Hotel stocks surge as govt allows resumption of hospitality services from June 8

Key Take Away

Hotel stocks are rallying after the Home Ministry's announced the re-opening of economic and other activities in the country except for containment zones, which will continue to remain in lockdown till June 30.

The government has allowed hotels, restaurants, and other hospitality services to resume operations from June 8 onwards.

Hotel Association of India Vice President K.B. Kachru said, "The pandemic and consequent lockdowns have had a disastrous impact on the hotel sector."

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Vande Bharat Mission: Authorities seek hotel rooms across the country

India begins its biggest repatriation exercise to bring back 14,800 nationals stuck in 12 countries, the government is earmarking a range of hotel rooms across the spectrum, from one star properties to plush five-stars, for quarantining these travellers who will be landing in different cities
Hotels newly earmarked in Delhi include the Taj Palace Hotel, Shangri-La’s Eros Hotel and Le Meridien, according to people aware of the matter. Besides Taj Palace, the Indian Hotels Company Limited ..
(IHCL) has earmarked rooms in five of its hotels in Bengaluru for the exercise, including in Taj MG Road, Taj West End and the Vivanta hotel in Whitefield.

“We are glad to be able to offer support and care for our community,” said a Shangri-La spokesperson. “The hotel will accommodate some of these returning travellers as and when required. During this period, we will take all necessary precautions and strictly abide by the guidelines provided by the Ministry of Health and Family Welfare,”.

“We have got 200 rooms. The Delhi government had approached us. As per the instructions that we have received, all the guests are supposed to pay for the rooms. The government is not footing the bill. In our case it’s Rs 4,000 for a single room and Rs 4,800 for a double room, inclusive of meals plus taxes,” said Tarun Thakral, Chief Operating Officer at Le Meridien. “I think they are giving options to arriving passengers to choose from hotel categories and rates.”
The Delhi government has reportedly allocated 1,200 rooms in Delhi and National Capital Region for the purpose.

The Hotel and Restaurant Association of Western India (HRAWI) said it has been in constant touch with the authorities in Maharashtra and has arranged more than 1,500 rooms at discounted rates in Mumbai across categories
At IBIS New Delhi Aerocity, there are 200 rooms which have been committed for the repatriation exercise
Lemon Tree Hotels said it has been approached by different state authorities on room availability and quotation in locations like Delhi, Mumbai, Bengaluru, Hyderabad, Chennai, Alleppey, Kochi, Amritsar and Lucknow.
Besides IHCL, hotel chains such as Lemon Tree, Accor and Radisson Hotels have been offering quarantining services for asymptomatic people during the lockdown.

OYO owners dub Covid-19 impact assistance by the company as hogwash

OYO, the largest aggregator of budget hotels in the country, is claiming that the hotel company has initiated a slew of initiatives to financially support OYO owners “to blunt the Covid-19” impact, the hotel owners are not ready to accept the claim at its face value.

The hotel owners suspect the content of the offer which the company has released through the media, is another ploy to “dupe” them to stay put in their assets

 OYO had said that the company, in order to “lessen the burden of payments due and accrued”, will waive off multiple charges like value added service charges, wizard membership accruals, etc. from March onwards from the owners. “Under these initiatives, a total of INR 24 crore discounts has already been offered to over 3000 OYO partners and continues to impact several others,”

Covid-19 support incentives to owners include weekly payments and reconciliation, reduced joining fee and complimentary top up for those who want to join OYO Secure programme, retention linked incentives ranging from 50% starting from April, etc.

The asset owners also question the attempt by OYO to garner brownie points in the name of CSR by offering hotels for covid-19 quarantine purposes to government and disaster management authorities while the company is not paying any rental or minimum guarantee.

 Oyo staff in India to go on leave with limited benefits from May 4 for four months, and also asked all employees in the country to accept a cut in their fixed salaries by 25% due to the impact of the Covid-19 on the hospitality industry

OYO Cuts 25% Salary Companywide, After Furloughs

Gurugram-based hospitality unicorn OYO Hotels and Homes has now asked its employees to “accept” 25% salary deduction as it looks to overcome the impact on revenue from the Covid-19 pandemic.It  will be effective for April-July 2020 payroll.

OYO has decided to put some employees on leave with limited benefits from May 4, 2020 to August 2020. The benefits would include medical insurance and parental insurance, school fee reimbursement, and ex gratia support.

The development comes amid reports that OYO has told its UK employees that more employees would be furloughed under the government’s job retention scheme. High earners are also being asked to take a temporary pay cut.

OYO group CEO Ritesh Agarwal had earlier asked employees to go on temporary leave and had offered to look after the medical and healthcare benefits of all the employees across all its regions.

Agarwal has also forgone his salary for the year and senior leadership have been asked to take a 25% from the salary. Other Senior Executives across the world have voluntarily contributed 25%-50% of their salary.

As OYO tries to cut employee costs, the company is offering support to its hotel partners. The startup claimed that it has waived off multiple charges which are paid by partner hotels from March onwards. A benefit of around INR 24 Cr has been offered to over 3000 OYO partners.

OYO has also partnered with multiple lending institutions including fintech startups, NBFCs, add private sector banks to facilitate adequate financing for hotel transformation, Capex and working capital requirements of hotel-partners.

A retention linked discount has also been launched for a few hotel partners. It ranges from 50% on base fees for April and May. For beyond April, OYO might offer an extended discount until June.

OYO Accused Of Listing Treebo Hotels Without Clearances

Gurugram-based hospitality unicorn OYO has found itself in a fresh battle against its competitor, Treebo. The company’s executive allegedly submitted “invalid” no-objection certificates from about 70 hotels to the OTA Booking.com .This was reportedly done to change the ownership listing of the properties to OYO from rival Treebo.

To begin with, when hospitality chains like OYO and Treebo list a hotel, they receive permissions from these hotels to promote the hotels on their websites as well as other OTAs like MakeMyTrip, Yatra, Booking.com etc.

The OTA said that after making necessary checks it had identified that the NOCs provided by OYO for these properties were “invalid”.

Booking.com reportedly said that it required accommodation partners to abide by all applicable laws and compliances. “There is a standard process that we follow at Booking.com for listing properties and the same process is being followed right now as well,” the company said.

OYO did not respond to Inc42’s queries on the matter till the time of publication.

The development comes at a time when the travel and hospitality industry has been severely hit by the Covid-19 pandemic and quarantines. OYO had recently told its employees that since the outbreak, OYO’s occupancy rate and revenues have dropped by more than 50 to 60% and the company’s balance sheet has come under severe stress.

OYO CEO and the Executive Leadership Team to Take Voluntary Salary Cuts

COVID-19 has impacted the global hospitality industry significantly with occupancies of various hotel chains being affected drastically. In this unprecedented and difficult period, Ritesh Agarwal, the Founder & Group CEO, OYO Hotels & Homes, has decided to forego 100% of his salary for the rest of the year. The company’s entire executive leadership team has taken a voluntary pay cut starting at 25%, with many opting for an additional uncapped amount, and some going up to 50% to enable building the runway for the company. This would be effective April 2020 and the entire company is standing together to tide over these times.

It has been a matter of pride for OYO Hotels & Homes that it has retained each and every single leader in the CXO group in the history of the company, and in a difficult time like this, the executive leadership has come together as one strong entity as true partners of the company.

Commenting on the development, Ritesh Agarwal, Founder & Group CEO said, “The current situation the world over is deeply concerning to each and every one of us. OYO is doing everything to support the world with its limited resources in this pandemic from making isolation centers to finding a safe place for first responders. Given the current business situation, which is unprecedented for our industry globally

Layoffs, rejig one-time exercise, will be over soon: Oyo CEO

Some parts of Oyo Hotels & Homes weren’t probably ready for the pace of growth it has witnessed and the hospitality chain is trying to address such issues this year, says its new chief executive for India and South Asia, Rohit Kapoor in an exclusive interview to The Economic Times. While confirming reports of job cuts at the company, he tells Anumeha Chaturvedi that it is asking about 15-20% of its 12,000 employees to go in a “one-time exercise” that “is going to end very soon”. There is no  deadline from Japanese investor SoftBank to report operational profitability on some businesses, he says, and adds that the management is committed to improving relations with hotel partners.

Oyo founder Ritesh Agarwal has reportedly said the company is asking some of its employees to move to a new career. What explains this?
The question that whether some staff members are being asked to go is correct. Over the last one and a half years, there has been an increase in revenue to about 3x, and we had 1-million-plus rooms globally by the end of 2019. But I don’t think we have any hesitation in admitting that growing at the pace that we did over the last three years, we did sometimes go ahead of ourselves … What we mean is that maybe all parts of the organisation were not ready for that pace of growth and that scale of  of operations, and 2020 is the year when we are taking active steps to address this. We have a clear roadmap for continuing to drive success for Oyo for this year and beyond based on factors like sustainable growth.