Oyo Hotels & Homes is denying reports that it has conducted mass layoffs in China, after accounts in the local media indicated that the Indian lodging unicorn had cut up to 1,000 mainland staff.
An Oyo spokesperson refuted the claims as “absolutely incorrect” and said that any staff terminations were part of its normal performance review process for team members.
Some Departments Said Cut by Half
Shanghai-based news outlet Jiemian reported on June 24, citing unnamed sources, that the Softbank-funded hotel startup is downsizing in China by cutting half of the frontline staff in its business development and operation units, amounting to more than 1,000 people.
The reported layoffs came a little more than two months after Oyo China said it had fired 25 employees and issued warnings to over 100 more, as it sought to crack down on “unethical practices.”
A hotel owner in Sichuan’s Chengdu allegedly confirmed that his Oyo counterpart in the city had just received a list of staff targetted for dismissal, saying in the Jiemian account that, “A department of 20 now has only one or two left.”
Oyo Pushes Back on Allegations
In a press statement, India-based Oyo, which boasts nearly 10,000 branded hotels and 450,000 rooms across 320 Chinese cities, called the allegations “twisted and misrepresented.” “The presumption of any letting go is wrong, where regular monthly performance reviews are being twisted and reported out of context,” the company said.
Founded in 2013 by 19-year-old Ritesh Agarwal, Oyo started off by aggregating budget hotels and hostels in India to ensure that they included minimum standards such as clean sheets, hot showers and free WiFi. It has since branched out into other types of lodging, with over 23,000 hotels and 46,000 vacation homes in 800 cities across 24 countries.
In September last year, Oyo pulled in $1 billion in new funding to grow its business in China, which is considered as a second “home market” alongside India. Some $600 million of this new capital would be targetted at fueling its China expansion, the company said at the time.
Within 18 months from when Oyo opened its first China hotel in Shenzhen, the lodging operator now claims to be the largest single-brand hotel chain in China.
Fast Growth Breeds Enemies
Oyo’s aggressive expansion has been said to have caused resistance from China’s two largest online travel agencies, Ctrip and Meituan-Dianping, both of which have threatened to take down Oyo’s listings from their platforms.
In May, the Indian hospitality provider announced partnerships with both Ctrip and Meituan-Dianping, after having allegedly paid a total of RMB 600 million to the two booking providers.
The cooperation would see enhanced integration of Oyo hotels on the platforms of Ctrip and Meituan-Danping, with the Chinese partners providing user traffic, data and brand promotion support to Oyo.
In its latest statement disputing the downsizing claims, Oyo added that it has committed a fresh $100 million in investment in China, earmarking the new cash “towards talent, customer experience, and quality & system improvements.”
Chinese media reported that Oyo’s operational costs in China have reached RMB 150 million per month, with the majority of that spent on manpower. In the past year, Oyo’s China team has grown 75-fold, with the company’s management said to be largely head hunted from leading tech companies such as Didi-Chuxing or Mobike as well as from global consulting firm McKinsey & Company.