SoftBank-backed homegrown hospitality chain OYO has laid off hundreds of employees in the US across multiple divisions amid the Covid-19 outbreak, which has killed more than 10,000 people in the country, according to a report.
The layoffs began in mid-March and included employees across sales, business development and human resource divisions, The Economic Times reported, citing a person privy to the development.
In February, the company laid off about 360 employees in the US, a third of its US workforce at the time, according to several media reports.
An email query sent to OYO by TechCircle did not elicit a response till the time of publishing this report.
However, it released a statement saying that the India workforce will remain unscathed during the lockdown period, although it has begun to put people on temporary leaves in some international markets.
In a video message and letter to employees and other stakeholders, Ritesh Agarwal, founder and group CEO, said that the company will place some ‘OYOpreneurs’ on furloughs.
The Covid-19 outbreak has severely impacted its business globally, he said. The occupancy rate and revenues of hotels owned by the company have dropped by “over 50-60% since earlier this year”, he added.
The report by the financial daily highlighted that the company’s capital investment in US hotels has come down to a quarter of what it was spending earlier, in face of the Covid-19 outbreak.
“OYO is expecting a long lull in the US and is laying off a lot of people in its corporate division along with some hotel employees. Finance and operations are very thinly manned and others are being asked to go,” the news report quoted the source as saying. “Costs there are very high and the leadership thinks accounted cash flows will go out of order if costs are not brought down drastically.”
Recently laid-off employees told the newspaper that the company was fielding several issues in the US related to unsustainably high salaries, lack of transparency with hotel owners and an ever-changing product.
Earlier this month, the company reportedly suspended payments to partner hotels as the company’s business dwindled amid the lockdown.
In a separate statement, Agarwal said he will forgo his salary for the rest of the year, starting April. The executive leadership team of the company will also take a voluntary pay cut of at least 25%, with some going up to 50%, the statement added.