How Do Revenue Multiples Influence Oyo Valuation?

I get a kick out of breaking down startup valuations, and revenue multiples are one of my favorite levers to play with because they feel so straightforward but hide a lot of nuance. At the simplest level, a revenue multiple is just the ratio investors are willing to pay for each unit of revenue — e.g., a 5x multiple on $100M in trailing twelve months (TTM) revenue implies a $500M valuation. But with a company like OYO, which sits between tech, travel, and hospitality operations, that simple math needs a lot of careful tuning. You can't just slap a SaaS multiple on it and call it a day; you have to ask what 'revenue' actually means, how predictable it is, and how much of the gross flows OYO actually keeps.

Where it gets interesting: OYO's business mixes managed and franchised hotels, leased properties, and marketplace-like relationships with hotel owners. Some reported figures are gross bookings (total consumer spend) and some are net revenue (OYO's take-rate out of bookings). Investors should insist on the net metric when applying revenue multiples, because gross bookings can be enormous while OYO's retained revenue is a sliver. That retained revenue also varies by geography, seasonality, and contract terms with hotel owners. So if two companies both show $200M in 'top-line' but one is reporting gross bookings and the other is reporting net revenue, using the same multiple would be misleading. Adjustments for IFRS/GAAP recognition, refunds/cancellations, and voucher liabilities are also crucial — I always look at cash collected versus revenue booked.

Beyond bookkeeping, multiples reflect future expectations. High growth, clear path to margin expansion, and strong unit economics justify higher revenue multiples. For OYO that means: improving average daily rate (ADR) and revenue per available room (RevPAR) without forcing unsustainable owner subsidies; raising the take-rate while keeping hotel partners satisfied; and lowering customer acquisition costs. If OYO can demonstrate repeatable payback periods for new markets and show EBITDA margins trending up, investors will place a premium multiple. Conversely, governance concerns, aggressive accounting, regulation, or weak unit economics push multiples down. Comparables are useful but imperfect — comparing OYO to 'Airbnb' or hotel REITs highlights model differences (marketplace vs asset-heavy), so you'd typically build ranges and apply discounts or premiums for risk and capital intensity.

Practically, I build scenarios: pessimistic low multiple (reflecting high churn, low take-rate, regulatory risk), base case (steady growth, margin improvement), and optimistic (market leadership, better monetization). I also run sensitivity tables: how valuation changes if take-rate rises from 10% to 15%, or if cancellations fall by 20%. For anyone evaluating OYO, the main things I'd watch are the mix of net vs gross revenue, the trajectory of unit economics (RevPAR, owner share), and evidence that the company can monetize repeat guests without heavy subsidies. Those knobs are what move the multiple, and honestly, they tell the real story behind the headline revenue number — so I keep an eye on them in earnings calls and industry chatter, and they usually tip me off to whether a multiple feels justified or overly optimistic.