As Covid-19 cases continue to rise in India, life is getting more challenging for hospitality and travel platforms like OYO, MakeMyTrip and others, which are trying to take their businesses back to the pre-pandemic level by tweaking products and services in sync with the new normal.
In spite of raising more than $800 Mn from SoftBank and RA Holdings in 2020 and $7.5 Mn from Hindustan Media Ventures earlier this year, hotel rooms aggregator OYO has been cautious during these troubled times and continues to trim unviable/loss-making business models.
According to an Economic Times report, the hospitality startup has exited its co-living and co-working platform OYO Life as part of its cost-cutting measures. The company has already shut down 4,000 beds available under OYO Life and converted 1,700 more into OYO’s hotel rooms. OYO however has not given any official clarification over the report besides Ankit Gupta, CEO, Frontier, OYO India and South Asia calling the report ‘inaccurate’.
For the past year, OYO has been continuously realigning its products and services to make them more sustainable as the Covid-hit market has become a long-term reality.
After laying off thousands of employees, OYO, last year, came up with a hybrid workforce model that divides its workforce into three categories — corporate employees, capability functions and field staff. While the field staff have to go to the office in accordance with their work schedule, employees in the other two categories are allowed to work from home or ‘work from anywhere.’
OYO has also given up the leases of its two flagship corporate offices in Gurugram, invoking the ‘force majeure’ clause that provides a reprieve to a party from performing its obligations under a contract due to calamities beyond human control. The Gurugram offices include OYO’s headquarters at Udyog Vihar and another office in Spaze Palazo. OYO says it is also negotiating to terminate the lease on a third property at Capital Cyberscape, spanning 1.5 Lakh sq. ft.
The company is also planning to let go of its employees in ancillary units, like financial shared services so that it can focus on its core businesses such as hotel onboarding. After the Covid-19 pandemic struck India and the rest of the world in 2020, revenues of the overall hospitality sector plummeted, severely affecting the financial health of the startups in the space. OYO is no exception and has been on a cost-cutting spree since then.