The Covid-19 pandemic has had a devastating impact on businesses across the globe, but no industry has perhaps been as badly hit as travel and hospitality. With borders closed, movement restricted, and uncertainty regarding when, if ever, business would return to normal, hospitality companies around the world were left facing an existential crisis.
Perhaps none more so than India’s OYO Rooms, which runs the OYO budget hotel chain. Despite billing itself billing itself Business Standard OYO says it is world's 3rd-largest hotel chain by room count Read more as the third-largest hotel chain in the world, it isn’t immune to the pandemic’s carnage. Media reports have speculated speculated Mint In a post-Covid world, OYO runs out of room Read more that OYO “had run out of room”, was on “the brink of disaster with little it can do about it”, and would “need another large round of capital if it is to survive the next 12-18 months or so”.
On the face of it, this scepticism might seem valid. After all, OYO was battling challenges on multiple fronts: room occupancies had plummeted plummeted The Hindu Business Line No cheer for hospitality and travel industries this new year Read more , hotel partners were rebelling rebelling Mint OYO suspends fixed income guarantees to hotel partners Read more , thousands of employees were laid off laid off Moneycontrol Until early this year, the company had around 10,000 employees in the country. Now, the number is estimated to have come down to less than 2,500 Read more , and international markets like China were bleeding bleeding Tech Node OYO China operations are on the brink of collapse Read more tens of millions of dollars in losses. Against this backdrop, the pandemic could well have been a death knell for OYO’s very existence.
But as it turns out, rather than killing OYO, the pandemic could well turn out to be what saves the company. Its hotel partners, who are bleeding, now need OYO’s brand more desperately than before. The company even has a trigger to completely revamp its business model and move away from minimum guarantees, which weren’t sustainable.