The COVID-19 pandemic has dealt a crippling blow to life as we know it. Hundreds of industries and businesses have been sorely affected by the disruptions caused by the pandemic. One of the worst affected sectors is the hospitality industry, which has been hit especially hard due to travel restrictions and social distancing. OYO is one of the primary businesses that have been severely affected by the restrictions. They have also had to contend with a steep drop in revenue.
Softbank Behind Massive Expansionary Moves
While OYO is spread all over the world, most of its operations rest heavily in India. The founder, Ritesh Agarwal, founded the company in 2013 – and it has since become one of the staples in the hospitality industry. The primary shareholder in this organization is SoftBank, which has helped the unicorn expand in an aggressive manner. From 2017-2019, the valuation of this enterprise rose from $400 million to $10 billion. OYO thrives in India but has been struggling of late.
Why is OYO Struggling So Much?
The main reason for the struggles of OYO is the travel restrictions imposed due to the pandemic. Once the WHO announced that the world was facing a pandemic, countries resorted to shutting down borders immediately. Even within countries, travel was highly restricted. All forms of transport were also suspended momentarily. Travel plans stood canceled and the industry experienced a massive drop in demand. At the moment, the development of vaccines is expected to help the company make a solid recovery.
Since its launch in 2013, the company is facing a fall in valuation for the first time. Many investors and experts are saying that the valuation of $10 billion that it holds right now is too high. In its heyday, OYO had more than 10,000 employees in India and 30,000 globally. The crisis has caused them to downsize their personnel by a third. As of right now, they only have 10,000 permanent employees all over the world.
Are Major Changes Expected at OYO?
In some recent interviews, Agarwal said that he doesn’t expect any major restructuring to take place during this time. He also mentioned that the business is attempting to make all of its operations technology-intensive. He said that this move is likely to affect the amount of personnel. There have also been rumors that the board of OYO is looking for a new CEO. In the same interview, Agarwal discredited these rumors and said that investors have never considered this.
Measures Taken by OYO During the COVID-19 Pandemic
During the pandemic, OYO attempted to cope with the drastic cut in demand. They started to offer safe quarantine spaces to frontline workers such as medical professionals, essential workers, etc. It also ran many marketing campaigns informing people about the sanitization and safety measures adopted by the company at this time. After the lockdown was lifted in June 2020, OYO has only managed to earn back 25% of its pre-COVID revenue. However, the profit levels are recovering nicely in recent times.
It is still a period of uncertainty regarding the hospitality business in India and the world. OYO needs to work very hard to make sure that the organization and its employees safely make it through this devastating and crippling pandemic.