India: Hospitality unicorn OYO has reportedly seen its value drop from $10 billion [at the time of its last known valuation in November 2019] to $8 billion, as reported by The Hurun Global Unicorn Report 2020.
The chain’s valuation had shot up to $10 billion in November as a result of CEO and founder, Ritesh Agarwal, injecting $2 billion into the company. The investment increased OYO’s valuation by almost 50 per cent at the time.
Since then, however, OYO’s operations around the world have been heavily restricted by the Covid-19 pandemic, with Agarwal recording a video message to highlight that the chain had suffered an estimated 15-20 per cent drop in revenue and occupancy. Its revenue in March similarly plummeted by 50 to 60 per cent across its global locations.
It was recently reported that OYO was planning to lay off 90 per cent of its workers, or ‘OYOpreneurs’, in the United States, the second major round of redundancies in the country at the hospitality chain already this year. Agarwal revealed in April that OYO was placing a “certain number” of its employees, believed to be in the thousands, on furlough and temporary leave “in the US and other countries”, including in China, where some 3000 staff members were affected, according to the Inc42 website.
Meanwhile, OYO’s executive team confirmed they would be taking a voluntary 25-50 per cent annual pay cut to maintain the long-term sustainability of the business in April.
Hurun’s data, though, suggests that OYO has not fared as badly as Airbnb and other hotel chains. It stated that Airbnb had seen its valuation drop by 50 per cent, taking into account its $18 million valuation in April after the first peak of the pandemic.
Other Indian hotel chains such as Lemon Tree Hotels [64 per cent] and Chalet Hotels [63.3 per cent] saw the steepest drop in valuation, as well as EIH [53.5 per cent] and Indian Hotels Company [46 per cent].
Speaking to Business Insider India, Hurun Report India MD and chief researcher, Anas Rahman Junaid, said: “We took into account the post Covid scenario and we have adjusted the valuation of some of the businesses. Hospitality, it’s a no-brainer, is one of the highly impacted sectors.
“Airbnb has downgraded its valuation and we have taken a conservative in-line approach of reducing the valuation in terms of the nearest comparable data,” added Junaid.
In company news from Japan, OYO’s new joint hotel booking business and apartment rental operations entity, OYO Japan, has announced OYO Life country head Ryoma Yamamoto as its first CEO, with senior executive Ryota Tanozaki becoming Yamamoto’s deputy.