Amidst the mass layoffs and steep slump in hotel occupancies due to the novel coronavirus outbreak, Oyo has something to bank upon.
As a part of its USD 1.5 billion funding round announced late last year, the Indian hospitality startup has received USD 807 million from SVF India Holdings and RA Hospitality, an investment firm owned by Oyo founder and CEO Ritesh Agarwal. While SVF India Holdings has put in about USD 507 million, RA Hospitality Holdings has invested the rest USD 300 million. This is in addition to the secondary investment worth USD 693 million made by RA Hospitality Holdings in December 2019, which takes the total investment from RA Hospitality in the latest round to USD approximately USD 1 billion.
According to the regulatory documents filed by the company, the Gurugram-based decacorn has allotted a total of 15,325 Series F compulsorily convertible cumulative preference shares (CCCP) to SVF India and RA Hospitality at a price of USD 52,643.22 per share. SVF India Holdings Ltd. and RA Hospitality Holdings were individually allotted 9,626 and 5,699 Series F CCCP shares, respectively. Currently, while SVF India Holdings owns 46.42% stakes, RA Hospitality has 23.74% stakes in the company.
“We are happy to confirm the filings of the closure of the Series F primary round announced in July 2019,” the company said in a statement. “This is a key development for OYO Hotels & Homes, and additional funds will help the business achieve its strategic objectives for 2020, which include accretive and sustainable growth, operational excellence and investment in corporate governance and training. This round has been financed by RA Hospitality Holdings and Softbank Vision Fund for a sum of USD 1.5 billion,” it said.
This comes at a time when the hospitality startup is going through a restructuring exercise, the largest in the six-and-a-half-year of its existence. To realign its objective toward becoming profitable and cut cost, and to “prepare for strong and sustainable growth in 2020, and beyond,” the company laid off around 2100 people in January across India, China, and the US. The second round of cuts a month later targeted over 5,000 people so as bring down its global workforce to 25,000. The coronavirus outbreak in China, and its spread worldwide, which halted global as well as domestic travel has worsened its already dire situation.
“In China, the coronavirus has hit us and in specific provinces, we are trying hard to keep hotels open, as many as possible,” Agarwal told Bloomberg in an interview earlier this month. “It’s a tough time for our hotel partners.”
To turn the situation around Oyo has been taking some desperate measures.
In India, its largest market with over 18,000 properties across 500-plus cities, Oyo is in discussions with the state governments to offer its hotels as quarantine centers. The company is also in the process of setting up “a central helpline number for service requests for the quarantine facility from the public as well as all state governments and relevant authorities,” local media Inc42 reported.
Oyo is looking to onboard as many hotels as possible to expand its reach in Japan. Its hospitality industry is one of the hardest-hit by the virus outbreaks as it gets a significant share of overseas tourists from China and South Korea. In a statement last week, the company announced ‘Oyo Partner Support Program,’ under which it would “pay new members a lump sum equal to a proportion of their past year’s revenue.”
“Japan is an extremely important market for Oyo and we intend to contribute to it over the long term,” Agarwal said in the statement. “This is our response as a global hotel group to Japan’s lodging industry in the time of crisis.”