OYO's pandemic-era layoffs exposed years of overexpansion and unsustainable hiring

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.

The pandemic forced layoffs exposing overexpansion: OYO prioritized room count over profitability, and headcount fell from 30,000 to 25,000 after $335 million in losses.

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

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.

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.