Oyo Rooms has recently furloughed thousands of employees for up to 3 months in the U.S. and other markets as the company’s revenue drops by more than 50% due to coronavirus outbreak. The furloughs come along the heels of cutting 5,000 employees & contractors from jobs in China, India, and other regions by the Softbank-backed startup.
Despite the impacts on teams of this Indian hotel chain in the U.S., India, its home market has not been impacted by the furloughs. However, the company is not planning to lay off any employees and will remain committed to providing medical and healthcare benefits to employees on furlough.
The coronavirus pandemic has disrupted almost every business across the globe, including many SoftBank portfolio startups such as OneWeb, Kabbage, and WeWork, which either have declared bankruptcy or furloughed employees.
According to Ritesh Agarwal, Oyo’s chief executive officer and founder, the coronavirus pandemic has severely impacted the startup’s budget hotel business across the globe. Its occupancy rate has recently been dropped by over 50-60%, while $335 million revenue loss has been recorded globally as compared to the $951 million generated for the fiscal year 2019. Mr. Agarwal added that the balance sheet of the company has recently come under severe stress due to the disrupted business by the current pandemic. He further added that every forward-looking capital expenditure, MNAs, as well as non-essential travel or other expenditures had been put on hold.
Oyo has been put under scrutiny in previous months as many of its partners complained about the company for not adhering to the end of the deal. For instance, the company has ended the practice of awarding guaranteed revenues and other perks to hotel partners and rolled out new contracts for them.
However, a considerable rise in demand for Oyo’s hotel services has been recently observed in China. The startup is planning to continuously engage with global authorities to provide services to healthcare workers and other front liners in their fight against the outbreak.