SoftBank-backed Oyo Hotels and Homes are expected to lay off at least 2,000 of its employees in India by the end of January. As part of cost-cutting measures besides adopting technology in some sections said a news report.
Departments including sales, supply and operations are expected to face layoffs.
Oyo does see technology replacing select roles in various business-side engagement buckets and every such team member is given another opportunity. A company spokesman was quoted as saying in the report.
In order to ensure that a “meritocracy-based” performance evaluation programme thrives, every month Oyo tracks the performance of individuals and depending on the results (a grating-based system) and the individual’s interests. It may replace some candidates after giving them an opportunity to go through a performance improvement programme, an Oyo spokesperson said in response to ET’s queries.
“A large number of people in sales and supply would be made redundant. Oyo could then say that because they have made some of these processes technology-enabled, they won’t need these people anymore.”
Another person said the company plans to cut jobs in its corporate office. “They might just keep about 8-10 salespeople in each branch,” the person said. “In Mumbai, there was a team of about 180 people in sales. They fired about 120 this month.”
Oyo Hotels & Homes’ net loss widened considerably in the financial year ended March 31. Owing to a combination of increased operating and employee benefit expenses, according to a valuation report filed by the company with the Registrar of Companies.
1.) Oravel Stays, which owns and operates the hospitality chain, has reported a provisional net loss of Rs 2,384.69 crore for the fiscal year, up from Rs 360.43 crore in the previous financial year.
2.) The Indian hospitality startup plans to cut jobs as its business was dented amid rising discontent among hotel owners, Reuters reported.
3.) The growing losses at Oyo come as its major investor SoftBank struggles to raise funding for a second investment fund. After the failed listing of office-rental company WeWork and amid questions about the path to the profitability of other marquee investments such as Uber.
4.) Last month, Oyo’s internal projections showed it may not make a profit in India and China until 2022. Even as the India-based hotel chain revealed a six-fold rise in losses during the fiscal year 2019.
5.) The losses highlight rapid expansion by Oyo into China, the United States, the United Kingdom and other markets. Which has made the six-year-old startup one of the world’s biggest hospitality brands by room count.
6.) Oyo’s India business will likely make losses until 2021, after which it could report a net profit after tax of $45.2 million in 2022. Which could expand by nearly 13 times to $586.9 million in two years, the projections showed.
7.) Overall, Oyo reported a net loss of Rs 2,385 crore ($332 million) in the year to March 2019. Compared with a loss of Rs 360 crore a year earlier. According to the valuation report filed with India’s ministry of corporate affairs. Revenue from operations surged to Rs 6,457 crore ($900 million) from about Rs 1,413 crore a year earlier.
8.) In October this year, Oyo said that it would raise $1.5 billion (nearly Rs 10,650 crore). From its founder, Softbank and other investors as it gets ready for expansion in the US and strengthening its vacation rentals business in Europe.
9.) Softbank has invested nearly $1 billion in Oyo. Through its Vision Fund and owns roughly 45 per cent stake in it.
10.) The latest round of funding will be a part of Series-F funding round.
11.) In October this year, a section of Chinese media had claimed that Oyo was planning to give pink slips to about 1,000 staff at its Chinese subsidiary—Oyo Jiudian. The hospitality company had denied the report.
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