OYO turns to Masayoshi Son for help in Japan, but SoftBank itself is struggling

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OYO turns to Masayoshi Son for help in Japan, but SoftBank itself is struggling
  • OYO has turned to the Japanese investment bank for help its home market Japan.
  • According to a Wall Street Journal report, OYO wants to put some of its employees on its investor SoftBank’s payrolls.
  • SoftBank is OYO’s partner in its Japanese venture – OYO Life.
OYO has turned to its partner and top investor SoftBank to help with its struggling business in Japan. According to a Wall Street Journal report, OYO wants to put some of its employees on its investor SoftBank’s payrolls.

However, a report by Nikkei Asian Review states that Oyo Life had ‘already started transferring employees, mainly in sales, to other SoftBank affiliates in Japan, such as WeWork and mobile payment company PayPay.’ OYO is following a secondment scheme in Japan to cut costs.

However, its dependency on SoftBank (who is also a partner in the Japanese venture) could be limited as the investment firm itself is set to post a record loss.

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SoftBank’s majestic $100 billion Vision Fund is headed for a $16.5 billion loss. The record loss for FY20 is because of ‘the deteriorating performance of its tech bets’. Meanwhile, the group as a whole will see a $12.5 billion loss.

OYO’s Japan story

Like all other hospitality chains, OYO is struggling under the coronavirus lockdown. Founder Ritesh Agarwal recently announced that its global revenues are down by 50-60%. The company also put hundreds of employees in the US on furloughs or temporary leaves.

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It has been a difficult year for the Indian unicorn OYO. From laying off hundreds of employees across geographies to increasing complaints from hotel owners about delayed payments, OYO has been in the spotlight for all the wrong reasons.

Right before the lockdown, the company was already scripting a turnaround story in Japan where it’s just a year old. OYO Life booked 4,000 rooms in January 2020, said a blog post by Kavikrut and Prasun Choudhury, board members, for OYO LIFE, Japan and OYO Hotels, Japan respectively. This is high occupancy for the geography which has 5,800 rooms in total.

OYO launched in Japan in 2019 and in the first year itself went through a whole list of ups and downs. Riding into the country on the back of its investor – SoftBank, OYO was hoping to make a splash, but it was soon mired in controversy.

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Yahoo bought 30% shares in OYO’s subsidiary company in Japan – OYO Life in March 2019. However, within seven months in November, Yahoo sold those shares back to OYO.

See Also:
EXCLUSIVE: Genpact puts over 200 employees in India ‘on the bench’ – hoping to find them a role
OYO founder Ritesh Agarwal admits the share buyback in 2019 was ‘bad timing’
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