India-based hotel group OYO is slowing its ambitions to be the world’s largest chain within the next three years, following a backlash from investors and growing losses. This comes after a period of rapid growth — now cut short.
Rohit Kapoor, the new CEO for OYO in India and South Asia, said the company had to cut back about 2,000 staff, pull out of 200 cities and remove 1,000 locations from its platform. For this reason, its pursuit of more growth has been stalled. The company also announced more job cuts and closures in the U.K. and U.S. last week.
The mission of OYO — which has only existed for seven years — is to rebrand and renovate hotels under its own name. The company promotes the hotels online, and offers hoteliers a guaranteed income, no matter what their activity is like.
Before its recent retreat from growth, OYO was on a major trajectory to become the world’s largest hotel chain, holding claim to hotels in 80 countries, as well as 1 million rooms in total. Kapoor, speaking with Financial Times at OYO’s headquarters, said he recognized that the company’s acceleration was “too fast to be balanced,” and that he was alright if its growth were to happen at a slower pace than originally anticipated.
OYO was founded by Ritesh Agarwal — only 19 years old then. The company has become a favorite of SoftBank, which owns almost half of the startup. That fact has drawn uneasy comparisons with another SoftBank-funded company, WeWork, which recently had to sell off numerous assets and cancel a planned IPO in the wake of financial woes. SoftBank bailed WeWork out — though not at a small cost, as the funds necessary were more than the bank estimated.
By March 2019, OYO’s losses surged to 600 percent and $335 million, with no expectation of profit in primary markets India and China until 2022.
Further troubles have arisen from complaints that the company has not met agreements, and owed money. Indian competition authorities have launched a probe into allegations that OYO was working with booking company MakeMyTrip to suppress competition.