OYO, the Indian hotel management company, is still laying off workers. After cutting thousands of jobs at its Indian headquarters and China last month, the softbank-backed star company is this time turning its knife into its own U.S. market. In the last week of January, OYO laid off 360 U.S. employees, about a third of the total number of employees at OYO’s U.S. office, according to Skift, a U.S. travel research media outlet. It comes less than a year after their high-profile foray into the U.S. market last February.
The scope of the layoffs is almost all-encompassing. The staff edipped includes business development managers, talent recruitment executives, and regional managers. In California, 50 business development managers were laid off, and In Florida was slightly better, but 20 were still laid off. OYO officials said that after the job cuts, the U.S. market “will adopt a more balanced development strategy to promote growth.”
“Slim” Indian team
OYO restructured its business last month, hiring new executives to lead the company’s overseas operations. Shortly thereafter, Bloomberg reported that OYO had laid off 5% of its workforce in China. Given that the total number of employees in their China office is about 12,000, the number of employees in the Chinese market is about 600.
OYO, by contrast, has been even more aggressive in its local business in India: 12 per cent of its 10,000 or so employees have been forced to leave. That’s not all that’s over, and the Indian team will cull more than 1,200 over the next three to four months.
In addition to the job cuts, the company will also abandon some hotels and withdraw from 200 cities. In the future, they will focus on operating its hotel chains in 400 other indian cities.
“We’ve been growing over the years in terms of the number of employees. In the case of the Indian team, while we are always thinking about how to restructure and optimize the company’s architecture, the fact is that the company has added a full 10,000 employees in the last 18 months. Our workforce in India and South Asia has also soared from nearly 2,000 to 12,000. “
Rohit Kapoor, who became CEO of OYO India and Southeast Asia on January 1, responded in an interview with India Today business magazine.
“Based on this, one of the goals of this company’s adjustment is to ‘slim down’ the team. We will optimize the human resources of 15% to 20%. But even so, OYO’s team has grown by as many as 8,000 compared to 18 months ago. Kapoor added.
“Optimize” the U.S. team
As for the U.S. market, they have more than 250 hotels and 19,000 rooms in more than 30 u.S. states, according to oYO official data.
In an email to the U.S. team, OYO Chief Operating Officer Abhinav Sinha revealed the company’s future strategy as it announced the layoffs. “The company will grow sustainably in the future and its profitability will improve significantly,” he wrote, “and OYO will enter a new phase of development.” “
To achieve these strategic objectives, Sinha declared that OYO will vigorously enhance its operational capabilities in the future while maintaining business growth, and that the team will focus on its core business and find a more rational path to growth. At the same time, OYO will also improve system scheduling capacity and process efficiency through technology upgrades, thereby effectively reducing operating costs.
“Unfortunately, as new profitable options emerge, as we move toward a more sustainable growth approach, some roles start to become a bit redundant,” he said. But this includes, but is not limited to, revenue management, data research, machine learning, engineering management, etc. “
“The layoffs are unbearable, but they can’t be done, and sometimes they have to,” admits Ritesh Agarwal, OYO’s founder, after the company’s restructuring. “
“But I have to say that we have always been very cautious about optimizing the restructuring of the structure, and only when we fully confirm that the restructuring is indeed good for the company to become more competitive.” At the same time, we will show respect to the employees who have left, and we will ensure that every employee who is forced to leave receive full and substantial compensation so that they have enough time to get through and get their next job. Mr Agarwal said.
In India, every laid-off worker in India, including those still on probation, receives a notice period, plus compensation for at least one month’s salary, according to Rohit Kapoor, CEO of OYO India and Southeast Asia. In terms of totals, most people will receive severance pay ranging from three to eight months.
The crisis behind the layoffs
OYO claims to be the world’s third-largest hotel chain, with 1.2 million rooms in more than 80 countries. But lately the company has been in trouble.
OYO has more than 10,000 properties in India, which is their biggest market, but in Rao, locals still have a lot of criticism of OYO. The main reason is that, while OYO has expanded rapidly in recent years, it has come at the expense of quality of service. Many experts have expressed the view that OYO’s problem is that it is too keen to expand the number of shoddy hotels, but not to manage them properly.
In fact, OYO is not not want to manage these hotels. Of their three main business models (franchising, leasing and own asset operations), franchises account for the largest proportion of rooms. Under this model, OYO receives a detailed list of all rooms from the hotel owner and presents specific revenue targets to the hotels based on their operating conditions and capabilities. However, in the actual operation, many owners have accused OYO of setting too harsh conditions. Recently, as the conflict intensified, a large number of shopkeepers choose to release with OYO, some of them complain edified OYO’s rising administrative costs, some accused OYO withholding their deposit not to pay back.
In addition to the franchisees, OYO also needs to think about how to control costs while expanding high-quality users.
In recent years, OYO has been saloons of money in order to achieve rapid growth in the number of users, and they have often given users discounts of less than 50%. But so “good faith” has not come to the expected results, the new users are mostly to spend the hour room of unmarried couples mainly. And these people are actually just to “wool”, they are not OYO’s high-quality target users.
An OYO spokesman told Skift, “Although we are proud of the pace of development in the past.” But now we’ve also realized that maybe we’ve run too fast before, leading to some work not being kept up in time. Now is the time to start making up lessons. “
In addition to the job cuts, OYO’s wellgans were also subject to a tax investigation by the local government last month. And with the bad news in succession, there have been rumors that OYO may be out of the market due to poor management.
But Mr Kapoor scoffed at the claim, dismissing the rumours as “false and false reports” and stressing that OYO has a huge advantage in the vertical sphere.
“For example, wedding-related industries. In the current trend of India’s population, the business is bound to show rapid growth, and we have not yet found a rival with us. In addition, the co-working space has great potential for growth, with 35 million people flocking to cities every year in India. The vast majority of them have no plans to buy a home, but whether it’s for work, study or part-time, this huge population needs to solve the housing problem, and OYO can help them. “
Tiger Sniffer: This article is compiled from Singapore’s technology media TechAsia and Indian business media Business Today to focus on oYO’s layoffs since last month.