SoftBank-backed Oyo Hotels and Homes is expected to lay off at least 2,000 of its employees in India by the end of January as part of cost-cutting measures besides adopting technology in some sections, said a news report.
Departments including sales, supply and operations are expected to face layoffs, said a report in The Economic Times.
Oyo does see technology replacing select roles in various business-side engagement buckets and every such team member is given another opportunity, a company spokesman was quoted as saying in the report.
The Indian hospitality startup plans to cut jobs as its business was dented amid rising discontent among hotel owners, Reuters reported.
The growing losses at Oyo come as its major investor SoftBank struggles to raise funding for a second investment fund, after the failed listing of office-rental company WeWork and amid questions about the path to profitability of other marquee investments such as Uber.
Last month, Oyo’s internal projections showed it may not make a profit in India and China until 2022, even as the India-based hotel chain revealed a six-fold rise in losses during fiscal year 2019.
The losses highlight rapid expansion by Oyo into China, the United States, the United Kingdom and other markets, which has made the six-year-old startup one of the world’s biggest hospitality brands by room count.
Oyo’s India business will likely make losses until 2021, after which it could report a net profit after tax of $45.2 million in 2022, which could expand by nearly 13 times to $586.9 million in two years, the projections showed.
Overall, Oyo reported a net loss of Rs 2,385 crore ($332 million) in the year to March 2019, compared with a loss of Rs 360 crore a year earlier, according to the valuation report filed with India’s ministry of corporate affairs. Revenue from operations surged to Rs 6,457 crore ($900 million) from about Rs 1,413 crore a year earlier.
In October this year, Oyo said that it would raise $1.5 billion (nearly Rs 10,650 crore), from its founder, Softbank and other investors as it gets ready for expansion in the US and strengthening its vacation rentals business in Europe.
Softbank, has invested nearly $1 billion in Oyo, through its Vision Fund and owns roughly 45 percent stake in it.
The latest round of funding will be a part of Series-F funding round.
In October this year, a section of Chinese media had claimed that Oyo was planning to give pink slips to about 1,000 staff at its Chinese subsidiary—Oyo Jiudian. The hospitality company had denied the report.
The Ritesh Agarwal-led company said that it had recruited over 1,500 employees in the past few months and would have over 10,000 full-time employees.
In April this year, Oyo had said it created over a lakh direct and indirect jobs in India and was aiming to double the number by 2020.
— With inputs from agencies
Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.
Updated Date: Dec 19, 2019 17:30:16 IST