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Oyo put thousands of workers on furloughs, likely covering every market other than its home base of India as it faces what founder and CEO Ritesh Agarwal termed a “balance sheet runway” that’s impacted by a 50 to 60 percent plunge in revenue and occupancy,
Oyo officially said it began carrying out furloughs and temporary leaves of “a certain number of employees in the U.S. and other countries,” although this could include a small number of layoffs, too, according to Agarwal’s video message to employees and other stakeholders. [See the video and full transcript embedded below.]
A source close to the company said the layoffs numbered in the “thousands,” and covered all of Oyo’s markets except India. That country would likely be hit, as well, when its 21-day coronavirus lockdown gets lifted as hotels face prospect of going out of business as demand remains weak.
Withdrawing from certain of its global markets is certainly on the table for Oyo, given the current crisis, although the United States, the source added.
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In addition to its hotel business, the furloughs also impact Oyo’s vacation rental operation, Oyo Homes, but not as several as hotels.
As with other hospitality brands around the world, many Oyo-branded properties have shut down.
“As you all know, this situation of COVID-19 comes at a very unique time for OYO,” Agarwal said in the video. “This is right after we had a sizeable restructuring of our company in January of this year. Due to that, I want to clarify for all of you that we intend to do no or negligible layoffs as a part of cost restructuring across the world.”
Oyo laid off some 360 employees, about one-third of its U.S. staff, in late January, and executed other layoffs in its global markets at that time.
However, in this current round of furloughs and temporary leaves around the world, including the U.S., Europe and China, Oyo said these workers are “safeguarded against a potential job cut.”
Agarwal stated in Wednesday’s announcement that it is keeping a pledge to the Indian government that it is taking “zero actions that impact employment status and salaries of ten thousand plus OYOpreneurs on payrolls and tens of thousands of OYO managed assets staff, during this unprecedented period of a 21-day countrywide lockdown” in that country.
Oyo, however, made no commitments to what would happen to the jobs of its staff in India, its largest market, after the coronavirus lockdown there.
Oyo stated it hopes to bring back as many furloughed workers and those on temporary leave as possible once the economic climate begins to improve globally. The furloughs and temporary leaves are for 60-90 days.
Oyo said it sees some “small yet encouraging green shoots of recovery” already in China, Denmark, and Japan.
For example, occupancy in China is rising 5 percent per week on average. “OYO Vacation Homes business of Dancentre in Denmark has seen its booking losses reduce and at the same time, we have seen Japan being resistant,” Agarwal said in the video.
Oyo had already paused capital expenditures and nonessential travel more than a month ago, and its leadership team is taking pay cuts of 25-50 percent, with Agarwal saying he won’t take any salary for the rest of the year.
Oyo characterized the furloughs and temporary leaves as “necessary and tough decisions in the interest of the health of the business and its long-term sustainability across markets the world over …”
In other news, Agarwal said fewer than 10 employees tested positive for Covid-19.
Note: This story has been updated to include the embedded CEO interview.