As Oyo Indonesia furloughed 400 staff, some workers and hotels pushed back

The Covid-19 pandemic has brought down the occupancy rates of budget hotel chain Oyo, forcing it to make sudden moves to stay afloat.

In Indonesia, the India-headquartered company reveals that it had put 50% of its 800 employees on “leave with limited benefits” – or a furlough – in May.

It has also changed its revenue model with hotel partners and implemented new hygiene measures to boost demand, though some hotel partners have bristled at these moves.

Photo credit: Tech in Asia Indonesia

“In April, (the occupancy rate of our partners was) under 20%. Starting in May, we started to see [an incremental increase],” says Eko Bramantyo, Oyo’s country head for Indonesia. According to him, the occupancy rate in Oyo’s hotel chain right now is around 40% – still far from the typical 50% to 70% range in the country.

See more: Behind Oyo’s layoffs in Malaysia, which affected hundreds of people

Hotels across Indonesia, not just Oyo’s, have been hit hard by the health crisis. Out of a total of over 3,500 hotels in the archipelago, close to 1,300 have shut down – affecting 150,000 workers.

Bramantyo says that the extreme and sudden change has pushed Oyo to adjust its approach. Focusing on expansion and market penetration previously, they’re now battling for survival.

“Sudden” furloughs

For Oyo, the decision to conduct furloughs was better than doing a mass layoff. “When conditions go back to normal, we still need [these employees],” explains Bramantyo. The move was also in line with the government’s direction for companies to avoid layoffs as much as possible, the company adds.

According to Bramantyo, the furloughed employees won’t get their monthly salaries, but they will still get a monthly allowance, mandatory religious holiday allowances, and health insurance.

Employees that Tech in Asia Indonesia spoke with confirmed this. “I’m still getting 1.5 million rupiahs (US$100) per month. I’m also getting health insurance and keeping office facilities like a laptop,” says one employee.

Another staff member, however, criticized the way Oyo’s management announced the decision to them. According to him, Oyo sent an email on April 23 offering two options: resign or accept leave with limited benefits.

He says that there was a one-on-one session between employees and their respective heads about the company’s condition, but there wasn’t an open discussion about the leave with limited benefits option. He had hoped that employees would have the chance to negotiate payment terms.

“For employees who rejected the resignation option, Oyo will one-sidedly put them on leave with limited benefits and communicate the decision over email,” he says, while furnishing the email he received.

No more minimum guarantees

A long-term challenge