Hospitality unicorn Oyo (Oravel Stays Pvt. Ltd) has 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, chief executive officer, Oyo India and South Asia, said in an email to employees on Wednesday. Employees who earn less than ₹5 lakh per annum will not be affected.
“Some" Oyo employees will be furloughed for four months starting 4 May, Kapoor said.
“Those going on this leave will avail benefits such as continuation of medical insurance and parental insurance, school fee reimbursement and ex-gratia support... in case of an unforseen medical emergency, we will support beyond the insured amounts, if the need so arises," Kapoor said in the email.
Kapoor confirmed the developments in an email to Mint, but declined to say how many employees have been put on furlough. He reiterated the earlier commitment made by Oyo founder Ritesh Agarwal to avoid cutting jobs.
“Oyo is taking all necessary actions, like reducing controllable costs, voluntary salary cuts accepted by leaders and more, to mitigate covid-19’s impact and ensuring long-term success and sustenance of the business while ensuring there are no job cuts in India, despite the economic pressures," Kapoor said.
However, while the company’s steps have delayed “any potential impact" on Oyo employees, the steps “may not be enough as the extent and projected length of the crisis is highly unpredictable", Kapoor warned.
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.
Oyo has enough cash to see out the crisis after raising $1.5 billion late last year.
However, the company’s $10 billion valuation is certain to plunge, said analysts.