Oyo’s biggest investor, the SoftBank Group (1), will utilize its 5 billion USD fund for Latin America. The venture will invest these funds in the newly launched company named Oyo Latam (2). The firm will take over 1,000 hotels primarily in Brazil and Mexico, said Henrique Weaver.
Weaver added that both companies would have board representation. However, he did not mention how much money SoftBank is going to invest. The move came after Oyo was forced to reduce its cost and put its global expansion strategies on the attic. Oyo is currently valued at 10 billion USD, including its latest funding rounds. However, the company had to reduce its footprint in the market. It also laid off its employees as the revenues took a hit due to the COVID-19.
The move shows how keen the Japanese investors are to ensure that Oyo, an Indian company, stays on its track. As per reports, SoftBank is now overseeing Oyo’s operations in China, India, and Japan.
Previously, SoftBank had big markdowns with other startups, including WeWork. It now wants to avoid a similar fate with Oyo. Notably, SoftBank has invested over 1 billion USD in the startup, as per the sources. There have been no comments from Softbank on the matter.
Pandemic Affecting Badly on Oyo Operations
Weaver added that the Oyo was doing excellent in Latin America. It had a super paced growth as the hotel market in the region is significantly fragmented. However, Oyo was forced to lay off its 500 employees in Brazil due to the coronavirus pandemic. Currently, the startup only has 140 people workforce in the country. Weaver added that the startup even gave up its office spaces and reduced its operating expenses.
Oyo is one of the largest hotel chains by room count. It has laid off hundreds of employees in the USA, Europe, while also shuttering offices in other markets. Notably, the startup has already started reducing costs since early January in India and China.