Oyo Hotels and Homes
India’s Oyo Hotels and Homes, backed by SoftBank Group, plans to sell more properties all over the world, three sources that are familiar with the issue, as the pandemic of coronavirus triggers a rapid departure from global development.
The hospitality industry was one of the worst affected by the outbreak of coronaviruses, with global and domestic travel almost halted.
While Oyo does not intend to leave any market entirely, it will either terminate or not renew agreements with hotels that manufacture losses, said two sources.
A fourth source aware of the plans added that as part of the broader restructuring that started last year, Oyo had already demolished several loss-making assets.
The source also said that in countries where travel restrictions continue to prevent the spread of the virus, the organization could have additional workers, making it harder for hotels to operate.
Just one year after a glamorous expansion into Europe, South-East Asia, and the United States outside India and China, Oyo is one of the rising indoor hospitality brands in the world. The drive also raised its losses last year to 335 million dollars.
How many hotels contract Oyo plans to conclude, nor in which countries were it not immediately apparent, sources said, who requested not to be identified because the talks were still private.
The fourth source said that Oyo would give priority to business and investments in India, Southeast Asia, Europe, China, and the USA while retaining its presence in places like Japan, Brazil, Mexico, and the Middle East.
Minimize Monthly Costs
The organization has one billion dollars of cash, and the initiatives, along with the other cost-cutting strategies and slumps outlined in early April, are intended to minimize monthly costs from 40 million dollars to around 25 million dollars by June, added the source.
Other large hotel operators like Marriott International have also given up their financial prospects and retired cash conservation personnel.
Oyo’s CEO, Ritesh Agarwal, said on April 8 that this pandemic has caused the company’s balance sheet to fall by 50 percent – 60 percent.
“As the current situation is unprecedented, it’s normal for Oyo to brace for the worst,” said one of the three people listed above.
Oyo is one of SoftBank’s most substantial bets with a 46% stake in the Japanese company.
The 6-year-old hotel start-up consulted restructuring specialist Aon Hewitt, two of the four men, last year, and recently appeared to the staff advisor. Alvarez & Marsal and Accenture Plc.
Alvarez and Accenture did not respond to the comment request emails. Aon Hewitt refused to comment on this.
Oyo Reduced Jobs
Between January and March, Oyo reduced 5,000 jobs in China and India mainly, with approximately 25,000 workers, and amended hotel contracts to withdraw income guarantees.
The two sources have agreed to end contracts with hotels that did not produce annual sales of at least $100,000. The most significant cuts have been made in emerging markets like India, South-East Asia, and Latin America, one of the two people said, adding that Oyo now worked in 400 Indian towns out of 550 earlier.
The two people said that the steps helped Oyo to slash its monthly expense to $40 million by $80 million in January.