Oyo Hotels and Homes has laid off close to 300 employees in its operations team over the last week or so, two people aware of the matter said, as the hospitality unicorn continued to pare costs amid a slump in business.
Oyo’s ongoing shift from a minimum business guarantee model to a revenue-sharing one requires fewer people, said one of the two people cited above, both of whom spoke on condition of anonymity.
“With this, 99% of Oyo’s franchise business will be revenue sharing, with only some properties still following a minimum guarantee assurance. In a bid to also automate several processes, Oyo has introduced newer tech deployments, which created further redundancies for the laid-off staff,” the second person said.
Oyo had laid off around 5,000 staff just before lockdown and later furloughed employees and cut salaries to keep costs in check.
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. 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 $1 billion to fund operations until an initial public offering (IPO).
Consumer internet startups in sectors such as hospitality and co-living have been struggling to honour minimum guarantee payments to their vendors and suppliers—essentially property or hotel owners—forcing them to suspend or tweak contracts.