Oyo fires ‘hundreds’ in the US amid global restructuring, Covid-19

SoftBank-backed hospitality giant Oyo’s struggle in the US continues as it recently had to let go of a substantial chunk of its workforce in the country.

Photo credit: Oyo

Juggling between restructuring its global operations (which kicked off late last year) to become profitable and surviving the Covid-19 pandemic that has crushed hotel demand worldwide, Oyo has ended up with no choice but to hand over pink slips to its employees in the US.

Local media Economic Times, citing sources, reported that Oyo has finally laid off “hundreds of employees” in America across divisions like sales, business development, and human resources over the last three weeks.

This is Oyo’s second round of layoffs in the US. In late January, the Indian hotel startup reportedly fired about 360 people, almost a third of its total American workforce. At the time, the company had already let go of “5% of its 12,000 employees in China partly due to non-performance and dismissed 12% of its 10,000 staff in India,” as per a Bloomberg report.

In an email announcing the layoffs to its American team, Oyo chief operating officer Abhinav Sinha said that the company’s new mantra was going to be “sustainable growth and profitability,” which would “help the company embark on the next phase.”

Since then, the situation has worsened as the coronavirus outbreak turned into a pandemic. And Oyo, like every other hotel chain, has seen its business crumble in the US. The Economic Times report, citing sources, said the company has reduced its investment in US hotels to one-fourth of what it was spending earlier.

“Oyo is expecting a long lull in the US and is laying off a lot of people in its corporate division along with some hotel employees. Finance and operations are very thinly manned and others are being asked to go,” The Economic Times report said, citing a person familiar with the matter. “Costs there are very high and the leadership thinks accounted cash flows will go out of order if costs are not brought down drastically.”

An Oyo spokesperson told The Economic Times that the “pandemic has impacted the hospitality industry at a global scale and Oyo is not immune to it,” and that “it would shortly announce further details as we finalize specific decisions to ensure Oyo’s long-term success.”

However, the trouble for Oyo is much deeper than the steep slump in demand due to travel restrictions across the globe to prevent the further spread of Covid-19. According to the report, an employee who was sacked in the first week of April said Oyo has been struggling to continue giving high salaries in the US, and the lack of transparency with American hotel partners has compounded the problems for the company.

Oyo has been trying to turn things around in the US where it entered in February 2019. Since late March, the company has been offering its rooms for free to American medical and healthcare professionals fighting coronavirus.

Although the move might not benefit Oyo immediately, it is likely to improve its brand image and cement its relationships with US authorities and the healthcare community.

This report was first published on KrAsia.