As it encounters pressure from SoftBank, its largest investor, to cut back on operating losses, budget hospitality company OYO is quickly scaling back. The firm has cut hotel rooms in the thousands, pulled out of cities, begun laying off workers and reduced other costs, The New York Times reported.
With its Vision Fund, SoftBank has put money into startups around the world in recent times. That funding has allowed many young companies to grow, but many times without much thought for profit per the report. Some startups funded by SoftBank started to run into trouble last year, with WeWork as one example.
The retreat of OYO has been fast and broad. The company lost over 65,000 rooms in just India as of October, according to internal data reviewed by the outlet. The moves come amid over 2,000 layoffs globally per unnamed current and former employees as cited by the outlet. OYO said that some of the information the newspaper obtained was not accurate but wasn’t specific.
The hotel company’s chief executive, Ritesh Agarwal, said per the report that the firm was focused on growth that was sustainable as well as profitability. Agarwal, said, according to the report, “Unfortunately, some roles at OYO will become redundant as we further drive tech-enabled synergy, enhanced efficiency, and remove duplication of effort across businesses or geographies.”
In separate news, OYO filed a valuation report with India’s ministry of corporate affairs noting that the firm did not expect to turn a profit until 2022 per reports in November. The losses were six times higher last year through March compared to 2018, but the firm’s revenue more than quadrupled for the same timeframe.
Losses were blamed, in part, on the firm’s quick expansion, but it was that growth into China, the U.K., the U.S., and other markets that positioned it among the biggest hospitality brands by room count in the world.