The head of Oyo Brazil told Reuters in an interview on Friday that SoftBank Group will directly manage the operations of its virus-affected hotel startup Oyo in Latin America through a joint venture that will control all hotels in the region. . Henrique Weaver said that as Oyo’s largest investor, SoftBank will use part of its US$5 billion (approximately 362.23 billion rupees) Latin American funds to invest in the newly established Oyo Latam company, which will take over more than 1,000 hotels , Mainly in Brazil and Mexico. .
Weaver said the two companies will have equal representation on the board of directors, but did not disclose how much SoftBank will invest.
Prior to this, Oyo’s market value in the latest round of financing reached US$10 billion (about Rs 73,246 crore), and was forced to cut costs and control its global market by reducing hotel coverage and firing employees after revenue. Expansionist strategy. Has been hit by the coronavirus pandemic.
Three people familiar with the matter told Reuters that this shows that Japanese investors are eager to ensure that the Indian company is on track. This is the latest sign that SoftBank is monitoring Oyo’s operations in markets including China, India and Japan more closely.
A source with direct knowledge of SoftBank’s thinking said that SoftBank has significantly reduced its bets, including the shared office space company WeWork, and hopes to avoid a similar fate with Oyo, which has invested more than $1 billion.
SoftBank declined to comment.
A spokeswoman for Oyo said that SoftBank, like any other investor in the company, has a place on the board of directors. Oyo is “a company managed by management and managed by the board.”
The spokesperson said: “Any description of the management of Oyo, or any “additional supervision” (formal or informal), or just media speculation, is completely untrue.
SoftBank said that it began to establish a partnership with Oyo in Latin America in 2019, and recently with the establishment of Oyo Latam and formal investment by the board of directors.
A person familiar with the matter said that SoftBank’s Raman Fund has invested $75 million in Oyo’s operations in the region.
Weaver said: “It turns out that Latin America is very suitable for Oyo, and its growth rate is very fast, because the hotel market in the region is extremely fragmented.”
Weaver said the pandemic forced the company to lay off 500 employees in Brazil, leaving 140 employees behind. It also gave up office space and cut operating expenses.
Oyo was once one of the world’s largest hotel chains in terms of number of rooms, and has taken hundreds of employees in the United States and Europe on vacation and closed offices in other global markets. It started cutting costs and layoffs in India and China as early as January.
Oyo Hotels & Homes said on Friday that due to the unabated growth of some domestic coronavirus cases, this restricts some employees in India from taking six months of leave, which has hit travel and hit hotel revenue.
The company said on Friday that Indian employees affected by the vacation can choose to quit their jobs voluntarily or take a vacation with limited benefits until the end of February 2021.
The hotel industry is one of the industries most affected by the coronavirus outbreak. Global and domestic travel has almost stagnated and the growth rate is quite slow.
Oyo has promised to invest more than US$600 million (approximately Rs 4,394 crore) in China. However, in recent months, the company’s executives have been lost and its footprint has been shrinking. It has also negotiated with hotel partners and suppliers. Fight against the lawsuits filed for outstanding payments.
These lawsuits caused some of Oyo’s bank accounts in China to be frozen, but the company stated that this was a standard procedure and did not imply guilt.
A Dayang spokesman said: “We are actively defending these allegations in court, including disputes over dues and claims.”
Oyo has only 1,200 employees in China, but only more than 6,000 at its peak.
Oyo’s retreat from China may prove to be expensive in the future as investors push the company’s valuation to $10 billion, in large part due to its bet on China’s potential and scale.
The spokesperson said: “In China, we have pressed the reset button and ensured that we have a group of profitable businesses before expanding rapidly.”
© Thomson Reuters 2020
Does Android One hinder Nokia’s smartphones in India? We discussed this on the weekly technical podcast Orbital, you can subscribe via Apple Podcast, Google Podcast or RSS, download the episode, or click the play button below.