Over the last week or so, Oyo Hotels and Homes laid off nearly 300 workers in its operations unit, two people aware of the matter said, as the hospitality unicorn continued to pare costs in the midst of a business slump.
The continued change of Oyo from a minimum business guarantee model to a revenue-sharing model needs fewer individuals
With this, 99 percent of Oyo’s franchise business will be revenue sharing, with only some properties still following a minimum guarantee assurance. In a bid to also automate several processes, Oyo has introduced newer tech deployments, which created further redundancies for the laid-off staff,” the second person said.
Oyo’s franchise business partners with hotel owners, while the frontier business takes over properties and runs them under the Oyo name, which includes co-living and student accommodation.
While pan-India was the layoff exercise, most workers who lost jobs were in areas where business is still impacted.
Oyo could cut more jobs as it looks to expand its runway, given the continuing effect of the pandemic on the hospitality industry.
At this point in time, we have done no major restructuring. “There are some localized actions, fundamental changes in business models and our shift towards products and technologies to serve our partners and customers, taking into account the current business realities,” said an Oyo spokesman.
Just before lockdown, Oyo laid off about 5,000 workers and later furloughed employees and cut wages to keep costs in check.
Since late 2019, the start-up has been losing employees. However as demand for travel rebounded, it started to restore salaries in a phased manner from August this year.
In September, founder and CEO Ritesh Agarwal said that SoftBank-backed Oyo was not prepared for a market crisis that saw its occupancy rates drop to near-zero for several months after the lockdown in March. Last week the 27-year-old founder told workers that the start-up is making some strides in recovering from the pandemic fallout and has around $1 billion to finance activities before an initial public offering (IPO).
In sectors such as hospitality and co-living, consumer internet startups have struggled to honor minimum guarantee payments to their vendors and suppliers, primarily property or hotel owners, causing them to suspend or tweak contracts.
