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The SoftBank effect: how $100 billion left workers in a hole

01/03/2020| 4:21:54 PM|

When SoftBank changed its tune on growth, the companies used SoftBank’s cash often slashed or reneged on their incentives.

For five years, Sunil Solankey, a retired captain in the Indian Army, had run the 20-room Four Sight Hotel in a New Delhi suburb. Business was steady, but he longed to make the establishment a destination for lucrative business travelers.

Last year, a hospitality start-up called Oyo told Mr. Solankey that it would turn the Four Sight into a flagship hotel for corporate customers. It guaranteed him monthly payments whether the rooms were booked or not, as long as he rebranded the property with Oyo’s name and sold the rooms exclusively through its site. 

At Oyo’s request, Mr. Solankey sank 600,000 rupees, or $8,400, into reupholstering the hotel’s furniture and adding new linens. But corporate guests did not materialize, and Oyo stopped making the payments. Now he is on the verge of eviction.

Under the arrangement, Oyo guaranteed him monthly payments of 700,000 rupees, or around $10,000, for three years, according to a contract viewed by The Times.

But within a year, the payments evaporated. Instead of business customers, unmarried couples looking for private rooms turned up. And Oyo discounted the rooms so much online that Mr. Solankey could not offer them to guests at a higher price.

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TAGS: OYO | softbank
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