader, longer-term perspective, Indian markets will only go north from here given the economic growth prospects in the country, Narayan said, issuing specific advice to investors.
Investors need to have the right intermediaries to capitalise on this opportunity presented by India, and not fall for the unregistered and fly-by-night ‘finfluencers’ who might be driven by vested interests, he said.
Using the oft-repeated idiom of “all roads lead to Rome”, Narayan remarked that Rome is not a traveller-friendly place and one may get scammed there as well. Therefore, it is important to seek advice from the right people for the investors, he said.
He also said that it is in investors’ interests to trade less and stay invested for longer for higher returns, and added that studies prove the same.
Sebi, which has flagged certain areas like derivatives recently, is not against speculation or participants taking short-term trades, but it would want investors to understand the risks, Narayan said.
Business
Ratan Tata Rubbishes Rumors Of ‘Critical Health’; Says No Cause For Concern
Tata Group’s Ratan Tata has denied rumours of his critical health that have been reported and have surfaced in the recent hours.
Ratan Tata’s associates took to his official Instagram account to debunk the news of him being ‘Critical’.
In the post, Ratan Tata said, “I am aware of recent rumors circulating regarding my health and want to assure everyone that these claims are unfounded. I am currently undergoing medical check-ups due to my age and related medical conditions.
There is no cause for concern. I remain in good spirits and request that the public and media respect refrain from spreading misinformation.
For more than fifty years, Ratan Tata has led the Indian business community’s entrance hall. The 86-year-old has been suffering from illnesses associated with ageing. Tata has participated in social life to the best of his limited ability despite his health issues.
Recently, on the occasion of Gandhi Jayanti, on October 2, Ratan Tata, expressed his congratulations to the Prime Minister on this occasion. “I congratulate the honourable Prime Minister on the 10-year commemoration of programmes that have benefitted millions in rural India.”
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