Oyo Hotels & Homes is taking a step back from its Latin America market as the COVID-19 pandemic continues to decimate travel across the globe, The Wall Street Journal reported Friday (Feb. 12).
Oyo announced plans to cut a significant number of its Latin America staff and reduce funding as it plans to move to a digital-only model in that part of the globe. The shift will require Oyo to lay off “nearly its entire staff,” according to Reuters.
Another casualty of the hard-hit travel industry, the Indian hotel startup was riding high in 2019 when it became the second-largest hotel chain in the world. Today, it lost nearly half of the number of hotel rooms that it operates.
Oyo’s business model is turnkey — in exchange for room prices and bookings, independent hotel owners get a cut of the revenue and fees that are collected provided they rebrand as an Oyo hotel.
The business model took off fast, but suffered when COVID-19 travel restrictions strangled the hospitality industry. In September of 2020, SoftBank stepped in and let go of staff as well as the $75 million that was meant for Oyo’s growth in Latin America, according to an Oyo spokesperson. Around that time, Oyo also downsized its operations in Japan.
In spite of the success of Oyo’s business model, the pandemic is presenting real challenges to fill the volume of rooms needed to sustain its business. Not helping matters was Oyo’s rapid expansions into China in 2018 and 2019 which have also led to heavy losses.
The company has decided to pivot from revenues and business to places that show a better promise of growth and performance which includes India, Southeast Asia and Europe. Oyo will employ a small staff in Latin America to support business while offering most of its services through technological platforms.
And as recently as December, Oyo CEO and Founder Ritesh Agarwal was still looking ahead to an initial public offering (IPO) for the hotel brand.