At a time when the travel and hospitality industry grapples with revenue loss and large scale layoffs due to the Covid-19 pandemic, budget hotel chain OYO has announced $18 million worth of company stocks to employees, both active and furloughed.
The employee stock ownership plan (ESOP) extension was announced by Group CEO and founder Ritesh Agarwal during an internal town hall, according to a company statement.
“While I hope we can get as many OYOpreneurs back, I am cognizant of the practical reality that the uncertainty around the COVID situation will continue for sometime… Necessary corporate approvals are being organized (for the ESOP issuance),” Agarwal said.
Additionally, for those employees who already own stock options, the Gurugram based startup has dropped the one-year cliff on the vesting of stock options for those hired in the past year, Agarwal added.
Separately, the company has constituted a committee to review support of existing medical insurance of critical illnesses among employees and immediate families, in order to extend additional support through ‘OYO Welfare fund.’
In early April, Agarwal had said the company will place some ‘OYOpreneurs’ on furloughs.
The occupancy rate and revenues of hotels owned by the company dropped by “over 50-60% since earlier this year,” Agarwal had said in the video message to employees.
Travel, tourism and hospitality sectors have been badly hit by the Covid-19 pandemic due to restrictions on leisure stay and travel. 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.
OYO had reportedly already downsized its India operations by laying off 2,400 employees in January. Late April, it announced a 25% pay-cut in the fixed component of salary until July 2020 for its India employees, apart from asking some of its employees in the country India to go on leave with limited benefits (LwLB) for a period of four months effective May 4.