Oyo Rooms

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''Oyo rooms: Amount ($ M) and investors: 2019''
 
''Oyo rooms: Amount ($ M) and investors: 2019''
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==2020==
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===Oyo Scales Back as SoftBank-Funded Companies Retreat===
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[https://www.nytimes.com/2020/01/13/technology/oyo-hotel-india-softbank.html?action=click&module=News&pgtype=Homepage  Vindu Goel, Karan Deep Singh and Erin Griffith, January 13, 2020: ''The New York Times'']
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The Indian hospitality start-up is losing hotel rooms and has stepped back from more than 200 cities as part of a broader pullback by firms financed by SoftBank.
 +
 +
MUMBAI, India — Oyo, once one of India’s fastest-growing tech start-ups, is now rapidly scaling back.
 +
 +
In recent weeks, Oyo, a budget hospitality company, has pulled out of dozens of cities, cut thousands of hotel rooms, started laying off employees and slashed other costs as it faced pressure from its biggest investor, the Japanese conglomerate SoftBank, to curb vast operating losses.
 +
 +
The retreat has been swift and sweeping. In India alone, Oyo has lost more than 65,000 rooms — or about a quarter of what it had offered to travelers — since October, according to internal data from current and former employees that was reviewed by The New York Times. This month, Oyo also stopped selling rooms in more than 200 small Indian cities, according to company documents and one current employee and one former employee.
 +
 +
The moves come on top of more than 2,000 layoffs around the world, which Oyo began rolling out last week, according to six current and former employees. Before the cutbacks, Oyo had about 20,000 employees in 80 countries.
 +
 +
Oyo said some of the data obtained by The Times was inaccurate but declined to be specific. In an email to employees on Monday, Ritesh Agarwal, the company’s chief executive, said Oyo was focused on sustainable growth and profitability — which meant layoffs.
 +
 +
“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,” he wrote in the email.
 +
 +
The Economic Times, an Indian publication, first reported in December that job cuts at Oyo were coming.
 +
 +
Oyo’s actions are part of a broader pullback by start-ups funded by SoftBank. Armed with a $100 billion fund known as the Vision Fund, SoftBank has shoveled money into start-ups across the globe in recent years. That has given many young companies fuel to expand, often with little thought for profit.
 +
 +
Last year, some SoftBank-funded start-ups began running into trouble — most notably WeWork, the office space company, which failed to go public when investors began questioning its losses. WeWork ultimately ousted its chief executive and slashed its valuation to less than $8 billion from $47 billion.
 +
 +
WeWork’s fall led to questions about other start-ups that SoftBank had financed and whether those young firms could make money. Last month, the dog-walking service Wag underwent several rounds of layoffs before SoftBank sold its shares at a loss. The construction start-up Katerra, another SoftBank-funded company, also cut its staff.
 +
 +
This month, layoffs have gathered momentum at start-ups that SoftBank had invested in. The South American delivery service Rappi and the San Francisco car-sharing start-up Getaround said they were laying off employees. Zume, a company that used robots to make pizzas and had been valued at $2 billion, cut more than half of its work force. It also stopped making pizzas.
 +
 +
Some investors and start-ups said they were now approaching SoftBank’s Vision Fund cautiously — or, in some cases, avoiding it altogether.
 +
 +
“We have advised almost all of our companies to steer clear,” said Josh Wolfe, an investor at the venture capital firm Lux Capital who has been critical of SoftBank’s strategy. “Everyone else was fearful to say the emperor had no clothes.”
 +
 +
SoftBank declined to comment on Oyo and other start-ups in which it has invested.
 +
 +
Mr. Agarwal founded Oyo in 2013 to organize India’s small independent hotels into a chain. The company markets rooms online and takes a cut of each stay. Mr. Agarwal, who has become a business star in India, has said he aspired to make Oyo the world’s largest hotel chain by 2023, displacing Marriott.
 +
 +
But as Oyo tried to expand globally, in part pushed by SoftBank, it spent heavily on incentives to attract hotel owners and customers to its site. That resulted in losses in India, where Oyo has said it will lose money through at least 2021.
 +
 +
Masayoshi Son, SoftBank’s chief executive, began investing in Oyo in 2015. SoftBank and its Vision Fund now own half its stock. While Mr. Son has called Oyo a jewel of his fund and urged it to grow quickly, he has since changed his stance.
 +
 +
As Oyo’s losses have mounted, senior leaders at the company have told employees that SoftBank had demanded that it become profitable on a basis known as EBITDA — earnings before interest, taxes, depreciation and amortization — by mid-2020, according to current and former employees.
 +
 +
In another sign of SoftBank’s shifting position, Yahoo Japan, which is half-owned by SoftBank, pulled the plug in November on a Japanese apartment-rental venture with Oyo. Most of the Oyo employees involved in the Japan venture have been laid off or relocated, current and former employees said.
 +
 +
Oyo faces other troubles in India. On Friday, the Indian income-tax authorities visited the company’s headquarters just outside New Delhi, requesting reams of documents. The tax department and Oyo said the government was examining whether the company was properly withholding and remitting income taxes on payments to vendors.
 +
 +
The Times reported this month that Oyo had offered thousands of unlicensed hotel rooms and sometimes offered free rooms to government officials to deter enforcement. The Times also described how some Oyo employees worked together to commit fraud against the company.
 +
 +
In his email on Monday, Mr. Agarwal said the behavior described by The Times would violate the company’s code of conduct. “We take all the allegations very seriously and are looking into each and every one,” he wrote.
 +
 +
To stem losses, Oyo has also cut back on staff and supplies such as mineral water and cleaning fluids in the hotels it runs itself, according to the current and former employees. Oyo staff members managing some of the hotels have been instructed to save more money on electricity bills by switching off lights, elevators and even boilers for hot water, they said.
 +
 +
Morale has plummeted among thousands of Oyo workers globally, current and former employees have said.
 +
 +
Prabhjeet Singh, an Oyo business development manager who left the company in September, said employees who criticized the company ran a greater risk of losing their jobs.
 +
 +
“It’s a culture of silence,” he said.
 +
 +
Oyo’s reputation has deteriorated so much in India that other employers are reluctant to hire its former workers, said Mr. Singh, who has been unable to land another job.
 +
 +
“They look at me as if I’ve done a crime working at Oyo,” he said.
 +
 +
Vindu Goel reported from Mumbai, Karan Deep Singh from New Delhi and Erin Griffith from San Francisco.
 +
 +
===Oyo sacks 1,000===
 +
[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2020%2F01%2F14&entity=Ar01914&sk=58F885CE&mode=text  Oyo sacks 1,000, to focus on profitability, January 14, 2020: ''The Times of India'']
 +
 +
 +
Oyo founder Ritesh Agarwal has told staff that the focus of the company is on profitability as it is looks to balance “the speed of our growth with our operational capabilities” along with driving governance and leveraging technology to improve operations. The development comes as Oyo has started cost-cutting, laying off 10% of the Indian workforce, about 1,000 employees, according to sources briefed on the matter.
 +
 +
The development comes as the SoftBank-backed hospitality major has come under global scrutiny for the way it runs its operations, including overstating properties listed on its platform and alleged bribes. Oyo has also faced protests from hotel owners in India and China over payments. Over the last two years, Oyo has expanded aggressively to global markets including China, Europe and the US, armed with billions in funding from SoftBank Vision Fund.
 +
 +
“I have no hesitation in admitting that, growing at the pace at which Oyo has in the past few years, we sometimes went ahead of ourselves and pressure-tested our organisation at multiple levels. This year, we are taking steps to address this,” said the 26-year-old Agarwal in a mail to employees. He added that the company remains subject to external audits and is “making significant investments in compliance, training and governance”.
 +
 +
Agarwal said in his mail that “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”. “As a result, we are asking some of our impacted colleagues to move to a new career outside of Oyo.” While the total number of layoffs are currently pegged at 1,000, some reports have pegged it at over 2,000 employees in India out of a base of 20,000. Globally, Oyo employs over 20,000 and it is also expected to undertake layoffs in markets like China. TOI had reported about layoffs at Oyo and other unicorns on December 23.
 +
 +
The move could see Oyo trimming its network of over 10,000 hotels in India as focus will be on “profitable locations and buildings and avoid growth that dilutes margins” and reduces “operating costs”.

Latest revision as of 08:41, 16 January 2020

This is a collection of articles archived for the excellence of their content.
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Contents

[edit] Board of directors

[edit] 2019, Nov

Early Yahoo investor joins Oyo board, November 22, 2019: The Times of India


SoftBank-backed Oyo Hotels and Homes said it has appointed Betsy Atkins, CEO and founder of Baja Corporation, as an independent director on the company’s board. Atkins is known for her early investments in Yahoo and eBay via Baja. She also sits on the board of Volvo Cars and Wynn Resorts. She will play a supervisory role and provide guidance on key business areas including corporate governance, driving tech-enabled efficiencies in business operations.

Oyo’s current board members include Goldman Sachs vice-chairman Mark Schwartz, SoftBank Vision Fund managing partner Munish Varma, Lightspeed India partner Bejul Somaia and Sequoia Capital India MD Mohit Bhatnagar. “Betsy brings tremendous operating and governance experience that will help us continue our mission to help middle-income people gain access to quality accommodations at different price points,” said Ritesh Agarwal, founder and group CEO, Oyo Hotels & Homes.


[edit] YEAR-WISE DEVELOPMENTS

[edit] 2018: no. 1 chain in India

Shilpa Phadnis, Digbijay Mishra & Sujit John, This 24-year-old is shaking the global budget hotel biz, October 21, 2018: The Times of India


Ritesh Agarwal’s Oyo is already the biggest hotel group in India, fast getting there in China, and is now breaking into UK, UAE and Indonesia

When you talk to Ritesh Agarwal, you can barely believe you are talking to a 24-yearold. You think you can at least make him fumble with questions about those who write nasty reviews – “the worst of worst experience” they had in an Oyo hotel. But no, he’s cool, explaining how they have gone about improving infrastructure and service quality, how overall app ratings have been at 4.5 (out of 5), and with humility admitting that there’s also work to be done.

And then you begin to get a sense of why people like SoftBank founder Masayoshi Son are betting so big on him. Last month, Son’s Japanese holding company, along with others, invested a billion dollars in Agarwal’s Oyo Rooms, valuing it at $5 billion, and making it India’s second-most valuable startup after Paytm.

Of course, there’s also Agarwal’s track record. The scale that he has achieved in barely five years – he started Oyo when he was 19 – is mindboggling. In number of rooms, Oyo is now the biggest hotel chain in India, nine times bigger than the No. 2, the 115-yearold Taj Group. It’s valued more than the Taj Group and the Oberoi hotel group combined.

And at its present rate of room additions, it could become the world’s biggest on that metric in the next few years. The Marriott Group is the leader with about 1.2 million rooms, followed by the Hilton Group, with about 840,000. Oyo is at 213,000. But in just one recent quarter, Oyo – which is present now in India, China, Malaysia, Nepal, UK, UAE and Indonesia – added about 80,000 rooms, while Marriott and Hilton did about 7,000-8,000 each.

Agarwal’s proposition is unique. In his words: “94% of the hotels (in the world) are 100 rooms or smaller, and 100% of the hotel chains have hotels that have 100 rooms or more. We are the only hotel chain that knows how to operate a less than 100-room hotel profitably.”

He does this with a mix of infrastructure and service quality improvements, and a dynamic pricing model, many of these involving use of modern digital technologies. The immediate impact of this is in occupancy rates.

Agarwal tells us the UK’s is the freshest example (Oyo entered the market just last month) and he must talk about it. “The first hotel we opened was in Sussex, called Oyo Townhouse. It started at 60% occupancy. And in just four weeks, we grew it to 94% occupancy. Because we did a great job of the service quality, took the ratings of the hotel significantly up, and provided dynamic pricing,” he says.

It’s the same everywhere. In China, he says, every hotel that has joined the chain has gone from 25% occupancy to 65% occupancy in two to three months.

The math, he says, is straightforward. “In every neighbourhood, you always have 20% of the hotels getting 80% of the business because the rest of the 80% of hotels do not have the right kind of infrastructure in terms of lobby area, bedroom, kitchen, and so on, and the right service quality,” he says.

Though each Oyo hotel is a leased or franchised operation, all infrastructure and service responsibility is Oyo’s. Oyo has about 400 construction managers each in China and India to make sure that every act of renovation is fully controlled by the company to upgrade the quality of living. And every general manager of a hotel is an Oyo employee who takes the responsibility to train each of the staff to ensure there is consistent quality of housekeeping and in-room dining. There are also 25 Oyo skill institutes between India and China where staff are trained.

Oyo handles revenue management too. Agarwal says it is quite hard in hotels to decide what channels of booking to use, how much of inventory and which category of rooms to make available in each channel, what should the pricing be, what should the offers be, what hour of the day should you increase the price, reduce the price.

“We use technology for a lot of efficiency in training our hotel staff, in the property management system, in pricing on a multichannel framework,” Agarwal says.

Anirudh Damani, partner at Artha India Ventures that funded Oyo in its early stages, says Agarwal’s big strength is his attitude to challenges and people. He recollects Agarwal meeting him in a pair of torn jeans when he was 18. “I asked him for a driver’s license but he did not feel offended. He doesn’t get worried when he is questioned on his credibility as an entrepreneur. We did mystery shopping as part of due diligence before investing in the company and we had our share of bad experiences, but he made up for it by personally writing to me apologising. That kind of maturity is rare in a young entrepreneur,” he says.

A competitor, who did not want to be named, admires Agarwal for having built a senior leadership team with credible names. Most of them have stuck with Agarwal.

Siddharth Goenka, who runs the budget hotel chain Octave Hotels, wonders though whether standardisation of service is possible when you don’t fully own and operate the hotel, and especially on such mass scale. “And if you can’t ensure that, people could lose trust. Besides, with hotel user ratings now available, a brand alone is not a decisionmaking criterion for customers,” he says.

Then there are those who ask whether Agarwal is burning too much investor cash, including to give attractive, and perhaps unsustainable, offers to hotel owners.

To that, Agarwal says Oyo is already making a 20% margin at an individual hotel level, net of customer and owner subsidies, and channel distribution cost, and every year that percentage is improving. He says losses are primarily because of the investments being made in R&D, top talent and skilling schools.

The biggest stability for Oyo perhaps comes from its Chinese operations, where it is adding about 30,000 rooms a month. “Ritesh has got the Chinese government’s blessings,” says one industry observer. Agarwal says the success is because he’s built the Chinese operations like a Chinese company. “Of our 3,700 Oyo entrepreneurs in China, only 20 speak fluent English. A lot of foreign companies try to hire bilingual staff. But we only care about people’s mission and hunger to execute well every day,” he says.

[edit] 2019

Oyo rooms: Amount ($ M) and investors: 2019
From: December 31, 2019: The Times of India


See graphic:

Oyo rooms: Amount ($ M) and investors: 2019

[edit] 2020

[edit] Oyo Scales Back as SoftBank-Funded Companies Retreat

Vindu Goel, Karan Deep Singh and Erin Griffith, January 13, 2020: The New York Times


The Indian hospitality start-up is losing hotel rooms and has stepped back from more than 200 cities as part of a broader pullback by firms financed by SoftBank.

MUMBAI, India — Oyo, once one of India’s fastest-growing tech start-ups, is now rapidly scaling back.

In recent weeks, Oyo, a budget hospitality company, has pulled out of dozens of cities, cut thousands of hotel rooms, started laying off employees and slashed other costs as it faced pressure from its biggest investor, the Japanese conglomerate SoftBank, to curb vast operating losses.

The retreat has been swift and sweeping. In India alone, Oyo has lost more than 65,000 rooms — or about a quarter of what it had offered to travelers — since October, according to internal data from current and former employees that was reviewed by The New York Times. This month, Oyo also stopped selling rooms in more than 200 small Indian cities, according to company documents and one current employee and one former employee.

The moves come on top of more than 2,000 layoffs around the world, which Oyo began rolling out last week, according to six current and former employees. Before the cutbacks, Oyo had about 20,000 employees in 80 countries.

Oyo said some of the data obtained by The Times was inaccurate but declined to be specific. In an email to employees on Monday, Ritesh Agarwal, the company’s chief executive, said Oyo was focused on sustainable growth and profitability — which meant layoffs.

“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,” he wrote in the email.

The Economic Times, an Indian publication, first reported in December that job cuts at Oyo were coming.

Oyo’s actions are part of a broader pullback by start-ups funded by SoftBank. Armed with a $100 billion fund known as the Vision Fund, SoftBank has shoveled money into start-ups across the globe in recent years. That has given many young companies fuel to expand, often with little thought for profit.

Last year, some SoftBank-funded start-ups began running into trouble — most notably WeWork, the office space company, which failed to go public when investors began questioning its losses. WeWork ultimately ousted its chief executive and slashed its valuation to less than $8 billion from $47 billion.

WeWork’s fall led to questions about other start-ups that SoftBank had financed and whether those young firms could make money. Last month, the dog-walking service Wag underwent several rounds of layoffs before SoftBank sold its shares at a loss. The construction start-up Katerra, another SoftBank-funded company, also cut its staff.

This month, layoffs have gathered momentum at start-ups that SoftBank had invested in. The South American delivery service Rappi and the San Francisco car-sharing start-up Getaround said they were laying off employees. Zume, a company that used robots to make pizzas and had been valued at $2 billion, cut more than half of its work force. It also stopped making pizzas.

Some investors and start-ups said they were now approaching SoftBank’s Vision Fund cautiously — or, in some cases, avoiding it altogether.

“We have advised almost all of our companies to steer clear,” said Josh Wolfe, an investor at the venture capital firm Lux Capital who has been critical of SoftBank’s strategy. “Everyone else was fearful to say the emperor had no clothes.”

SoftBank declined to comment on Oyo and other start-ups in which it has invested.

Mr. Agarwal founded Oyo in 2013 to organize India’s small independent hotels into a chain. The company markets rooms online and takes a cut of each stay. Mr. Agarwal, who has become a business star in India, has said he aspired to make Oyo the world’s largest hotel chain by 2023, displacing Marriott.

But as Oyo tried to expand globally, in part pushed by SoftBank, it spent heavily on incentives to attract hotel owners and customers to its site. That resulted in losses in India, where Oyo has said it will lose money through at least 2021.

Masayoshi Son, SoftBank’s chief executive, began investing in Oyo in 2015. SoftBank and its Vision Fund now own half its stock. While Mr. Son has called Oyo a jewel of his fund and urged it to grow quickly, he has since changed his stance.

As Oyo’s losses have mounted, senior leaders at the company have told employees that SoftBank had demanded that it become profitable on a basis known as EBITDA — earnings before interest, taxes, depreciation and amortization — by mid-2020, according to current and former employees.

In another sign of SoftBank’s shifting position, Yahoo Japan, which is half-owned by SoftBank, pulled the plug in November on a Japanese apartment-rental venture with Oyo. Most of the Oyo employees involved in the Japan venture have been laid off or relocated, current and former employees said.

Oyo faces other troubles in India. On Friday, the Indian income-tax authorities visited the company’s headquarters just outside New Delhi, requesting reams of documents. The tax department and Oyo said the government was examining whether the company was properly withholding and remitting income taxes on payments to vendors.

The Times reported this month that Oyo had offered thousands of unlicensed hotel rooms and sometimes offered free rooms to government officials to deter enforcement. The Times also described how some Oyo employees worked together to commit fraud against the company.

In his email on Monday, Mr. Agarwal said the behavior described by The Times would violate the company’s code of conduct. “We take all the allegations very seriously and are looking into each and every one,” he wrote.

To stem losses, Oyo has also cut back on staff and supplies such as mineral water and cleaning fluids in the hotels it runs itself, according to the current and former employees. Oyo staff members managing some of the hotels have been instructed to save more money on electricity bills by switching off lights, elevators and even boilers for hot water, they said.

Morale has plummeted among thousands of Oyo workers globally, current and former employees have said.

Prabhjeet Singh, an Oyo business development manager who left the company in September, said employees who criticized the company ran a greater risk of losing their jobs.

“It’s a culture of silence,” he said.

Oyo’s reputation has deteriorated so much in India that other employers are reluctant to hire its former workers, said Mr. Singh, who has been unable to land another job.

“They look at me as if I’ve done a crime working at Oyo,” he said.

Vindu Goel reported from Mumbai, Karan Deep Singh from New Delhi and Erin Griffith from San Francisco.

[edit] Oyo sacks 1,000

Oyo sacks 1,000, to focus on profitability, January 14, 2020: The Times of India


Oyo founder Ritesh Agarwal has told staff that the focus of the company is on profitability as it is looks to balance “the speed of our growth with our operational capabilities” along with driving governance and leveraging technology to improve operations. The development comes as Oyo has started cost-cutting, laying off 10% of the Indian workforce, about 1,000 employees, according to sources briefed on the matter.

The development comes as the SoftBank-backed hospitality major has come under global scrutiny for the way it runs its operations, including overstating properties listed on its platform and alleged bribes. Oyo has also faced protests from hotel owners in India and China over payments. Over the last two years, Oyo has expanded aggressively to global markets including China, Europe and the US, armed with billions in funding from SoftBank Vision Fund.

“I have no hesitation in admitting that, growing at the pace at which Oyo has in the past few years, we sometimes went ahead of ourselves and pressure-tested our organisation at multiple levels. This year, we are taking steps to address this,” said the 26-year-old Agarwal in a mail to employees. He added that the company remains subject to external audits and is “making significant investments in compliance, training and governance”.

Agarwal said in his mail that “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”. “As a result, we are asking some of our impacted colleagues to move to a new career outside of Oyo.” While the total number of layoffs are currently pegged at 1,000, some reports have pegged it at over 2,000 employees in India out of a base of 20,000. Globally, Oyo employs over 20,000 and it is also expected to undertake layoffs in markets like China. TOI had reported about layoffs at Oyo and other unicorns on December 23.

The move could see Oyo trimming its network of over 10,000 hotels in India as focus will be on “profitable locations and buildings and avoid growth that dilutes margins” and reduces “operating costs”.

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