Calling is already visible in its core business – hotels. Multiple employees said OYO is shifting its focus to company-owned hotels and is abandoning third-party-owned hotels. This makes sense for two reasons — hundreds of hotels have defied OYO customers, accused them of fraud and unfair practices, and too much of the margins on the hotel’s own properties.
Surprisingly, OYO’s Serviceable Room Nights (SRN) —the number of rooms on its platform — can drop by 300,000 between January and December 2019.
The general consensus, and Agarwal’s email, is that Mega VC refers to SoftBank — which owns 50% of OYO and is in its own crisis — of course promotes correction. Conversations with multiple employees indicate that this has to happen. They talk about how OYO, the world’s third largest hotel chain, is increasing all costs and demonstrating that its business model is working. Unless it has raised questions about the health of its business and tried it through methods of creating a high-pressure, toxic work environment.
Where are you going OYO
OYO layoffs, employees have no policy to say. They cut all kinds of jobs – the supply side (who brought hotels on the OYO platform), the demand side (those charged with filling rooms) and everyone in between.
Last week alone, 300 employees were fired at Gurugram; 150 in Chennai; In Kolkata, 125-150; 135 employees in Mumbai; 200 in Delhi and 70 in Nainital; In Hyderabad about 60. These figures are taken from the employees of each locality.
These employees are estimated to have laid off between 1,500-3,000. No one knows how many job cuts have been made so far. The numbers in the media reports varied: 1,000, 1,800, 2,000, 3,000. 5,000 too. The three employees told The Ken that the layoffs began in August 2019, began in earnest in December, and reached critical levels in January. Job cuts are expected in March, company sources said.
Ask the reason why employees are laid off and you get a variety of responses – performance, cost reduction, restructuring, scaling down, profitability. Or, as in the case of a Lucknow employee, an excel sheet decision.
“In previous job cuts, there was a perception that at least it didn’t show up. But now A-grade performers are getting pink slips. That doesn’t make sense,” said a sales manager in Delhi. Senior managers were less than clear, with suggestions from Gurugram headquarters.
The cuts are OYO’s latest moves to its organizational structure, which began early 2018.
As of 2018, OYO’s India operations are divided into three teams:
1) Central: Corporate, Product, Finance, Engineering etc. There are also teams like the transformation of climbing into new hotels.
2) Operations: Customer own-experience, growth etc.
3) Business development: Responsible for partnering with hotels.
But with the decline of 2018, two employees said OYO is undergoing a massive reorganization. The formation of the three teams has been discontinued. They retained the central team, but now, the regions (or hubs) are responsible for managing hotel partners and generating revenue. To make this model work, OYO went into recruiting overdrive.
Multiple employees said OYO will do so in 2019 as the new construction fits and expands. OYO is just over a month away from launching a new venture or stepping into a new country. It has spread to countries like Japan and Saudi Arabia as well as new cities like Raipur. In February 2019, it was renamed OYO Living to OYO Life.
“Their valuation increased in January 2019, I think. When they have funds, they take a lot. They have to show investors that we have a lot of these assets and we have a lot of people,” said the former demand manager who resigned in 2019.