Oyo, after witnessing a phase of aggressive expansion into multiple geographies globally over past couple of year, seems to be facing the heat now. The company, as we reported earlier this year, is now looking to layoff massive workforce.

According to several media reports, the company is firing thousands of employees across China and India. Earlier, we reported that the company is planning to lay off 2000 employees by the end of January 2020. It is said that the process is being undertaken to make operations more ‘tech enabled’ and reduce dependence on manpower.

If the previous reports are to be believed, then most of the layoffs will happen from the sales, supply and operations divisions. However, the company has not yet confirmed which departments will be hit.

This isn’t the only trouble for Oyo as hotel owners in China have been protesting in front of the company’s offices, accusing the startup of violating contractual agreements. This is pretty similar to hotel owners’ protests in India. Commenting on this, the company said in a statement that it will “enhance communications with hotel owners and develop owner loyalty.”

It also added that the company will “launch the VIP owner program, and contact owners regularly, to ensure that the interests and needs of theirs and ours are equally taken into account.”

Although the company has been growing rapidly, its losses have been growing every year, multiplying six fold in 2019 and ballooning up to Rs 2,384 crores. In November, around 500 hotels in 100 cities have cut off ties with the company since April. However, Oyo declined the report and said that the numbers were ‘inflated’.

Such aggressive growth and rapid expansion for the company has been possible thanks to the almost unabated bankrolling done by Softbank. Add to that the rather questionable multi-million debt raise that founder Ritesh Agarwal did recently, and you could see how the company continues to fuel such rapid expansion. Softbank has so far invested about $1.5 billion in Oyo, pushing its valuation to the north of $10 billion. The company also counts Airbnb, Sequoia Capital and Lightspeed Venture Partners, among others as backers.


Comments are closed.