Oyo Hotels and Homes has asked all its employees in India to accept a 25% reduction in their salaries for four months, starting April. The announcement comes weeks after the company furloughed thousands of its workers due to the pandemic’s economic impact.
The Softbank-backed startup has also sent some of its people on leave with limited benefits from May 4 until August this year, according to a statement. Oyo previously said that health benefits for its furloughed staff will continue.
“Our company is taking a difficult but necessary step for India, whereby we are asking all OYOprenuers to accept a reduction in their fixed compensation by 25%,” Rohit Kapoor, Oyo’s CEO for India and South Asia, said in a memo.
Kapoor noted that all of the other benefits and contracts of those affected will remain unchanged. Oyo also made sure that after the pay cuts, the fixed compensation for any employee won’t fall below 500,000 rupees (US$6,500) a year.
Oyo also remained adamant that it does not intend to cut jobs in India during this time.
In a video message to Oyo staff about two weeks ago, Oyo founder and group CEO Ritesh Agarwal said that the company had to place a significant number of its employees on temporarily leave or furloughs to ensure long-term cash runway for the business.
“At the latest, the revenues of Oyo and the occupancies have dropped by over 50% to 60%,” Agarwal said, noting that other hotel chains have been seeing declines of about 75% or more. He also said that he will forego all of his salary for the year, while the leadership team has agreed to take pay cuts of 25% to over 50%.
Prior to the announcement, Oyo had reportedly laid off hundreds of employees in the US. Abhinav Sinha, Oyo’s chief operating officer, told the American team in an email announcing the layoffs that Oyo will be shifting its focus on sustainable growth.
In March, it was also reported that Oyo has slashed more than 7,000 employees in China since November 2019.