Speaker 1: This is Bloomberg Business Week with Carol Messer and Jason
Speaker 1: Kelly on Bloomberg Radio. So. Back in December, Bloomberg Business
Speaker 1: Week reported on how Oyo Hotels had become the world's
Speaker 1: number two hotel operator by room count and was poised
Speaker 1: to overtake number one Married International. They've been on quite
Speaker 1: a tear, but like many in the hospitality industry, they
Speaker 1: are dealing with the coronavirus pandemic and the impact it's
Speaker 1: having on their businesses. Uh. Ritesh ager Wall is CEO
Speaker 1: of Oyo Hotels and is joining us on the phone
Speaker 1: from Delhi, India. He is also the founder of Oyo Hotels. Rites.
Speaker 1: Thank you so much for being with us. UM, give
Speaker 1: us an update on where you are and the impact
Speaker 1: that the virus is having on your business. You guys
Speaker 1: operate around the globe. Yeah, first off, thank you so
Speaker 1: much for having me over the Business Week. Uh. This
Speaker 1: is someone this is a program which I'm a big
Speaker 1: follower off and I'm so glad to have an opportunity
Speaker 1: to come speak here. Uh these are of course. Uh,
Speaker 1: you know, our company is young. We have a five
Speaker 1: and a half six year old company and in this
Speaker 1: period of time, we have never seen anything like what
Speaker 1: the virus has become for the hospitality and the travel industry.
Speaker 1: The size of the impact is unprecedented. Um you know,
Speaker 1: from from not just a company just five and a
Speaker 1: half six years old, but for a company that would
Speaker 1: have been probably been around for decades. So from from
Speaker 1: our perspective, I think we are trying to constantly respond
Speaker 1: to this situation in the following manner. The first priority
Speaker 1: for US has been making sure that we serve our
Speaker 1: customers and our communities were the highest amount of priorities.
Speaker 1: So we are trying to fight the virus and everywhere
Speaker 1: we can, in every part of the world. So whether
Speaker 1: it is in the United States by means of the
Speaker 1: First Responders program, whether it is in India by helping
Speaker 1: in the form of isolation centers or extended hospital, or
Speaker 1: whether it is in China and near the ten Day
Speaker 1: Hospital to enable health workers to get good places to
Speaker 1: live in or in the UK for helping the NHS
Speaker 1: workers to find them good places sustained. I think we're
Speaker 1: trying to make sure we do everything possible from cleanliness,
Speaker 1: ease of uh space for all of them. But on
Speaker 1: the other hand, we're also trying to make sure that
Speaker 1: we have prepared for, uh, you know, all the challenges
Speaker 1: that our business is going to face in the coming months.
Speaker 1: It is too early at this point of time. We
Speaker 1: have on one side a positive story in China, which
Speaker 1: has started recovering. It's not fully recovered yet, let me clarify,
Speaker 1: but at six of what it was at the peaks before.
Speaker 1: But that said, globally every market we are seeing some
Speaker 1: of the other kind of impact due to the coronavirus situation,
Speaker 1: and I believe it's something that's going to continue to
Speaker 1: impact the hospitality industry for the near future. So well,
Speaker 1: let me ask you how badly was your China operations,
Speaker 1: how how hard were they hit um and how will
Speaker 1: it effect revenues overall? Since I think you've already lost
Speaker 1: about five million last fiscal. Sure, I think you know
Speaker 1: our company lost his last year if you were to
Speaker 1: compare that to the previous fiscal improved in India but
Speaker 1: accelerated in China because we had just launched in China
Speaker 1: last year fiscal, but the COVID situation happening in the
Speaker 1: same year was not a good news at all. I
Speaker 1: think the China occupancy for Oreo dropped quite substantially, So
Speaker 1: if there was a hundred dollars in revenue, we've typically
Speaker 1: lost around sixty to sixty five dollars in revenue immediately
Speaker 1: when the first lockdowns got announced. I think we've been
Speaker 1: able to recover a little over half of it now,
Speaker 1: but there is some way to go before we recover
Speaker 1: the rest of the occupants. So that's how the China
Speaker 1: business results have been. That is, in less than two months,
Speaker 1: the business has been able to discover more than half.
Speaker 1: But that said, um, it's it's still behind, significantly behind
Speaker 1: what it was earlier, and I think our genuine hope
Speaker 1: is we're able to see similar recovery from every other
Speaker 1: part of the world. But that said, um, we are
Speaker 1: operators who are you know, who aspire to try and
Speaker 1: come out stronger at the other end. At the same time,
Speaker 1: prepare for making sure that even if this wider situation
Speaker 1: does last longer, we are enabling our company a chance
Speaker 1: to be successful in the very long term. But I do,
Speaker 1: I do, I am curious about what this means that
Speaker 1: for your plans. I know you guys were looking at
Speaker 1: becoming the world's largest hotel operator. I mean overtaking Marriott.
Speaker 1: I know, um, this was certainly you know in the
Speaker 1: works prior to the virus. How does the virus, I mean,
Speaker 1: some of your biggest markets China, the US, and Europe
Speaker 1: have been hit really hard. So how does this affect
Speaker 1: your plans to be come number one in terms of
Speaker 1: hotel operators? Sure? I think at this point of time,
Speaker 1: our focus is primarily on making sure that we serve
Speaker 1: our consumers and the health workers and the community around us.
Speaker 1: I think, uh, if you're able to do good for
Speaker 1: the world, I think, um, and for our customers and partners,
Speaker 1: I have no question in mind that we will get
Speaker 1: to not just being the leading hotel chain, but much
Speaker 1: more a company that people are inspired by. But that said,
Speaker 1: I think what's clear is that we had in the
Speaker 1: last few months been able to prove that our capabilities
Speaker 1: are clearly superior for enabling small hotel owners to be successful.
Speaker 1: So over the next six to eight months, the small
Speaker 1: hotel owners are going to is really tough times. The
Speaker 1: occupancies are going to be low, operating costs will need
Speaker 1: to be very closely looked at, and a lot of
Speaker 1: these smallertail owners will need support and education to be
Speaker 1: able to take advantage of the fantastic um bailout packages
Speaker 1: that various countries are trying to help. Our small and
Speaker 1: medium enterprise it opens over the next eight months, can
Speaker 1: be partner them and make sure that we can come
Speaker 1: out stronger by means of making them successful but also
Speaker 1: having a stronger business in the part of becoming a
Speaker 1: bigger but at the same time a stronger and he
Speaker 1: be a company at the end of this crisis. Well,
Speaker 1: and I do wonder you know what you're thinking is
Speaker 1: about it was recovery plan when we get to the
Speaker 1: other side side of it, because from what I've understand,
Speaker 1: you've cut a bunch of workers, and you guys have
Speaker 1: been phasing out, um the guarantees that you give to
Speaker 1: the revenue guarantees to some of these hotel operators. Um.
Speaker 1: So you talk about helping the independent hotel folks, But
Speaker 1: I do wonder if you anticipate that as a result
Speaker 1: of this and unforeseen in terms of the virus, that
Speaker 1: some of those independent hotel operators, because you you won't
Speaker 1: be giving them the revenue guarantees, that they're going to
Speaker 1: ultimately probably be hurt in this process. Yeah, that's a
Speaker 1: very important perspective, I think I would answer that into
Speaker 1: different parts. The first one is OIL has continuously focused
Speaker 1: on making sure that how do we bring more revenue
Speaker 1: for our partners, and as you have been able to
Speaker 1: make sure that every year increase the occupancies of ACID
Speaker 1: owners more than them remaining UM independent or through some
Speaker 1: of the other arrangements with one of the competitors. I
Speaker 1: think we've tried to be a leading edge for our
Speaker 1: partners to make sure that even in these toubtimes we
Speaker 1: can be a preferred alternative for them. But that said,
Speaker 1: you're absolutely right that we have been phasing our guarantees,
Speaker 1: especially for our new signing and as well as for
Speaker 1: some of our past active owners. So due to that,
Speaker 1: there will be definitely some of the challenges from our partners.
Speaker 1: But I think what we're trying to do in the
Speaker 1: process is make sure that we continue to engage with
Speaker 1: our partners, bring them more occupancy, and more importantly so
Speaker 1: the partners who are highly affected. We're setting up a
Speaker 1: global COVID nineteen fund for our asset owners and UM.
Speaker 1: You know, Bloomberg also recently covered about our process of
Speaker 1: enabling those in Japan, in Southeast Asia and so and
Speaker 1: over thecoming days, we plan to bring it worldwide entered
Speaker 1: no go ahead. Our intent is we are not a
Speaker 1: perfect company, and they've never said that we are one.
Speaker 1: But our hope is how do we constantly improve ourselves
Speaker 1: to be better than anybody else for our customers and
Speaker 1: our partners in these really tough times and with the
Speaker 1: limited resources we have, And that that's the only aspiration
Speaker 1: that we're taking along without one of the things. And
Speaker 1: I know when you're in a company like your own,
Speaker 1: I mean you're thinking about, you know, how this impacts
Speaker 1: yourself personally, certainly the virus, but of course how it
Speaker 1: impacts your workers. Um, you guys have cut about five
Speaker 1: thousand jobs. I mean, do you anticipate that there will
Speaker 1: be more job cuts? So, first off, I think the
Speaker 1: job cuts that are the restructuring that we had announced
Speaker 1: for in January, which was as a part of our
Speaker 1: restructuring organization, given three important parameters that we have discussed earlier.
Speaker 1: But that said, I think at this point of time,
Speaker 1: the COVID nineteen situation is very very unique. From OILS perspective,
Speaker 1: Our principle or the opinion is as under. I think
Speaker 1: this situation being unprecedented our focus will be that's how
Speaker 1: can be ensure that we prioritize any impact on the
Speaker 1: senior executives before any individual job is touched, which means
Speaker 1: that before anything like that where to be considered, my pay,
Speaker 1: my executives stay and their executive spray will be the
Speaker 1: first one to be touched, and I should be at
Speaker 1: the pay before I consider any of those discussions. So
Speaker 1: I think at this point of time, we are still
Speaker 1: evaluating the broadest challenges and impact of the COVID nineteen situation.
Speaker 1: To be honest, it has impacted some of our markets,
Speaker 1: but some of our markets are still not impacted yet,
Speaker 1: but we do anticipate that they will getting impacted. So
Speaker 1: once we understand more about the details, we will figure
Speaker 1: out what the outcomes are. But what I can assure
Speaker 1: is that at any point at any of those outcomes,
Speaker 1: I think the first one to be impacted by a
Speaker 1: challenge like that would be need and then my executives attached.
Speaker 1: Almost done. But I just wanted to ask you, I
Speaker 1: am curious if you're feeling any kind of pressure from
Speaker 1: either investors, I mean Soft Bank. They are you're controlling shareholder,
Speaker 1: the Vision Fund, and they have been under pressure as
Speaker 1: you know over the past year or so UM specifically
Speaker 1: because of some of their investments we work and others UM.
Speaker 1: But there is a lot more emphasis on startups being profitable.
Speaker 1: Are you feeling pressure UM as a result of that,
Speaker 1: be it from SoftBank specifically or directly, sure? No. I
Speaker 1: think the first one I want to classify that OIL
Speaker 1: is a board and UH distributed shareholder let company. I think,
Speaker 1: of course Software Vision Fund is a very valuable shareholder,
Speaker 1: but they're not be controlling shareholder in a company beyond
Speaker 1: Software and Whision Fund has toquire capital light speed UM
Speaker 1: and they just have a shareholders and are capitable and
Speaker 1: are very thankful to all of them, including Division Fund.
Speaker 1: I think our company driven by a very strong group
Speaker 1: of board members like let's see UH and and a
Speaker 1: couple of other independent board members, along with our shareholders
Speaker 1: boardlembers as well. Clearly, I think the world and the
Speaker 1: high growth companies, even before the COVID nineteen situations, had
Speaker 1: acknowledged that past to profitability is something that the markets
Speaker 1: want to see, and I think the COVID nineteen situations
Speaker 1: will give their advice to the high growth companies even further.
Speaker 1: Our company is in a place where, UM, we are
Speaker 1: uniquely positioned to be able to get there. It don't
Speaker 1: happen by happenstance. We will need to work hard and
Speaker 1: make sure that every day we try and do more
Speaker 1: work to be able to make sure that we emerge
Speaker 1: a stronger company with long term UM success. But you know,
Speaker 1: in order to do that still require significant amount of
Speaker 1: hard work. I'm not pressured but by means of any
Speaker 1: of our share owners. UM. But I think as an
Speaker 1: entrepreneur who wants to do right for his company and
Speaker 1: his steam members, his customers, and his shareholders, I think
Speaker 1: I do. I do feel a sense of responsibility and um,
Speaker 1: you know, duty towards the company that I serve and
Speaker 1: and I'm I'm fully committed to making sure that I
Speaker 1: serve it with the best of my understanding. And I
Speaker 1: am curious too. I mean, you're calling you know, I'm
Speaker 1: talking to you from Delhi, UH and I do. We
Speaker 1: talked earlier on our broadcast about the emerging markets and
Speaker 1: how they're bracing for the impact of the virus. What
Speaker 1: can you tell us about what's going on UH India,
Speaker 1: specifically what you're seeing and and you're concerned about you
Speaker 1: know the country and what it might face with the
Speaker 1: virus and certainly the spread of it. Sure I may
Speaker 1: be psychly biased in that respect, so forgive me for that.
Speaker 1: I think from our perspective that a few important views,
Speaker 1: specifically about India and then more broadly about emerging markets.
Speaker 1: I think the first views that I believe the consensus
Speaker 1: at least what I'm hearing, is that India will emerge
Speaker 1: stronger economically um at the end of this crisis, especially
Speaker 1: because uh, this is an economy which uh you know,
Speaker 1: has not been very significantly hit by the virus so far,
Speaker 1: high schools to a thousand cases, uh, limited debts and
Speaker 1: um you know, of course any that is very bad,
Speaker 1: but relatively smaller in comparison to various other larger countries.
Speaker 1: And second, there is relative guidance that has been issued
Speaker 1: of GDP podcasts. Uh. It's of course a very bad
Speaker 1: time to be able to sort of say that which
Speaker 1: countries are doing better, But India probably will be one
Speaker 1: of the fastest growing economies even in these really tough times.
Speaker 1: And more than that, I think the Indian Prime ministers
Speaker 1: taken significant steps to consider lockdown, including body field UM
Speaker 1: and and multi state body see at a time when
Speaker 1: we had a couple of hundreds cases. IM since you're
Speaker 1: hope is all of these steps should keep our country
Speaker 1: ahead and enable our economy to prosper, which will definitely
Speaker 1: means a quarter or two of UM really tough signs
Speaker 1: and that's something that everybody in the industry will feel
Speaker 1: and hospitality and travel will see more than most others.
Speaker 1: But I think, um, and it will require a lot
Speaker 1: of stuff steps including I think being able to make
Speaker 1: sure that we are able to constantly navigate the path
Speaker 1: of ensuring that these two quarters we get past. That said,
Speaker 1: I think my belief is at the end of this, uh,
Speaker 1: we will we will be a stronger economy here in
Speaker 1: India and emerging markets at large. UM. That's great because
Speaker 1: I was going to ask you, how do you think
Speaker 1: the coronavirus pandemic will change the world once we get
Speaker 1: on the other side side of it, and I am
Speaker 1: assuming that would be kind of your answer. Yeah. I
Speaker 1: think my belief is that one of the things that
Speaker 1: the virus has proven is that the g DPS or
Speaker 1: the per capita income uh if not what the virus
Speaker 1: judges which country it impacts too. Uh So I think
Speaker 1: it's at the end of the other side. I think
Speaker 1: it will be imperative for the world to sort of
Speaker 1: try and make sure that it is much stronger. My
Speaker 1: belief is countries, regardless of being emerging economies, are developed,
Speaker 1: the countries with fundamentals are stronger will end up coming
Speaker 1: up recovering faster, and countries with fundamentals are weaker, whether
Speaker 1: they're developed or emerging, will will take longer. Very similar
Speaker 1: to how it is about for private companies of public companies,
Speaker 1: high quality companies come back always sooner than other companies.
Speaker 1: Our hope is we will be one of those companies
Speaker 1: who will continue to be what it's fundamentals and and
Speaker 1: and come out sooner. So I've got to ask you
Speaker 1: since you said that, I mean, I know one of
Speaker 1: the things that's been talked about, and I promise this
Speaker 1: will be our last question. Um, we talked about you know,
Speaker 1: the ten billion value, ten billion dollar valuation. Do you
Speaker 1: think you know? I mean, how is that affected by
Speaker 1: all of this? Sure? I think, um, you know, first off,
Speaker 1: I think as operators and entrepreneurs, I think we're focused
Speaker 1: on building a good business rather than what the valuation is. UM.
Speaker 1: Every day We're thankfully not a public company, because if
Speaker 1: we were a public company in today's world where market
Speaker 1: cars singing as quickly as they would, then I think
Speaker 1: that would be the only topic we discuss if we
Speaker 1: care about it. So clearly as a management and as
Speaker 1: a company, our focus is really a good business and
Speaker 1: not the valuation. Um. I think from our perspective, the
Speaker 1: valuation is a function of what is the quality of
Speaker 1: the business, what is the stage and how the company
Speaker 1: that it in value? Which is which is something that
Speaker 1: is best less two investors to be able to decide um,
Speaker 1: you know how how they consider energy on valuation. So
Speaker 1: whenever or considers raising it makes around with capital either
Speaker 1: privately or if any shares of its gets traded in
Speaker 1: sequency markets, I think that's probably the time to see
Speaker 1: how the valuation getting effected. Alright, Gonna leave it there.
Speaker 1: Thank you so much. I know we covered a lot
Speaker 1: and I didn't mean for it to go on this long,
Speaker 1: but I just since we had you and I really
Speaker 1: appreciate you getting up we all do, so. Thank you
Speaker 1: so much. Stay safe and um, I you know, I
Speaker 1: hope everything goes okay, and let's hope you're out of
Speaker 1: the situation sooner rather than later at this point, So
Speaker 1: do stay safe. Thank you so much. I just wanted
Speaker 1: to add one more thing, sure, yeah, I just wanted
Speaker 1: to add that the United States is going through an
Speaker 1: unprecedented situation. The RUNDO three hundred hotels there for the
Speaker 1: first responders in the United States. We have brought in
Speaker 1: a program there first responders, including health workers and various
Speaker 1: other people who are engaged in the fighting as coronavirus.
Speaker 1: OIO has committed to bring freedoom nights for them along
Speaker 1: with its partners, to ensure that they don't need to
Speaker 1: worry about going back to their loved ones and being
Speaker 1: worried about having some issues of the virus back home.
Speaker 1: They can come back safe, have a good night, get
Speaker 1: a good shower, and uh, you know, support all of
Speaker 1: our friends and families in the United States in this
Speaker 1: in this big fight around coronavirus. I know the Four
Speaker 1: Seasons in New York has also come up with something similar.
Speaker 1: Our beliefs all of us here at hotels can do
Speaker 1: very limited things given the limited resources we have and
Speaker 1: more so oil being a startup. But in the in
Speaker 1: the COVID fight, whether it's a smaller, big company. We
Speaker 1: are all in it together, and they're very thankful to
Speaker 1: the people of the United States and the first responders
Speaker 1: for taking this up so positively so far. I'm so
Speaker 1: glad you brought that up. It's something that we actually
Speaker 1: have mentioned on air already, so UM we commend you
Speaker 1: for doing that because that certainly has been a helpful
Speaker 1: thing for those focus or folks, especially in the medical community,
Speaker 1: who are on the front line of all of this.
Speaker 1: UM rites, thank you so much. Like I said, I
Speaker 1: know it's the middle of the night, so thank you
Speaker 1: again so much for spending time with us and good
Speaker 1: luck with everything. Ritesh Agrawall, founder and CEO of Oyo Hotels,
Speaker 1: on the phone from Delhi, India. Thank you. Ratah