Oyo is furloughing more employees globally and levying a 25% pay cut across the board through July this year as the Indian budget lodging startup looks to reduce its expenses to deal with the coronavirus pandemic that has slashed its revenue by about 60%.
Rohit Kapoor, chief executive of Oyo, shared the news with employees in a virtual town hall Wednesday. The move comes at a time when Oyo has already furloughed and cut thousands of jobs in recent months.
“Today, our company is taking a difficult but necessary step for India, whereby we are asking all OYOprenuers to accept a reduction in their fixed compensation by 25%. This will be effective for April-July 2020 payroll,” said Kapoor, according to a transcript obtained by TechCrunch.
Kapoor insisted that Oyo would continue to provide “limited” benefits to affected employees during this transition and ensured that no additional jobs were being cut. An Oyo spokesperson confirmed the development to TechCrunch, but declined to share how many employees were being furloughed.
Oyo founder and chief executive Ritesh Agarwal said earlier this month that the coronavirus outbreak had severely impacted the firm’s business globally. The company’s occupancy rate and revenues had dropped by “over” 50 to 60% since earlier this year, he said.
Oyo reported a loss of $335 million on $951 million revenue globally for the financial year ending March 31, 2019.
Oyo’s recent performance is the latest setback for Masayoshi Son’s SoftBank, which is seeing several of its star portfolio startups suffer severely during the coronavirus outbreak.
The firm is already engaging with lawsuits with WeWork, which had a meltdown last year. Its other major big bet, Uber, withdrew its 2020 financial guidance last week and said it was writing down $1.9 billion to $2.2 billion on the value of some equity investments it has made.
AI-based lending platform Kabbage has furloughed employees; global communications firm OneWeb has filed for bankruptcy; home buying startup Opendoor said last week it was laying off 600 employees, or 35% of its workforce; e-commerce startup Brandless went bust earlier this year; and real estate brokerage startup Compass also cut jobs.
Earlier this month, SoftBank forecast a $7 billion net loss for the year ending in March, and said it expected its operating loss to balloon to $12.5 billion.