Oyo Said to Lay Off 1,000 Employees in India Amid Profit Push

Oyo Pulls Back On Thousands Of Hotel Rooms Dozens Of Cities Report

Some Oyo officials told the U.S. daily that employees were under so much pressure to add new rooms that they brought hotels online that lacked air-conditioning, water heaters or electricity.

Over the past few months, OYO has "also successfully transitioned many of our colleagues into more meaningful roles within OYO by providing mentorship, training and tools to be successful", he added. "Every "Oyopreneur" is important to Oyo and ensuring their well-being both during and after their tenure is our number-one priority".

Adding to Oyo's challenges, hotel owners in China have been protesting in front of the company's offices, accusing the startup of violating contractual agreements. "I want to thank you for your efforts and apologize for the impact this is causing", he added.

Ritesh Agarwal-led Indian hospitality unicorn Oyo, now the second top unicorn after Paytm and valued at almost $10 billion in the country, has acted tough by laying off thousands of employees in India and China, after Japanese giant SoftBank tightened its noose around it. Agarwal, who has become a business star in India, said he aspired to make Oyo the world's largest hotel chain by 2023, displacing Marriott.

A New York Times record just recently estimated present and previous Oyo staff members as claiming that the business was "indulging in questionable business practices".

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Other investments by the Japanese technology giant, including Uber, have also seen their valuations drop sharply.

Earlier this month, Softbank's portfolio startup in Latin America Rappi said it has laid off 6% of its workforce. Now another report, which surfaced on Tuesday (January 14), says OYO is rapidly scaling back on the number of rooms on its platform to run a tighter ship.

SoftBank's Vision Fund has so far invested about $1.5 billion in Oyo, which is now believed to be valued at $10 billion.

Oyo's losses widened more than sixfold to 23.85 billion rupees ($336 million) during the financial year ended March 2019, even as revenues rose over fourfold during the period. While the expenses for the company also grew 3.9X, OYO's revenue increased by 3.5X in FY19 as compared to FY18. In others, Oyo wanted to save money and figured that most owners would not press for full payment. Oyo reportedly charges about a 20% franchise fee on room revenues. Federation of Hotels and Restaurant Association of India has approached the Competition Commission of India to register a complaint against the hospitality chain for allegedly levying charges without prior intimation.

Also backed by Airbnb Inc., Sequoia Capital and Lightspeed Venture Partners, Oyo now works with 10,000 hotel owners in the country. It is said to said to have actually given up 5 percent of its 12,000 team in China, and 10 percent of its 10,000 team in India.

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