We should go public when the time is right: OYO Hotels' Steve Albrechts

'There are many factors and parameters that we are going to weigh', he said

The board members of OYO, which has filed its latest financial report with the Securities and Exchange Board of India (Sebi), held a meeting on Monday to discuss the road map for the IPO-bound company. Steve Albrechts, non-executive director on the board of OYO Hotels and Homes, San Francisco, and also head of the audit committee at the company, in an interview with Shivani Shinde talks about the latest financial numbers, governance and leadership issues, and the future course of action for the hospitality services platform. Edited excerpts:

What does the board make of the company’s latest financial report?

First, travel has rebounded. Our gross booking value per storefront is up considerably. Overall gross booking value and revenues are up, and we had an Ebitda positive quarter; still, there's a long way to go. We're not patting ourselves on the back yet.

OYO’s IPO has been delayed; the DRHP was filed last year. How concerned is the board about the delay and what is the way forward? 

I have served on a number of boards and I think we should go public when the timing is right. By that I mean when our internal finances and financial results look good, as well as the market looks good. I can tell you this as one of the independent directors who heads the audit committee that we aren't ready and the markets aren’t ready. In the meantime, we’re having quarterly audits so we can be ready (for an IPO) anytime. At the end of the day, it’s the board that’s going to make the decision. I personally will not vote to go public until I feel, as a company, we're ready to go. Going public is the beginning, not an end.

We have to be a sustainable company. I have tremendous confidence in OYO and we are ahead from a governance point of view but from a financial point of view, we're not there yet.

Would it be fair to assume that profitability is a target that you want to achieve before launching the IPO?

There are many factors and parameters that we are going to weigh. Where we are on the profitability scale is one; our revenue is another factor, and the market scenario is certainly key. We, as a board, have faith in the long-term goals of OYO and a decision will not be made only on the company becoming profitable. There are so many factors to be considered. Obviously, the markets are not appropriate right now.

Indian start-ups have been at the receiving end as many of them have failed to deliver on profitability. OYO today is at the receiving end for the use of the term ‘adjusted Ebitda’. Your comments…

I know how some companies that went public in India saw their stock price and valuation drop dramatically. They have received flak, but this happens across the world. I am part of the OYO boardroom and as a board member, if the company doesn't have a long-term plan or if we don't feel comfortable about it, I will never support us going public. Profitability, margin, etc, are just a few of the parameters. Governance is a bigger issue; many start-ups have had this issue. So, I want to ensure that we have the right governance, the right financials, and the right prospects.

OYO has been making several tuck-in acquisitions as it grows. Do you think acquisition is the right strategy for growth?

The focus is on cash and profits, and we have to prove that we can be profitable and cash flow positive for a period. It’s important to return some of that to our investors as opposed to inorganic growth. But if there is a target that is accretive to OYO, I shall look at that situation. At present, we need to think about slowing down inorganic growth for the time being, so that we can prove to the market that we’re cash flow positive and we're profitable, and then also be able to tell whether we want to invest this cash or return to investors. But we have a great organic growth opportunity. The TAM or total available market is 54 million storefronts, and only 12 per cent of them are organic.

Are you concerned about the seniors leaving the company?

I just came out of a board meeting and we evaluated the management team -- the top 13 people in the company. We did succession planning, and we looked at each of those 13 senior leaders. There's more stability here than in many other companies. I'm very bullish on our management team. I think we have a tremendous management team.