OYO China reduced its staff by 7,000, and 7 founding executives have left 5

OYO China reduced its staff by 7,000, and 7 founding executives have left 5

Image source: Visual China

Indian unicorn OYO hangs by a thread in the Chinese market.

Recently, Jiemian News learned that OYO China is launching a round of large-scale layoffs in the past few months. According to the number of employees on March 10, 2020, the total number of OYO employees is only 2,743. Compared with more than 9,800 employees at their peak in November 2019, it has decreased by nearly 7,000, and this number continues to expand.

In addition, Jiemian News also exclusively learned that the executives of OYO China have left on a large scale, and the seven VP/SVP who participated in the creation of the OYO China team in the early days have left five. Among the CXOs who joined later, three people have also left.

Screenshots of internal communications obtained by Jiemian journalists show that on November 2, 2019, the total number of employees of OYO China was still at a high level of 9,828, and since 2020, the number of employees per month has dropped sharply in units of thousands.

According to the reporter’s understanding, in January 2020, the total number of OYO employees dropped to 7,500; in February, the number of employees continued to decline to 5,800; in March, the number of employees was only more than 2,700.

Regarding the rapid downsizing, OYO responded on March 11 that the company is optimizing and refining the regional management structure, and making appropriate adjustments to the business functions and establishments in the corresponding regions. “The adjustment will inevitably involve the improvement of organizational efficiency and the optimization of a certain scale of personnel. The specific number of people involved will become clearer in the next week or two.”

In addition, after investigating and sorting out the resignation of OYO executives, Jiemian News has compiled the following list:

In July 2019, Fu Xiaoming, President of Government Affairs, resigned

In October 2019, Chief Legal Officer Wu Xiaocui resigned

In November 2019, Zhang Jiahao, vice president of marketing, left

In January 2020, Han Feng, vice president of operations, resigned

In January 2020, Senior Vice President of Technology Zhang Hongzhi resigned

In January 2020, Wang He, Senior Vice President of Human Resources, resigned

In February 2020, Luo Shanshan, vice president of finance, resigned

In February 2020, Chief Operating Officer Shi Zhenkang resigned

Among them, Zhang Jiahao, Han Feng, Zhang Hongzhi, Wang He, and Luo Shanshan are the early founding executives, and Fu Xiaoming, Wu Xiaocui, and Shi Zhenkang are the CXOs who joined later.

A former OYO executive who just left his job told Jiemian News: “The ratio of layoffs in OYO’s various departments is nearly 50%, and the technical team has reached 60%. At present, the number of OYO hotels has dropped from the previous tens of thousands to only 400. Around, the occupancy rate dropped to around 10%.”

In 2013, 19-year-old Lee Tae-hee established OYO Hotels in India. In November 2017, Li Taixi brought an Indian executive, Anuj, to China to explore the market. Under the blessing of the capital halo such as Softbank and Sequoia, they want to copy another OYO myth in India.

OYO once used a building in Shanghai’s Yangpu District as its foothold in China, and then frantically recruited and expanded its territory in the Chinese market.

The company once released a set of data showing its ambition: OYO Hotel has more than 10,000 employees, creating more than 200,000 job opportunities for the Chinese hotel industry. It is expected that by the end of 2020, the number of employees will exceed 20,000.

Jiemian News once reported that due to the company’s rapid expansion and poor operation, coupled with data fraud, intensified conflicts with hotel owners, as well as capital retreat, the impact of the new crown epidemic on the tourism industry and other factors, OYO has shown a decline since last year. At the beginning of this year, OYO adopted drastic layoffs to cut costs.

“The main reason is that the capital has begun to ask OYO to cut losses,” said the former executive.

OYO used to be an internationally renowned financing “monster”. Up to now, OYO has accumulated more than 1.1 billion US dollars in financing. In September last year, SoftBank invested US$800 million; in December last year, Singapore’s ride-hailing giant Grab invested US$100 million; in February this year, Didi Chuxing, the leader of China’s online car-hailing, invested US$100 million; 75 million US dollars to invest in OYO. OYO is currently valued at 13 times what SoftBank was worth when it first invested in 2015.

But OYO has been questioned because of its huge losses. Its fiscal 2019 results showed that the company’s losses widened to $335 million from $52 million in 2018, a sixfold increase in losses.

On the other hand, SoftBank, OYO’s most important capital, is also in the throes of declining profits. Last month, SoftBank Group released a financial report saying that operating profit in the third fiscal quarter ended December last year fell by 99%, far below market expectations, mainly due to the investment loss of its $100 billion “Vision Fund”.

In 2019, OYO China had sought independent financing, including SoftBank Capital, Sequoia Capital, and founder Li Taixi, all of whom were interested in participating in this financing. But so far, this financing has not been completed.

Not long ago, Li Taixi said in an interview with overseas media: “In the previous stage, we added many assets to the business platform and established a brand. In 2020, our primary goal is to achieve profitable growth.”

Li Taixi revealed that the number of OYO’s global employees will be reduced by about 17% from 30,000 in January. After the reorganization, the total number of OYO’s global employees will drop to about 25,000. In addition, OYO will put “improving relations with hotels and strengthening corporate supervision” as a priority.

In fact, in the face of difficulties, OYO China has tried to improve in many ways, including the 2.0 model of cooperating with owners to guarantee the bottom line, but with little success, it has not really solved the core problem of OYO helping hotel owners to obtain customers.

This time, OYO China chose to cut costs through large-scale downsizing, but it is still unknown whether this method will allow the company to really tide over the difficulties.

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