SOFTBANK Group is taking a direct role in managing Oyo’s operations in Latin America through a joint venture which would control all hotels in the region, Reuters reported today.
The move comes as Oyo, valued at US$10 billion (RM41.50 billion) in its most recent fundraising round, has been forced to cut costs and slow down its expansionist strategy by reducing its hotel footprint and laying off employees after revenues took a hit from the pandemic.
SoftBank, the biggest investor in Oyo, will use part of its US$5 billion (RM20.7 billion) Latin America fund to invest in the newly formed company called Oyo Latam which will take over 1,000 hotels mainly in Brazil and Mexico.
According to Reuters, a source with knowledge of the matter revealed that SoftBank’s Latam fund has invested US$75 million into Oyo’s business in the region.
The pandemic has forced Oyo to lay off 500 employees in Brazil, leaving it with a workforce of 140 people, given up its office space and slashed operating expenses, head of Oyo Brazil, Henrique Weaver, was quoted as saying.
Once among the world’s largest hotel chains by room count, Oyo has laid off hundreds of employees in the United States and Europe and shuttered offices in other global markets. In India and China it began cutting costs and headcount as early as January.
In contrast, on the local front, the Edge reported that Oyo’s hotels were not only performing between 20% and 30% better than other hotels in the same category, but it was also doing better than the industry as a whole.
In a July 15 report, it quoted Oyo’s chief executive officer for Southeast Asia and Middle East Dr Mandar Vaidya as saying about 30% to 40% of OYO’s business had come back and that business from the Oyo app and Oyo website had come back at double the speed compared with all other [booking] channels.
It said Oyo would focus on reopening as many hotels as possible while some of its competitors were taking a longer time to reopen.
The report also stated that the budget hotel chain was expected to sign up more hotel partners post-Covid-19 than pre-Covid-19, owing to intense competition and its existing network and reach.
Regionally, an upbeat Oyo was targeting to achieve two million rooms by 2025 in Southeast Asian market from 75,000 in 2019, Focus Malaysia reported.
Oyo Rooms Hospitality country head Tan Ming Luk said the company has achieved significant growth in the last two years since its inception in 2017.
Since entering the Malaysian market, Oyo Rooms Hospitality Sdn Bhd has received one million room bookings in all its managed and franchised properties throughout Malaysia.
As at November last year, the company had more than 16,000 franchised and leased rooms in more than 450 properties across some 50 cities throughout the country.
The company, which also has a presence in Indonesia, Vietnam, Thailand, and the Philippines, said it aimed to extend its latest offering – Oyo Homes – to the most travelled destinations in the country, such as Kuala Lumpur, Selangor, Melaka, Penang, Kedah and Johor.
More than 1,000 homeowners in major cities in the country have been part of the Oyo chain of home management service.
“We look forward to strengthening our footprint across the country with a diverse portfolio and relentless commitment towards delivering more choices and delighting our guests with exceptional customer experiences,” Tan told Focus Malaysia.
“Malaysia is a strategic growth market for Oyo in Southeast Asia. We are constantly looking at being a long-term, wide-scale, impactful and sustainable company for our customers and our asset owners,” he added. – Sept 6, 2020
