Gurugram-based online travel firm MakeMyTrip will cut salaries of top and managerial level employees as its business has been taking a severe beating due the Covid-19 outbreak, according to a media report.
It also plans to lay off nearly 400 employees, about 60% of its backend and support services workforce, digital news platform Entrackr reported on Wednesday. These employees are not on its direct payroll, the report said.
The group executive chairman of the company, Deep Kalra, informed employees that the pay cut will also impact group companies including Goibibo and redBus, the report said. The original salaries of employees will be reinstated once the situation is back under control, the report said, citing undisclosed sources.
“During these difficult times, we are focusing on bringing our operating costs under acceptable levels till the situation improves. We are not only reducing variable costs to match the revenue decline but are also looking at optimizing fixed costs,” a spokesperson of the company, now majority owned by China’s largest online travel firm Ctrip, said in an email response to TechCircle.
The online travel agency (OTA) segment was among the first ones to feel the impact of Covid-19 as international travel took a hit early on in February. While many users had to cancel their bookings, the OTAs took to extending credit on their platforms while airlines allow for open PNR for such a time when travel can be scheduled. Hotel bookings took a hit due to reduced travel for work and suspended vacation plans.
The report about the drastic move comes a day after Deep Kalra and group CEO Rajesh Magow wrote to their employees indicating there would be “tough measures” ahead to keep overall expenses at a minimum.
According to the letter, both Kalra and Magow will not take a salary from April, while its leadership team has offered to take a reduction of approximately 50% in their compensation.
“We will continue to sharply reduce variable costs like advertising, sales promotions and payment gateway costs, along with optimising information technology infrastructure and expenses relating to the functioning of our offices and other establishments. We will immediately cancel all discretionary spends such as events and trainings, and also suspend brand building expenses during the following quarter,” the report quoted, citing the letter.
According to estimates by the World Travel and Tourism Council, about 50 million jobs are at risk across the world in the travel and tourism industry due to the Coronavirus impact. Asia is likely to be the worst affected region, it said.