India's budget hotel giant Oyo slashes 10% of staff

Andrew Cummings
January 17, 2020

In the email sent to employees on Monday, the group CEO said, "One of the implications of the new strategic objectives for 2020, is that, like the leadership team, we will reorganise more teams across businesses and functions".

According to records, SoftBank has actually provided Oyo a target date of March 31, 2020 to terminate agreements or organisations, which are not EBITDA-profitable. The company has been ramping up its focus on tech-enabled synergy, and enhanced efficiency in a bid to remove duplication of effort across businesses or locations, Agarwal said. OYO is doing everything possible to ensure that outgoing colleagues receive as much assistance and support as possible during this transition, Agarwal said.

In the internal letter to the employees of Oyo in India and South Asia, Agrawal says, "Every Oyopreneur is important to Oyo and ensuring their well-being both during and after their tenure is our number one priority".

Ritesh Agarwal- led Indian friendliness unicorn Oyo, presently the 2nd leading unicorn after Paytm and valued at virtually $10 (approximatelyRs 70,760 crores) billion in the nation, is apparently giving up countless staff members in India and China, after Japanese enormous SoftBank tightened its noose around it.

Over the past few months, OYO has "also successfully transitioned many of our colleagues into more meaningful roles within OYO by providing mentorship, training and tools to be successful", he added. "I want to thank them for their efforts and apologize for the impact this is causing", he added.

A New York Times record just recently estimated present and previous Oyo staff members as claiming that the business was "indulging in questionable business practices".

To stem losses, Oyo has also cut back on staff and supplies such as mineral water and cleaning fluids in the hotels it runs itself, according to the current and former employees.

Oyo Hotels and Homes will reportedly lay off almost 2,400 employees in India over this week, The Economic Times reported.

SoftBank's Vision Fund has so far invested about $1.5 billion in Oyo, pushing its valuation to $10 billion. Moreover, in June 2019 a female Oyo guest reported an incident of rape but was requested by the company not to lodge an FIR. A majority of the company's expenses are attributed to operational expenses, which escalated to 61.32 billion rupees in FY19, a fivefold increase from a year ago.

With a portfolio of more than 35K hotels and 125K vacation homes, and over 1.2 Mn rooms across 80 countries and 800 cities, OYO is looking for profitability but the costs for the same are getting increasingly heavy for others.

The Times reported this month that Oyo had offered thousands of unlicensed hotel rooms and sometimes offered free rooms to government officials to deter enforcement. Federation of Hotels and Restaurant Association of India has approached the Competition Commission of India to register a complaint against the hospitality chain for allegedly levying charges without prior intimation.

Income tax authorities, on Friday (January 11) reportedly carried out a surprise search at Indian hospitality unicorn Oyo's Gurugram office. The company counts India and China among its largest markets.

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