Three reporters at The New York Times over recent days have built up a profile of OYO Hotels operating under significant losses and facing increasing pressure from its biggest investor, Japan’s SoftBank.
The reporters at The New York Times interpreting data from current and former employees state several reasons for concern.
In recent weeks, OYO Hotels has pulled out of dozens of cities, cut thousands of hotel rooms, started laying off employees and slashed other costs as it faced pressure from its biggest investor, the Japanese conglomerate SoftBank, to curb vast operating losses.
The retreat has been swift and sweeping. In India alone, OYO Hotels has lost more than 65,000 rooms — or about a quarter of what it had offered to travellers — since October, according to internal data from current and former employees that was reviewed by The New York Times. This month, OYO Hotels also stopped selling rooms in more than 200 small Indian cities, according to company documents and one current employee and one former employee.
The moves come on top of more than 2,000 layoffs around the world, which OYO Hotels began rolling out last week, according to six current and former employees. Before the cutbacks, OYO Hotels had about 20,000 employees in 80 countries.
OYO Hotels said some of the data obtained by The Times was inaccurate but declined to be specific. In an email to employees on Monday, Ritesh Agarwal, the company’s chief executive, said OYO Hotels was focused on sustainable growth and profitability — which meant layoffs.
In the email, seen by the reporters at The New York Times Ritesh Agarwal stated: “Unfortunately, some roles at Oyo will become redundant as we further drive tech-enabled synergy, enhanced efficiency, and remove duplication of effort across businesses or geographies.”
OYO Hotels’ actions are part of a broader pullback by start-ups funded by SoftBank. Armed with a $100 billion fund known as the Vision Fund, SoftBank has shovelled money into start-ups across the globe in recent years. That has given many young companies fuel to expand, often with little thought for profit.
Some investors and start-ups said they were now approaching SoftBank’s Vision Fund cautiously — or, in some cases, avoiding it altogether.
Regular readers of H&C News will know that we report on OYO Hotels regularly, so background to the dynamic rise of OYO Hotels can be seen here.