OYO sacks 25 employees in China for unethical conduct, delists two hotels

OYO sacks 25 employees in China for unethical conduct, delists two hotels
Photo Credit: Photo Credit: VCCircle
18 Apr, 2019

Budget hospitality chain OYO has fired 25 employees from its China subsidiary for misconduct and warned 110 more as part of an ongoing crackdown on unethical practices.

OYO Jiudian, its China arm, has set up an integrity committee with representation from select senior leadership members and third-party representatives to help the company identify misconduct and remove unethical practices, it said in a statement.

“At this stage in our growth, it is important for us to set the highest standards of integrity and corporate governance to ensure we are not just growing fast but also moving in the right direction... While this [sacking] may seem harsh and unpopular and has already elicited some reactions, the best decisions are the hardest ones,” Sam Shih, COO, OYO China, said.

The company said a majority of offenses involve sums as small as RMB 10 (Rs 104), but it didn't disclose the exact nature of offenses. OYO has also delisted two hotels in the last two months, subject to fulfilment of quality standards and other customer experience checks as part of its quality assurance programme.

OYO entered China in early 2018 and has since been aggressively expanding in the country. Today, it claims to operate over 8,000 hotels and 400,000 rooms across 290 cities in China.

“With utmost conviction towards delivering high-quality accommodation to our customers, any building which does not maintain the standards we have set for us and the industry is churned out of our system,” Shih said.

In India, OYO operates in more than 259 Indian cities across 1.75 lakh rooms in 8,700 hotels and homes via a mix of both franchise and lease models.

The company has half-a-dozen offerings in its portfolio: OYO Rooms, OYO Collection O, OYO Townhouse, OYO SilverKey, OYO Capital O, OYO Palette Resorts and OYO Life. However, the company has said that budget accommodation remains its core offering.

The company has also aggressively spread its wings to overseas markets over the last one year or so, launching properties across Southeast Asian nations such as the Philippines, Indonesia and Japan. It has also set up a presence in the UK and Saudi Arabia. It recently identified China, Southeast Asia and the Middle East as its core overseas markets. 

OYO had in February raised $100 million from Chinese ride-hailing firm Didi Chuxing as part of a $1 billion Series E round. SoftBank, Singaporean ride-hailing company Grab, Lightspeed Venture Partners, Sequoia Capital and Greenoaks Capital had contributed the initial $900 million to the round which valued the firm at $5 billion.

OYO entered the online food business recently by launching private labels on delivery platforms Swiggy, Zomato and Uber Eats. It also plans to venture into the cloud kitchen and shared offices sectors.