Oyo Rooms, the Indian hospitality chain of leased hotels, has laid off close to 300 employees.
The first reason for the layoff is that Oyo has shifted from a minimum business guarantee model to a revenue-sharing model, that requires lesser staff. The second reason is that it has put in place cost-cutting measures in an attempt to overcome the pandemic-induced business slump.
While some properties will still follow a minimum guarantee policy, around 99 per cent will follow the new revenue model. Oyo has introduced tech upgrades that have further made some jobs redundant. It is in the midst of efforts to ensure long-term sustainability keeping in mind the realities of business amidst the ongoing pandemic.
Oyo’s more established business, which deals with co-living and student housing has been as affected by the pandemic as its franchise business in partnership with hotel owners. Layoffs have taken place in both businesses. Although employees have been laid off across India, the maximum effect has been faced by those working in locations where OYO’s business was affected.
There has been no talk of any formal restructuring. OYO may cut more jobs as the adverse effects of the pandemic on the hospitality industry show no signs of wearing off any time soon. Before lockdown, the Company had laid off 5,000 staff members and imposed salary cuts for the remaining employees. Losses had been incurred, as occupancy had been reduced to almost zero during the lockdown.
As demand for travel picked up from August, the process of restoring the reduced salaries had begun in phases.
OYO’s adoption of a hybrid work model divides its workforce into corporate employees, field staff and capability functions. While the field staff are already in office, operating within the safety protocols, the other two categories are working remotely.