Core Viewpoint - OYO, the Indian hotel chain known as the "king of budget hotels," is preparing for an IPO with a target valuation of $8 billion (approximately 57.2 billion RMB) scheduled for November 2023, following a challenging period in the Chinese market where it faced significant losses and operational issues [1][20]. Group 1: Company Background and Expansion - OYO rapidly expanded in China, covering over 300 cities and partnering with more than 10,000 hotels within 20 months, significantly outpacing competitors like Home Inn and 7 Days Inn [1][19]. - At its peak in 2019, OYO had approximately 1.2 million hotel rooms globally, making it the second-largest hotel chain after Marriott [2][19]. - The company initially focused on low-cost, budget accommodations, leveraging a light-asset model that primarily generated revenue through commission from franchise hotels [7][9]. Group 2: Challenges and Setbacks - OYO faced criticism for its rapid expansion strategy, which relied heavily on franchise agreements with minimal quality control, leading to a proliferation of low-quality hotels [10][12]. - By 2020, OYO's aggressive growth resulted in significant financial losses, with monthly expenditures reaching approximately 150 million RMB while generating only 13 million RMB in commission income [12][15]. - The company experienced a drastic reduction in its Chinese operations, with the number of hotels plummeting from over 10,000 to just over 1,000 due to management issues and market exit [19][20]. Group 3: Financial Recovery and Future Plans - OYO has reported a turnaround in its financial performance, achieving its first quarterly profit in Q2 of the 2024 fiscal year, with a net profit of over 13.6 million RMB [20][24]. - The company aims to expand its presence in core growth markets, including India, Indonesia, Europe, and Malaysia, while also exploring opportunities in the U.S. and China [20][24]. - OYO's recent acquisition of Motel 6 for $525 million marks its largest acquisition to date, indicating a strategic shift towards enhancing its portfolio and market presence [23][24]. Group 4: Market Trends and Competitive Landscape - The domestic low-tier market is growing at a rate 150% faster than high-tier markets, presenting significant opportunities for budget hotel chains like OYO [20][28]. - OYO's low-price strategy aligns with current consumer trends, where price-sensitive consumers are increasingly seeking value, creating a fertile ground for budget offerings [28][30]. - The company's approach of attracting a large user base through low prices and achieving profitability through scale and cost control is becoming increasingly relevant in today's economic climate [29][30].