The COVID-19 pandemic situation has put a spanner in the growth of stellar performing unicorn startups of the world with homegrown OYO that now saying the sales of the company have come down to half in the past few weeks. “OYO has seen a 50-60% drop in terms of sales,” as Ritesh Agarwal, the founder of OYO, told on NDTV in an interview recently. The problem is unlikely to resolve itself in the coming months as well with the consumers becoming skeptical about traveling. ” In the times to come consumers will be so much more worried before they travel,” as he was adding that the company will have to make an effort to make consumers aware of the sanitation initiatives to make the rooms safer. Commenting on the recent layoffs undertaken by the company, Ritesh Agarwal told that the company had to impose pay cuts and also had to let go of several employees. Ritesh Agarwal had taken a 100% pay cut as corona virus dried up revenues for the travel, tourism and hospitality sector as well.
Hotels and hospitality industry are one of the worst-hit sectors due to coronavirus lockdown with the sector witnessing almost zero revenues for a full quarter as governments across the world imposed travel restrictions. The fact that the hotel industry has a high amount of fixed costs has also aggravated the problem for the sector and according to The Indian Express report, the sector has taken alternative routes for cushion the revenue blow. Some Indian hotels have started to give discounts on future bookings while others have started food delivery as an alternate revenue source and to solve short-term credit problems.
OYO’s layoff spree had also started even before the corona virus which had impacted the hotel business. The company laid off around 1,200 employees from its India team and about half of it from China in Jan-2020. According to a letter to employees in January 2020, Ritesh Agarwal told that – “We are asking some of our impacted colleagues to move to a new career outside of OYO,” that calling the decision a 2020 strategic move.