The coronavirus pandemic has put a spanner in the growth of the otherwise stellar performing unicorn startups of the world with homegrown OYO now saying that the sales of the company have come down to half in the past few weeks. OYO has “seen 50-60% drop in terms of sales,” Ritesh Agarwal, founder of OYO, told NDTV in an interview recently. The problem is unlikely to resolve itself in the coming months as well with the consumers becoming skeptical about travelling. “In the times to come consumers will be so much more worried before they travel,” he said, adding that the company will have to make additional efforts to make consumers aware of its sanitation initiatives to make rooms safer.
Commenting on the recent layoffs undertaken by the company, Ritesh Agarwal said that the company had to impose pay cuts and had to let go of several employees. Ritesh Agarwal had also taken a 100% pay cut as coronavirus dried up revenues for the travel, tourism and hospitality sector.
Hotels and hospitality industry is one of the worst hit sectors due to coronavirus lockdown with the sector witnessing almost zero revenues for a full quarter as governments across the world imposed travel restrictions. The fact that the hotel industry has a high amount of fixed costs has also aggravated the problem for the sector and according to a The Indian Express report, the sector has now taken alternative routes to cushion the revenue blow. Some Indian hotels have started to give discounts on future bookings while others have started food delivery as an alternate revenue source and to solve short-term credit problem.
OYO’s layoff spree had started even before the coronavirus had impacted the hotel business. The company had laid off about 1,200 employees from its India team and about half of it from China in January 2020. In a letter to employees in January 2020, Ritesh Agarwal said: “We are asking some of our impacted colleagues to move to a new career outside of OYO,” calling the decision a 2020 strategic move.