Bengaluru: Two months after hospitality unicorn Oyo (Oravel Stays Pvt Ltd) furloughed staff to save cash, the company has now informed employees in US that a large number of them will have to be laid off. They will, however, be given stock options.
In an e-mail this week, Oyo’s chief operating officer Abhinav Sinha has said that the company has to part ways with many Oyopreneurs, a term used for its employees, once the furlough ends.
Despite showing some recovery, US revenue is still 25% below January levels and that sets the company back in a high-growth geography significantly, Sinha said.
“More importantly, our global business is today operating at ~30% of pre-COVID revenue levels, with India finally starting to move up in occupancy from lows of 6-7% in the beginning of June. While we still remain optimistic about our long term recovery and our prospect in each geography, it is also very clear to us now that the path to full recovery for OYO global will last well into the second half of 2021," Sinha said in the email.
In April, Oyo announced salary cuts, besides furloughing staff, to save cash after its revenues plunged because of the covid-19 pandemic. The fixed compensation of the company’s employees in India will reduce by 25%, Rohit Kapoor, CEO, Oyo India and South Asia, had said in an email to employees.
“...We knew this crisis was real and could take time, but we were hopeful that we could leverage our global resources to re-engage after the furlough.However, the reality is, the impact on our business has been deeper, and the recovery has been slower than what we had anticipated," Sinha said in the email.
In US, Oyo went through a ‘tough restructuring exercise’ in January, this year, Sinha said. Employees on furlough will be given stock ownership opportunity and outplacement assistance and would be individually informed if they are laid off.
Oyo’s moves to cut costs are in line with measures taken by hospitality companies across the world whose businesses have been ravaged by the Covid-19 pandemic.
Oyo, which has a footprint in 80 countries, is especially vulnerable to the crisis because of its loss-making business model.
For the year ended March 2019, Oyo, which is backed by SoftBank, Sequoia Capital and Lightspeed, among others, reported a loss of about $335 million on revenues of $951 million.