As the economic impact of the coronavirus outbreak on the hospitality sector deepens with no end to the crisis in sight, hotel aggregator OYO said it is cutting employee salaries in India by 25%. The SoftBank-backed company is also placing some employees in the country on voluntary leaves with limited benefits, starting May 4, a day after the lockdown in India ends.
The Gurugram-based company is, however, not considering job cuts in India at this time, despite significant economic pressures, it said in a statement on Wednesday. The temporary leaves will last for four months until August 2020, while the pay cuts will be effective till the July 2020 payroll, OYO added.
“We are asking all OYOprenuers to accept a reduction in their fixed compensation by 25%, effective till July 2020 payroll. All other benefits and terms of your contract will remain unchanged,” said Rohit Kapoor, CEO, OYO Hotels & Homes, India & South Asia. He said that the pay cut is planned in a way that the fixed compensation for any employee is not less than ₹5 lakhs per annum, ensuring that a large percentage of the workforce working at lower pay scales is not affected.
Earlier this month, the company had placed its employees in the U.S. on furloughs. In a video message to his employees on April 8, founder and CEO Ritesh Agarwal had said that OYO was registering almost 50%-60% lower revenue and occupancy rates. The company placed a large number of workers across the world on temporary leave or furloughs of a minimum of 60-90 days.
“The company’s balance sheet runway has come under severe stress; [this means that we have] to ensure that we immediately look at every controllable cost and reduce them,” he said. He also aid he would forego his own salary for a year, while the leadership team would be taking pay cuts of 25% and, in some cases, even 50% voluntarily.
The company said that it aims to minimise job cuts due to Covid-19, around the world, as much as possible, despite a deep impact on the business.
“We can keep job cuts at bay through a combination of lowered work weeks, pay cuts, temporary leave of absence until business recovers and other such measures. Our goal is to ensure long-term sustenance of our business, which is critical for the industry’s recovery as well,” Agarwal had said.
