I first want to openly acknowledge that It’s been a rough patch for us over the last few months in the UK. In January, when we initiated our global restructuring exercise and laid out the new 2020 sustainable plan (refer to my last blog here), I could never have anticipated that we would enter our peak season in Europe facing such a big challenge. This is not the first major travel disruption we have endured as an industry, but the impact of the Covid-19 pandemic has and will hit harder than all previous disruptions put together. Occupancy throughout the hospitality industry has fallen almost 80% and there are still no clear signs or timelines for recovery as we reach six weeks of lockdown.
In this COVID period, I have had to again make some tough decisions to ensure the company’s long term success and sustenance, which I decided to address in an open (rather lengthier) blog:
- Impact of COVID-19 on OYOpreneurs in the UK office
Phase 1 – Furlough, salary reductions and other cost reductions
On account of the uncertainty and squeezed revenue streams caused by enforced closures and travel restrictions, the majority of our staff in the UK were put on furlough. I’m truly grateful to the UK Government for launching the Job Retention Scheme as we were able to protect the incomes of our employees when faced with this unprecedented crisis. Additionally, we asked our higher-earning colleagues to accept a reduction in their fixed compensation of up to 25% as well as cut down our controllable expenses considerably. Resilience is one of our core values and each OYOpreneur has shown an abundance of it during this time.
Phase 2 – Consultation process
Despite our earnest efforts, it is clear as the situation unfolds that the scale of the challenge for tourism and hospitality will be long term. We do not know when countries will reopen their borders, when or how the lockdown will lift within the UK or when people will feel safe to travel again. And when they do, will travel be the same? While I am certain that eventually, COVID-19 will stop dominating our everyday lives and preventing our natural instincts to explore and be social, we have come to a point now where we need to acknowledge that the market will not rebound soon enough to allow us to meet our pre-COVID business plans. Our priority at the moment is to prepare a plan that will help us mitigate the situation in the short run, but more importantly divert resources to help us prepare the business for the new future of travel and hospitality. Hence, with very heavy hearts, given the new business realities and resultant priorities, we have entered into a consultation period with some OYOpreneurs, largely impacting our business development and sales teams.
- Company’s position on the request from some employees who left the business pre-COVID to be re-hired and furloughed:
We really value our employees, past and present. Our team members are the ones who’ve helped build the business and get us to where we are today, and we are indebted to them for their contribution. However, we did have to go through an unfortunate restructuring process beginning in January, wherein we followed a well-documented and fair process. We provided our impacted colleagues with full support throughout, starting with the flexibility to start seeking new jobs from mid-January throughout the 30-day consultation period; giving them one week to one month’s notice period payouts; one month’s salary tax-free as severance pay; access to employee assistance programmes and outplacement support. We did whatever we could within the constraints we were operating with and were heartened by the professionalism our colleagues demonstrated during these testing times.
Given Covid-19’s timing, a number of these former employees have since contacted us and requested to be re-hired in order to be placed on the furlough scheme so they can avail some of the benefits offered by the establishment. While our intent is to do what we can to help them, we have been unable to come to their aid due to the following reasons:
- We are unsure – as are many other employers and legal advisors – if temporarily rehiring people who were made redundant for reasons unrelated to Covid-19 only for the furlough period will later to be found in breach of the Job Retention Scheme, and considered a misuse of taxpayers’ money
- The roles held by our colleagues who left no longer exist in our organisation. Reinstating those roles would mean a reversal of the whole process – including any benefits such as severance packages, holiday pay etc. We have directly reached out to HMRC, but given all that’s going on, they have been unable to confirm if temporarily hiring people who were made redundant for a reason unrelated to Covid-19 to put them on furlough will be considered acceptable
As a business, we feel great empathy for the difficult position some of the affected individuals are dealing with, but careful scrutiny of the situation has prevented us from being able to comply with these requests. It is easy in these situations for people to lay criticism on companies and leaders in our position, but it is important to rationally look at the facts. For instance, there is still a widespread misconception about the furlough scheme – in particular, the idea that it presents no material risk to a company and ‘costs a company nothing’. The reality is that companies pay an employee’s wages and then claim back money from the government which impacts cash-flow; and that employees continue to accrue holiday pay whilst on furlough, which employers are liable to cover. The situation carries a risk for business since all employees must be treated fairly and equally and if the claim is later rejected by HMRC poses a considerable liability. In this situation, it is already clear that it would once again lead to unemployment rather than a return to the business for these select few. So while we understand the strong reaction, and the frustration some feel, I personally want to request all those who criticize companies like ours to provide a concrete mutually acceptable and practically feasible solution.
- Our efforts to support colleagues during the current consultation
We are committed to continuing to support our employees in ways that are feasible given the deep impact of the COVID situation on our business. While the situation is still out of our control, we will ensure that we follow the defined process and ensure relevant benefits are provided, while at the same time, try to sustain the incomes of our colleagues for as long as possible.
- We have announced that we will go on an external hiring freeze for the next six months in the UK so that any role that might open up will be made available first to any impacted colleagues who may want to consider re-joining us.
- We are even exploring other temporary employment options, but this will depend largely on the recovery of the industry. We will be tabling various proposals in front of our current employees during our internal consultation process.
All OYOpreneurs are highly entrepreneurial, and it is unfortunate that we had to let them go because of Covid’s impact on the business. I strongly endorse each one of them and want to request all industry leaders across the UK and beyond, who are looking to hire good talent to please consider them.
Our business continuity plan and related efforts
OYO has been quick to act and adapt our approach in response to the Covid-19 challenge. Our focus has been on how we can support the fight against this pandemic as well as supporting our partners and the local communities in which they operate.
- OYO and its partners have made over 2,000 rooms available to key workers and those in need of interim accommodation at heavily discounted prices. The prices were not set to be profitable, but to cover the operating expenses of these small businesses. Phoebe and Adrian are just two of our partners supporting their communities during these difficult times
- Every night, hundreds of key workers and people in need are being given a safe place to sleep by our partners. Over 35,000 room nights have been booked for these targeted groups
- More than a dozen OYO hotels are being used exclusively to put a roof over the head of homeless people. OYO has worked with local councils and a number of homeless charities to facilitate this accommodation, with those organisations providing extra welfare and support services for these long-stay guests.
- We also set up OYO Rooms for Carers where our business, members of our team and the general public can book and pledge a room for a healthcare worker at the cost of £25 per night. These rooms are being distributed via NHS Trusts for healthcare workers to redeem at their nearest OYO hotel
- We have delivered – and will continue to deliver – above-market average occupancy to our hotel partners, each of which is a small business that’s integral in some way to its community and also wants to survive through this pandemic. Our various initiatives are enabling OYO to deliver good occupancy levels to our partners who are open in London.
- We have onboarded over 20 new hotel partners in the last 30 days, providing them with services via our existing capabilities including revenue management and technology
The hospitality and tourism industries – along with the wider economy – face unprecedented challenges due to the Covid-19 pandemic. Personally I have found the last 8 weeks one of the most difficult in my career to date. As a business, we have had to make some very tough decisions. I welcome the scrutiny and opinion of all of industry stakeholders albeit some of it seems a little unfair at times. We can always be better but we are almost certainly not unfeeling or uncaring as a business or as a leadership team.
I have two big commitments that I continue to hold dear and these are:
- We will continue to deliver above-market average performance to our partners while ensuring a high NPS. In the last three months, we have created tremendous value for our owners with various new initiatives and they remain excited about their association with the company
- We will continue to treat our customers and our OYOpreneurs with respect and transparency. We as a team will keep our heads down and will continue to do what’s right
OYO is here to stay in the UK. These challenges present hurdles, but we are determined to emerge stronger and continue to make sure we deliver on the above promises.
I will hopefully get an opportunity to share more updates and learnings soon!