Despite backing from giants like SoftBank, Airbnb and Lightspeed Venture Partners and more than $3 billion in funding, OYO – the world's third largest hotel chain – has been hit hard by the pandemic.
Now, the India-based company, which has its U.S. headquarters in Dallas, is planning to layoff about 90% of its U.S. workforce, most of whom were furloughed in April amid declining revenue as Covid-19 shut down hotels business across the globe. Employees who weren’t furloughed at the time took paycuts of about 25%.
“We knew this crisis was real and could take time, but we were hopeful that we could leverage our global resources to re-engage after the furlough,” OYO COO Abhinav Sinha wrote in an email to employees that was obtained by the news site Skift. “However, the reality is, the impact on our business has been deeper, and the recovery has been slower than what we had anticipated.”
According to startup layoff tracking website Layoffs.fyi, while the company is seeing its U.S. business beginning to recover, OYO's revenue is 25% below its January totals, and worldwide its revenue is only at about 30% of its pre-Covid levels. The company said it doesn’t fully expect to recover from its losses until the second half of next year.
The company has not yet publicized how many employees were furloughed. However, the recent news follows thousands of global furloughs at OYO in April. It’s unclear how many outside the U.S. will also be affected by the new round of layoffs.
However, OYO’s troubles aren’t entirely due to the recent crisis. In January, the company laid off about 3,000 employees, 360 of whom were based in the U.S. That round of layoffs was in part due to a reported $335 million revenue loss in the financial year ending in March 2019. Late 2019 also saw OYO make headlines about a toxic work culture and some of the its business asset owners and hotel partners making police complaints about deceptive practices and corruption. At the time CEO Aditya Ghosh stepped down and was replaced by Rohit Kapoor. Although, Ghosh still holds a seat on the company’s board.
According to Sinha’s email, OYO is creating an $18 million pool to help fund employee stock options. It is also helping laid off employees with job-placement support and extended health care support.
“While it was a very difficult decision for us to make, I would like to emphasize that it was not in any way a reflection of the work that [employees] did or [their performance. It is just a reflection of new realities of the market and the new realities for OYO globally in the midst of the pandemic,” Sinha wrote in the email.
