OYO Hotels is set to make most of its UK staff redundant, due to closures enforced by the Covid-19 crisis in hospitality.
Yahoo Finance reported that last Friday, staff at OYO Hotels were told a 30-day consultation period on redundancies at the company was taking place.
With a team of 300 people across the UK, a spokesperson for the company said that redundancies would see 150 to 200 people lose their jobs.
Head of the UK for OYO Hotels, Rishabh Gupta stated that the impact of Covid-19 was monumental. Speaking about the impact Gupta said the pandemic: “has and will hit harder than all previous disruptions put together.” He also and advised that in his opinion there were “no clear signs or timelines for recovery.”
“Unfortunately, this means we will need to enter into a consultation period in order to align the costs with the revenue available,” Gupta wrote by email to staff on Friday and reviewed by Yahoo Finance UK.
The news is an about face on announcements only last year, where we were reporting – OYO reaches 100 UK hotels in less than a year.
The job losses come just weeks after Oyo’s founder and chief executive Ritesh Agarwal assured staff there would be “no or negligible lay-offs” as a result of Covid-19, according to the Financial Times.
Gupta said the decision to pursue large scale redundancies was “extremely tough” and told staff he understood “this brings more uncertainty at an already very difficult time.”
OYO Hotels UK redundancies – UK hotel occupancy falls by 80%
Gupta said hotel occupancy across the UK had fallen by 80% since the start of the pandemic.
“We have come to a point, given the market conditions, where we need to acknowledge that the market will not rebound soon enough to allow us to meet the levels set by our business plan,” Gupta wrote.
He continued: “We not only need a plan to survive the immediate Covid-19 pandemic, but also sustain the long term reductions in the customer demand along with the other economic shocks that this pandemic has caused.”
OYO Hotels UK redundancies – wider global valuation in question
OYO Hotels was set up in 2013 booking budget hotel rooms online. The company partners with hotels to provide booking and revenue management software, in exchange for a cut of earnings. The start-up launched in the UK at the end of 2018 and has signed up around 200 hotels here.
OYO raised over $3bn since launch, much of it from Japanese tech giant SoftBank. SoftBank backed the business through its $100bn Vision investment fund and OYO was valued at $10bn as recently as last October in a funding round led by SoftBank.
OYO Hotels sprung into life and still referred to by many as a $10 billion start up, it will need every bit of its entrepreneurial life blood to retain that valuation.