Fresh from a lay-off, OYO has now reportedly announced 25% salary cuts for all employees for 4 months, starting April, reports Reuters. Some of the workers have also been sent on leave with limited benefits, as revealed through an internal memo accessed by Reuters.
“Our company is taking a difficult but necessary step for India, whereby we are asking all OYOprenuers to accept a reduction in their fixed compensation by 25%,” the company’s Chief Executive Rohit Kapoor said in a note on Wednesday.
Some employees will be sent on leave with limited benefits, starting May 4th until August, Kapoor said.
The ongoing pandemic has decimated the hospitality sector, forcing even major names like Marriott to cut down on expenses. OYO has been on a firing spree of its own, partly due to the restructuring policy aimed at making the company profitable in near future, while the rest is down to the ongoing lockdowns.
A couple of weeks back, OYO announced laying off majority of its US staff citing coronavirus as a reason. The company’s spending in the US had gone down considerably, amid the coronavirus outbreak, which has hit an already not-so-well performing OYO US business. The spending was reportedly being reduced to just a quarter of what it used to be. OYO later confirmed that the layoffs are a side effect of the struggling hospitality sector due to the lockdown in place.
OYO had first warned partner hotels of disruption in the payment cycle back in March. The company later invoked a “force majeure” clause, ceasing payments entirely to the partners as it struggled to maintain cash flow. The company has continued the lay-offs in the meantime, which were somewhat accelerated by the onset of the pandemic. OYO plans to lay-off 5000 employees as part of the restructuring process, although that figure may go up slightly given the current scenario.
Earlier in January, OYO had brought about several restructuring policies, which collectively resulted in firing of ‘thousands’ of employees in both India and China. The company had witnessed a period of rapid expansion the past year and the lay offs were a sign that it was now looking to slow down a bit. Coronavirus further compounded problems, with the travel and hospitality sectors being the worst hit.