Japan: SoftBank Group Corp. has appointed two executives to prop up OYO in Japan, one of the prized startups in its portfolio, where the hospitality chain has had to merge its hotel booking and apartment rental units as part of its cost-cutting measures.
SoftBank executive vice president, Eric Gan, and its Vision Fund investor, Lucio Di Ciaccio, are to join a management oversight committee to support newly-created Oyo Japan, which was founded in July, as the chain seeks to downsize in the country in anticipation for further squeezing of the country’s hospitality and tourism industry. The committee is already known to include OYO Japan’s new CEO, Ryoma Yamamoto.
Japan has been one of OYO’s hardest-hit markets throughout the Covid-19 pandemic, which has resulted in the chain’s closure of a number of regional offices and the likely downsizing of its prime Tokyo headquarters in the country. The move to launch OYO Japan this summer, combining the short-term residential and hotel booking divisions [OYO Life and OYO Hotels], was seen as a significant restructuring development, triggered by the need to furlough and lay off staff after posting huge losses in consecutive years, and the rapid rate of its growth coinciding with plummeting demand for travel due to the pandemic.
Before the pandemic, OYO had expanded its portfolio to operate over 35,000 hotels and 125,000 vacation homes, including more than 1.2 million rooms in 80 countries and 800 cities worldwide. It also reached unicorn status, with a rumoured valuation of around $10 billion in December, and had diversified into various travel and hospitality segments, including short-term rentals, casino hotels and co-working stays.
However, even with the backing of technology entrepreneur and SoftBank founder, Masayoshi Son, sources have claim that previous residential brand OYO Life had been struggling to break even for some time and had fallen well short of its aim to provide one million residential rooms. Having launched last year in order to simplify the renting of apartments through a mobile app, it is believed to have signed contracts for some 6,300 rooms and occupied just over 50 per cent of that number.
Furloughs and redundancies across OYO’s hotels segment have dropped staff numbers from around 600 to 150 since last October, according to a document obtained by Bloomberg News.
In a year when Tokyo was expecting to welcome thousands of people to the Summer Olympic Games over July and August, overseas tourism has declined 99.9 per cent on figures from last year, and domestic tourism has been stunted with the threat of a second wave of the coronavirus hanging over it.