Bengaluru: The founder and CEO Ritesh Agarwal on Tuesday, said OYO was not prepared for a business crisis which was caused by the lockdown. He spoke at the All India Management Association’s (AIMA’s) 47th National Convention.
Agarwal said that the company saw its occupancy rates dropping down to zero for a few months after the lockdown was imposed in the month of March. He added that the company’s hotel inventory has seen 40-45% revival in terms of occupancy rates when compared to pre-COVID levels.
“We have always been prepared for crises as we have even designed the business for a 10% or even 20% drop in occupancy, by looking at the last four crises that the world economy has been through. But we were not really prepared for an almost 0% occupancy for few months…so for the first time we had to design our business for almost zero revenues, and to have significant long-term cash for survival,” Agarwal was quoted as saying by Mint.
He also added that it is very early to provide an estimate as it is uncertain that when the demand in the hospitality industry would return to pre-COVID levels.
“It’s hard to estimate when demand would go back to pre-COVID level…it could 6 months to even 2 years, it really depends on various other circumstances,” he added.
Due to the coronavirus pandemic, the start-up laid off around Rs. 5000 employees just before the imposition of lockdown and cut the salaries to keep the expenditures on check a save cash during the uncertain period.
The company has been laying-off since 2019, even before the coronavirus outbreak in the country. Though, from August it began to take back the employees in a phased manner.
Agarwal also said that it is now expected that it’s budget and homestay categories to bounce back faster in demand when compared to the luxury and premium segment especially in markets including India, Europe, and Southeast Asia.
“Our sense is that as economic activity, and leisure travel will come back sooner, because people do not have offices to go back on Monday morning, and hence they are looking at extended vacations…In the corporate travel segment, we small and medium businesses owners increasingly travelling across towns and states,” Agarwal added.
It is also claimed by OYO that it will be adding signing on 40,000 new rooms every month on its platform in the last two months.
“For the first time, we don’t have the cost structure to be able to bring the growth and hence the focus is to make sure that customer and partner service is kept in the centre…and if that means that some part of the growth will get stripped off, we are probably okay with it because we were growing 300% before COVID, and if we grow between 50-100% that’s fine,” Agarwal said.