One of the key sectors that have been one worst affected by the coronavirus crisis is hospitality, with domestic and global travels coming nearly to a standstill. SoftBank Group funded Oyo Hotels and Homes has recently announced plans to offload more properties across the globe as the COVID-19 pandemic prompts the hospitality company to seek retreat from global expansion.
As per sources close to the matter, Oyo is not planning to completely withdraw from any market. However, the company is planning to either terminate or not renew contracts with the hotels that are making considerable loss. As a part of a wider restructuring plan that began in 2019, Oyo had already cast off a number of loss-making properties.
The company may also lay off additional staff in countries where travel regulations to prevent the spread of the virus continue for several months, making it tough for hotels to operate and generate any revenue.
Ritesh Agarwal, Founder of OYO, reportedly said in a statement that the pandemic had resulted in a 50%-60% percent drop in occupancy levels and revenues, putting major stress on the firm’s balance sheet.
Oyo had already made an expansion from China and India into Europe, Southeast Asia and the U.S, making itself one of the world’s biggest hospitality brands in terms of room count. Although, the expansion had also widened its losses to USD 335 million last year.
The company has around USD 1 billion of cash and the cost-cutting measures and furloughs planned earlier in April are aimed at bringing down monthly expenses to approximately USD 25 million from USD 40 million, by June. Given the adversity of the current situation, it is natural for Oyo to manage and prepare for the worst.