Oyo furloughs staff as revenues dip by 60%

Oyo has placed “a significant number” of its employees on temporary leave or furloughs of 60 to 90 days to ensure “long-term cash runway for the company,” its founder and group CEO, Ritesh Agarwal, said in a video message to Oyo staff.

Photo credit: Oyo

“At the latest, the revenues of Oyo and the occupancies have dropped by over 50% to 60%,” Agarwal said, adding that other leading hotel chains around the world have also seen declining revenues by over 75% and are continuing to get worse. Oyo previously reported a 10% to 15% drop in revenues and occupancy rates.

With the company’s balance sheet runway “under severe stress,” Oyo is looking at every controllable cost and is planning to reduce them, including capital expenditure, non-essential travel, and new expenses, among others.

Agarwal also said that he will forgo all his salary for the year, while the leadership team has agreed to take pay cuts of 25% to over 50%.

The company clarified that health benefits for its furloughed staff will continue.

According to the founder, the Covid-19 crisis comes at a “very unique time for Oyo,” which announced earlier this year that it’s restructuring its operations to boost profitability. The exercise would see layoffs of about 5,000 to 25,000 people in China, the US, and India.

Agarwal, however, emphasized that “we intend to do no or negligible layoffs as a part of cost restructuring across the world.”

The chief exec shared that Oyo’s China business has seen occupancy rise by 5% week on week in the last few weeks. Its vacation home business in Denmark has also seen its booking losses reduced as well.

“I am confident that Oyo will emerge stronger and more resilient than ever before outside of this crisis,” he said.