OYO Hotels, one of the largest startups in SoftBank Group Corp.’s portfolio, is dramatically shrinking its footprint and headcount in Japan as bookings in the country plunge due to travel restrictions.
The Indian startup slashed its regional presence by closing offices in provincial centers Sapporo, Sendai, Nagano, Hiroshima and Omiya at the end of June, Chief Business Officer Ryota Tanozaki said in an interview. OYO is also looking to downsize its Tokyo headquarters, which occupy two floors in an office building walking distance from the Imperial Palace, he added. The moves extend the company’s ongoing effort to downsize internationally as it adapts to a much smaller tourism industry in the wake of the coronavirus outbreak.
OYO is encouraging its employees to quit, offering up to a four-month severance, according to a person asking not to be named because the details are private.
“The hotel industry overall is facing a tough situation because of the virus, and we will connect employees who wish to find a new job with a recruitment agency,” Tanozaki said, declining to comment on details of any job cuts.
OYO furloughed further thousands of employees as the virus spread and is now offering them stakes in the company at a steep discount to make up for a drop in pay.
OYO has struggled in Japan even with the full endorsement of SoftBank. Son’s ubiquitous brand is on one of the country’s largest wireless carriers, the leading web portal and the Fukuoka SoftBank Hawks, which have won five of the last six baseball championships. OYO’s push for rapid growth in the country was hampered by technical problems and a public backlash from hotels, leaving it far short of its targets.
Overseas visitors to Japan totaled 1,700 in May, marking a 99.9% decline from a year earlier, according to the country’s tourism agency. Domestic tourism has also been at a standstill during a state of emergency that spanned April and May. The delay of the Tokyo 2020 Summer Olympics into next year and fears of a second wave of infections are likely to extend the pain for the hospitality industry in the country.
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