Oyo Hotels Said to Cut Over 72% of China Staff

Oyo Hotels has cut its China staff by more than 72 percent since late 2019, according to a local news report last week, as the Softbank-backed company struggles to reach profitability less than one year after declaring itself the world’s third-largest hotel chain.

The layoff of more than 7,000 people from Oyo’s China team since November of 2019 was reported by mainland news site Jiemian late last week, and comes after Oyo was reported to be making redundant 20 percent of its team in its home country of India during January.

Oyo, which has received more than $1.5 billion in investment from Softbank and was valued at $10 billion in December of 2019, is said to have been under pressure from the Japanese venture capital firm to reduce its losses since the near collapse of its stablemate WeWork late last year.

COO, Other Senior Execs Join Exodus

As part of its China retrenchment, Oyo has let go at least five of seven vice presidents or senior vice presidents who were central to the establishment of the company’s China operation in 2018, according to the Jiemian report.

Among those said to have departed in recent months are the company’s China COO and partner Sam Shih (Shi Zhenkang) and vice president for finance Luo Shanshan, both of whom left in February. In January Oyo’s vice president for operations, and senior vice presidents responsible for human resources and technology also departed the company.

Screenshots from an internal Oyo corporate app show the company having 9,828 staff as of 2 November 2019, with updates this month indicating just 2,743 team members.

In a response to Jiemian, Oyo representatives reportedly characterised the reduction in force as part of an effort to optimise and fine tune the company’s management structure and adjust its business to market conditions.

Opening Fast, Cutting Faster

In June of last year, Oyo was confident enough for Shih to proclaim it China’s second-largest hotel group. That comment came just one month after the company’s 26-year-old CEO, Ritesh Agarwal boasted at an industry event that, “We’re opening roughly 10 to 12 buildings a day in China.”

At the end of 2019, according to Oyo’s website, the company had a network of 19,000 hotels with 780,000 rooms in 338 Chinese cities. However, that expansion also saw the hotel firm lose $335 million globally last year – up from a loss of $52 million in 2018.

To add to the company’s woes, some 20 former employees staged a labour action at Oyo’s Shanghai offices early last week demanding payment of bonuses after being let go from the hotel group in recent months. That dispute took place after a group of Oyo’s hotel owning partners had stormed the same office in January demanding compensation for promised income which had never been received.

Despite the COVID-19 crisis challenging the hospitality sector globally, Oyo is now reportedly offering lump sum payments to Japanese hotel owners willing to join its network, and last week the Wall Street Journal reported that the Indian company has expanded its vacation home-rental business to the US.