Within weeks of slashing workforce in India and China, Indian hospitality chain Oyo Hotels and Homes (OYO) is retrenching hundreds of employees in the US in a bid to keep its bottom line intact.
The SoftBank-backed unicorn (headquartered in Gurugram) has laid off around 360 people in the US, about one-third of its total headcount in the country, Skift reported. Jobs have reportedly been slashed across numerous categories, including business development managers, talent acquisition leads, and area general managers.
Oyo forayed into the US in February 2019 and currently claims to have grown to 19,000 rooms in over 250 hotels across 30 states.
While OYO refrained from getting into specifics, a senior company executive requesting anonymity, said, “These are hard decisions, but critical for the company to make if it wants to build a strong and sustainable business. Unlike other companies that have been written off, OYO has a strong balance sheet but is still taking these measures, which is testament to the fact that the company is running a marathon, and not here for a sprint.”
Earlier this year, OYO made headlines for laying off over 5 per cent of its 12,000 employees in China and 12 per cent of its 10,000 staff in India.
“India, China, US and UK, will continue to be key to OYO’s success story, and the rightsizing exercise and business model changes introduced are therefore inevitable. This is a start to the company’s true transformation from that of a start-up in ‘growth mode’ to a sustainable business in ‘sustained growth’ mode, with profitability in view,” the executive added.
In an internal email sent to OYO staff, its global chief operating officer Abhinav Sinha said the company’s focus on sustainable growth is the reason for job cuts. DealStreetAsia has a copy of the email. The company, however, did not disclose the numbers.
“Unfortunately, as we move towards more sustainable growth, and towards a new profitability focused plan, some roles will become redundant,” Sinha wrote, highlighting the road ahead for OYO US that “is full of opportunities and promises.”
“In 2020, we will deliver on these strategic objectives by making three key changes: build for profitability through measured growth and technology investment; realigning the chain’s network plan; and centralizing some processes to create highly efficient teams,” he added.
Since its inception in 2013, OYO has aggressively expanded to 800 cities in 80 countries, including the US, the UK, and the Middle East besides a host of European countries – it entered all these destinations over the past two years. Meanwhile, in Asia, it expanded its operations in China, Malaysia, Indonesia, and Japan. The company currently counts India and China among its largest markets.
In an email sent to employees across India and South Asia earlier this month, OYO founder and group CEO Ritesh Agarwal said, “As we drive tech-enabled synergy, remove duplication of effort across businesses and geographies, and finalise our network plan for 2020, we realise that, unfortunately, we are having to say goodbye to some of our valued and trusted friends and colleagues at OYO…We are mostly through and will complete this restructuring shortly, as we prepare for a strong sustainable growth in 2020, and beyond.”
The company’s losses widened more than six-fold to Rs 2,384.69 crore during the financial year ended March 2019, even as revenues rose over fourfold during the period. A majority of the company’s expenses are attributed to operational expenses, which escalated to Rs 6,131.65 crore in FY19, a five-fold increase from a year ago.