Yahoo Finance $10bn hotel startup Oyo asks high earners to take pay cut as it furloughs more UK staff
Oyo, the SoftBank-backed hotel startup valued at $10bn (£8bn) last year, is tightening its belt further in the UK as the coronavirus lockdown continues to hit the business.
Staff at Oyo’s UK business were told this week that more employees would be furloughed under the government’s job retention scheme. High earners are also being asked to take a temporary pay cut.
UK head Rishabh Gupta said in an email to staff the steps were necessary to “mitigate COVID-19’s impact and ensure long-term success and sustainability of the business despite the economic pressures.”
“Globally, it is the greatest challenge of our generation and nothing of this magnitude has been witnessed for over 100 years since the Spanish Flu epidemic of 1918,” Gupta wrote.
Read more: SoftBank-backed $10bn hotel startup Oyo axes dozens of UK staff
Oyo’s UK chief didn’t specify how many additional staff would be furloughed and the company declined to specify when contacted by Yahoo Finance UK. The majority of Oyo’s roughly 300 UK staff have already been furloughed.
Gupta said staff earning over £50,000 a year would also be asked to take a temporary pay cut until June. Pay reductions range from 7.5% to 25%. Oyo’s founder has already waived his salary for 2020 and managers globally have taken a 25% pay cut.
The cuts will “enable us to bring our operational costs down, retain jobs and reinforce long term continuity in our markets,” Gupta told staff.
Oyo declined to comment on the pay cuts and additional furloughs, but provided a comment issued when Yahoo Finance UK first reported plans to furlough staff.
Read more: $10bn hotel startup Oyo furloughs most UK staff amid COVID-19 slump
“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,” an Oyo spokesperson said.
“We thank the UK government for helping businesses like ours ensure that people have an income during these challenging times.”
India-headquartered Oyo was set up in 2013 as a way to book local, budget hotel rooms online. It has rapidly expanded to become a global business and launched in the UK at the end of 2018.
Read more: Founder of $10bn hotel startup Oyo gives up salary over COVID-19
Oyo partners with hotels to provide booking and revenue management software, in exchange for a cut of earnings. It has signed up around 200 hotels in the UK and has kept some open to provide accommodation for health and social care staff. Over 10,000 bookings have been made since the shutdown, Gupta said. Essential workers are being offered free rooms or reduced rates.
Oyo has been championed by Japanese tech giant SoftBank, which backed the business through its $100bn Vision investment fund. Oyo was valued at $10bn as recently as last October in a funding round led by SoftBank.
However, Oyo had a difficult start to 2020 and was forced to lay off thousands of employees 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.
Read more: Oyo's UK chief of staff leaves after layoffs
Earlier this week SoftBank warned it would likely face its biggest annual loss ever, as its $100bn tech investment fund faces a $16.7bn loss due to the coronavirus pandemic.
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