OYO’s New Strategic Objectives for 2020

OYO’s New Strategic Objectives for 2020

Sanjib Dutta

According to recent media reports, OYO, the India startup providing budget hotels was planning to reduce its global employee count to 25,000 from 30,000 in January 2020. By late 2019, OYO, the third largest hospitality chain in the world was in trouble. Started in 2013, OYO expanded globally at a rapid pace making its presence in 800 cities with 1 million plus rooms by end of 2019.

In terms of revenue, it grew three times from 2017-2019. However, OYO also recorded six fold increase in losses from FY 2018 to FY 2019. In order to reduce operating expenses and become profitable, in early 2020, OYO undertook a major restructuring exercise which involved change in leadership, consolidating unprofitable businesses and downsizing.

Employees in both domestic and international markets were laid off. In India, approximately 15-20% of the workforce was asked to leave. In USA, 360 employees and in China 5% of its staff were laid off. Employees complained that there was no transparency in the whole process. A demand manager from Chhattisgarh said she suddenly learnt that she had been “filtered”. An ex-employee said those who criticized the company ran a greater risk of losing their jobs. She lamented, a culture of silence had taken over.

OYO provided separation package which included ex-gratia, medical insurance continuity and outplacement agency support. But even with a generous separation package, employee morale seemed to be low. It remained to be seen if OYO would come out profitable after this massive restructuring exercise.

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