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Exclusive | Oyo lays off another 600-800 employees as it moves to a revenue-sharing model

Until early this year, the company had around 10,000 employees in the country. Now, the number is estimated to have come down to less than 2,500, with Oyo shifting to a lean model and exiting operations and renovations.

December 08, 2020 / 04:14 PM IST

With the aim of reducing costs further, Softbank-backed hospitality firm Oyo has again laid off around 600-800 employees, according to sources privy to the development. Most of the staffers are from the renovation and operations departments. 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 leave encashment, the company is also offering these employees an option to surrender 25 percent of the unvested deeply discounted ESOPs granted to them in June in lieu of a cash benefit. This cash amount can be equal to 25 percent of their March 2020 fixed salary.

In June, Oyo offered all its employees deeply discounted ESOPs comparable to Restricted Stock Units or RSUs.

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The company, which claims to have a $1 billion war chest, also gave increments and promotions selectively to its technology team, stressing on the increasing role of technology in future operations.

Oyo statement on layoffs

Oyo 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.

Also read: Oyo offers employees deeply discounted ESOPs

In April, following the pandemic, the hospitality firm asked select employees to go on leave with limited benefits and also asked all employees in the country to accept a cut in their fixed salaries by 25 percent.

Until early this year, the company had around 10,000 employees in the country. However, according to sources, that number has now come down to barely 2,000-2,500 with Oyo shifting to a lean model amid the pandemic, which has left the industry reeling, and focussing on technology to drive growth. Oyo is also learnt to have partnered with consultancy firm ABC Consultants to offer outplacement support to the impacted employees.

In an exclusive interaction with Moneycontrol in September, founder Ritesh Agarwal had said the economy and boutique hotels were on the path to recovery due to a sense of safety in smaller hotels.
Priyanka Sahay
first published: Dec 8, 2020 10:24 am
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