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$10bn hotel startup Oyo furloughs most UK staff amid COVID-19 slump

·Senior City Correspondent, Yahoo Finance UK
·3 min read
BRAZIL - 2019/07/22: In this photo illustration an OYO Rooms logo seen displayed on a smartphone. (Photo Illustration by Rafael Henrique/SOPA Images/LightRocket via Getty Images)
Oyo is a hotel booking startup. (Rafael Henrique/SOPA Images/LightRocket via Getty Images)

Oyo, the $10bn (£8bn) hotel booking startup, has furloughed the majority of its UK staff after the coronavirus pandemic led to a slump in bookings.

Oyo told staff in an email this week that the “majority of roles” would be placed on furloughed leave for up to eight weeks. Oyo will take advantage of the recently announced government income support scheme, which will pay 80% of staff wages up to £2,500.

Staff are being furloughed due to “a sharp, recent downturn in our business as a result of the coronavirus outbreak across the globe,” management wrote in an email.

“Oyo has placed the majority of roles within its UK workforce on furlough leave due to a temporary reduction in work available during the current Coronavirus crisis,” a spokesperson told Yahoo Finance UK.

“This has been caused by the recent downturn in the overall hospitality industry. The impact has been felt not just by Oyo but by many other businesses across the country.”

Read more: SoftBank-backed $10bn hotel startup Oyo axes dozens of UK staff

An insider estimated that around 200 of Oyo’s 300 or so staff would be placed on furlough. A spokesperson declined to comment on numbers.

Oyo’s management said in an email to staff that some people would continue to work for the startup to “maintain its UK operations, communication channels with customers and hotels, and drive process improvements.”

“We are taking steps now to ensure we can continue to service our existing available portfolio and be in the best position to be able to retain staff in the future, when business returns to normal,” a spokesperson said. “We thank the UK government for helping businesses like ours ensure that people have an income during these challenging times.”

Ritesh Agarwal, founder and CEO of OYO Rooms, is interviewed on the floor of the New York Stock Exchange, Tuesday, Feb. 18, 2020. (AP Photo/Richard Drew)
Ritesh Agarwal, founder and CEO of Oyo Rooms. (Richard Drew/AP)

Oyo announced last week that it would keep some of its UK hotels open during the pandemic to provide accommodation for NHS workers and key workers at reduced rates. Rishabh Gupta, head of Oyo UK, said the rates would “cover the minimum costs of keeping these hotels operational” and was “not an exercise in profitability.”

“We are working with our hotel partners to offer such support and are grateful for their cooperation and willingness to adapt,” a spokesperson said on Tuesday.

“Oyo and our partners have already made more than 2,000 rooms available for key worker groups. We are working to provide our hotels with as much support as possible during this difficult period.

“Oyo is in touch with local councils, NHS Trusts, government departments and more to offer assistance in any way it can.”

India-headquartered Oyo, which is backed by Japan’s SoftBank, was set up as a way to book budget Indian hotel rooms online but has rapidly expanded to become a global business. It partners with hotels to provide booking and revenue management software, in exchange for a cut of earnings.

Read more: Oyo's UK chief of staff leaves after layoffs

The company was founded in 2013 by then 19-year-old Ritesh Agarwal and was valued at $10bn as recently as last October.

Oyo has had a difficult start to 2020, with thousands of layoffs around the world. Dozens of staff were let go in the UK and the executive who spearheaded the UK launch left in January. A key lieutenant of his also left in recent weeks.

Oyo has signed up around 200 hotels in the UK, most of which are small and medium businesses.