Hospitality company OYO has placed “a significant number” of its employees in the US and other markets on leaves and furloughs for two-three months as it tries to sustain through the Coronavirus outbreak that has impacted almost every sector globally including hospitality. However, multiple media reports claimed thousands of employees have been furloughed by the company. While OYO didn’t disclose the number of affected employees and “select other markets” where it carried out the exercise, the company said that employees in India would remain unaffected. The announcement was made through a video message by its founder and chief executive officer Ritesh Agarwal along with a statement by the company.
Agarwal said that the revenue impact of the crisis is significant with around 50 per cent – 60 per cent decline. “Revenues of OYO and the occupancies have dropped by over 50-60%,” he said up from 10-15 per cent expected earlier. As a result, the company’s “balance sheet runway has come under severe stress,” he added. The move follows the restructuring exercise that the company undertook in January this year wherein it reportedly laid off around 600 employees in China and around 1,200 in India while exiting 200 cities as part of the exercise. Also, last month Bloomberg reported that OYO laid off 5,000 employees across the US, India and China to cut costs and move towards profitability.
The restructuring exercise reportedly followed SoftBank’s pressure on its portfolio companies to focus on profitability and control cash burn. However, OYO’s CEO for India and South Asia Rohit Kapoor had refuted any such pressure. “So I want to dispel this thing that this is coming from any pressure from any investor. We are a board governed company and have a strong management team. We have as normal discussions with SoftBank as with any other investor on the board where we talk about the plan for next year, they have their points of views, you have your points of views etc.,” Kapoor had told Financial Express Online recently in an interview.
OYO’s FY19 consolidated losses on the back of expansion globally particularly China increased to 35 per cent of revenue in FY19 to $335 million. The global FY18 loss was $52 million while India loss was $50 million in FY18 and $83 million in FY19. Its consolidated revenues for FY19 increased to $951 million from $211 million in FY2018.