OYO Hotels & Homes, currently operating in over 20 states and UTs, has managed to reach 30% of the pre-Covid occupancy levels with bookings led by millennials and small and mid-sized businesses (SMEs).
“In terms of revival and business recovery, we are cautiously optimistic about the market at the moment. But there is a long way to go before we reach pre-Covid occupancy levels,” Rohit Kapoor, CEO, India & South Asia, told FE in an e-mail interview.
Though the pandemic has impacted business at “multiple levels”, the SoftBank-backed company does not intend to raise fresh funds in the near term and has a decent runway to help the firm tide over the crisis.
In October, OYO had announced a fresh $1.5-billion financing round with participation from founder Ritesh Agarwal-led RA Hospitality Holdings and other investors.
Going ahead, OYO’s focus markets across countries will be determined by the trajectory of the pandemic in the regions, the estimated time period of a full recovery and the current size of OYO’s business in the markets. The firm will also consider the state of its financials in individual markets and how well are its product offerings tailored to meet the emerging needs, Kapoor said.
On the basis of internal evaluation of the current situation, OYO plans to remain invested in India, China, Indonesia and Malaysia, besides building on its portfolio of vacation homes in Europe and the UK over the next 12 months. Markets like the US, Japan, West Asia and the rest of South East Asia will be operated with a lower capital base, Kapoor said.
“While the direction is to focus on core, we will continue to track results and the impact of Covid-19 very closely. However, we are still seeing good bookings for winter for weddings (separate India vertical),” Kapoor added.
The company has restored full salaries of all employees in India and South Asia who avail a fixed compensation of up to `8 lakh with effect from August 1. The salaries of the senior staff will be fully restored in two phases by December. OYO does not plan to recruit fresh employees anytime soon. However, the furloughed employees will be first considered for any new role that opens up within the organisation.
“We expect budget hotels to return sooner compared with luxury hotels,” Kapoor said.
The Gurgaon-based company’s consolidated losses increased to $335 million for the year ended March 2019 from $52 million in FY18, as expansion into international markets, including China, entailed heavy costs. Before the pandemic hit, OYO let go of about 15-20% of its 12,000-strong India workforce (prior to layoffs) in an attempt to “right-size”.