In a bid to pare costs amid a slump in business, Oyo chain of hotels this week has again laid off around 300 employees, mainly from renovation and operations departments, according to sources privy to the development.
According to media reports, the company plans to shut down these divisions and focus primarily on a revenue-sharing model with partner hotels.
Oyo will now be charging the hotel partners a share of the entire revenue they earn on their properties. It will cease to offer a minimum guarantee or even provide management staff at the hotel premises, something it used to do with the aim of maintaining consistency and to monitor quality.
Now, while the hotel owners will be responsible for operations, the marketing will be done by Oyo.
Besides, regular compensation, which includes notice pay and leaves encashment, the company is also offering these employees an option to surrender 25 per cent of the unvested deeply discounted employee stock ownership plan (ESOPs) granted to them in June in lieu of a cash benefit. This cash amount can be equal to 25 per cent of their March 2020 fixed salary.
Oyo's statement on lay-offs
Oyo has issued a denial on the number of people being laid off claiming it was highly overstated.
"We have done no significant restructuring at this point in time. There are some localised actions basis change in business models and our move towards product and technology to serve our partners and customers keeping in mind the current business realities. We have no further comments to offer," a spokesperson told Moneycontrol.
Just before the lockdown, in April, this year, the hospitality firm, which had around 10,000 employees at that time, had asked some of its staff in India to go on leave with limited benefits from May 4 for four months. It had also asked all employees in the country to accept a cut in their fixed salaries by 25 per cent due to the impact of the Covid-19 on the hospitality industry.
The startup has been shedding staff since late 2019. However, from August this year, it began restoring salaries in a phased manner as demand for travel rebounded.
SoftBank-backed Oyo was not prepared for a business crisis that saw its occupancy rates dropping to near-zero for several months after the lockdown in March, founder and CEO Ritesh Agarwal said in September.
In a ray of hope, the 27-year-old founder, last week, told employees that the startup is making some progress in recovering from the pandemic fallout and has about USD1 billion to fund operations until an initial public offering (IPO).
