The encyclopedia · People & Management · People decision · 2020
OYO's pandemic-era layoffs exposed years of overexpansion and unsustainable hiring
SoftBank-backed OYO grew into the world's third-largest hotel chain in six years, then laid off thousands as losses mounted and the pandemic hit.
OYO · 2020-01
What happened
OYO, founded in 2013 in India, became a global budget-hotel aggregator with about 1.2 million rooms across more than 80 countries by early 2020, fueled by SoftBank investment. It prioritized property count over profitability, onboarded subpar hotels, and used deep discounts to attract customers.
In January 2020, founder and CEO Ritesh Agarwal announced a global restructuring and layoffs: over 1,000 in India, around 600 in China, and about 360 in the United States in the first wave, with global headcount expected to fall from 30,000 to roughly 25,000. Losses had shot up to USD 335 million in fiscal 2019, and the first quarter of fiscal 2020 alone added USD 181 million.
The COVID-19 pandemic then forced further furloughs and layoffs. The episode exposed that OYO had over-hired and over-expanded on the back of venture capital, and it became a cautionary tale about growth-at-all-costs and the difficulty of rightsizing a workforce after a funding-driven hiring spree.
Why it happened
- SoftBank-funded growth targets prioritized room count and headcount over unit economics
- The company onboarded low-quality hotels and subsidised customers with unsustainable discounts
- Rapid international expansion created duplicated roles and market-specific losses
- Management delayed profitability until external shocks made restructuring unavoidable
The lesson
A funding-fueled hiring spree is easy to start; the hard part is keeping the business healthy enough that the people you hired still have jobs.
Aftermath
OYO continued to cut staff globally through 2020, furloughed thousands, and saw its valuation questioned. It later filed draft IPO papers in India but remained far smaller than its peak global ambitions.
Sources
- Skift — Oyo Axes Staff and Pares Back Ambitions: Where Does It Go From Here?
- KrASIA — SoftBank-backed Oyo to let go over 5,000 employees globally
- TechCrunch — India's Oyo furloughs thousands of employees as revenue drops by over 50%
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