Softbank Supports Oyo’s Latam Operations
Last month, Softbank dispatched some of its top executives to cushion Oyo’s bleeding business in Japan. The accommodation provider occupies a significant place in its portfolio.
Today, the technology investor ties the notch one step higher through venturing on the Indian company’s Latin America’s operations.
The Japanese conglomerate will source from its $5 billion Latin America reserve fund to invest in the newly formed “Oyo Latam.”
The new venture will take over 1,000 hotels across Brazil and Mexico.
The two firms will have an equal number of board representatives. On the other hand, the exact amount of the investment was not made available on technology news.
According to sources, it may reach $75 million.
Along with the Japan operations aid, Softbank’s Latin American support signifies its commitment to oversee the Oyo’s overall operations.
The investment giant also closely monitors the hotel chain’s operations in critical markets, particularly in China and India.
The new initiative is received with several backlashes from the public as it gives an impression of a gradual takeover.
However, Oyo’s representative noted that this is merely a fulfillment of a long-standing partnership. It does not in any way mean that the service provider is being managed nor undergoing additional oversight by the Japanese company.
Since 2019, the two firms have started their strategic collaboration to penetrate the Latin American market.
The recent move under the banner name “Oyo Latam” and official selection of board members is only a formalized version of what is already set last year.
The modern technology user hotel chain has drastically downsized Brazil’s workforce by 500 employees during the pandemic. The incumbent employed statistics in the country only runs at 140 people.
Similarly, it follows strict cost-cutting measures through evacuating office spaces in several countries.
Softbank and Oyo’s East Asian Dilemma
The Softbank backed Oyo experienced a diminishing influence in East Asian markets in recent months.
In Japan, the hotel chain struggles to keep its head above the water. From its 600 employees in October 2019, the company had to let go of 450 Japanese workers, leaving its total human resources 150.
Luckily, its primary backer came on the rescue by offering job re-assignments to other Softbank ventures.
Overseas visitors to the tourism-hotspot country plunged by 99.9% in June to roughly 2,600 tourists.
Consequently, Oyo is also having problems with its China operations.
It initially committed to investing $600 million in the Chinese market. But business is looking gloomy in the world’s largest consumer market.
In recent months, it experienced shrinking foot traffic in its establishments followed by the of its executives’ in the country.
As if to add insult to the injury, the Indian service provider battles with lawsuits against partners on concerns involving non-payment of dues.
Its China service providers dropped from 6,000 employees to 1,200 at present.
Even with successive setbacks, Softbank is firm to support the startup’s operations regardless experts’ warning that it is a bad investment.
Oyo chief executive Ritesh Agarwal has an optimistic business outlook for the post-pandemic environment.
He asserted that many people would shy away from expensive hotels and favor budget-friendly options and home rentals after the health crisis.
Adding to this, many more travelers will resort to technology to make online bookings instead of undergoing traditional booking, thereby choosing Oyo.
