A hotel of OYO in Changzhou, East China's Jiangsu Province in May. (Photo: VCG)
International hotel chains like OYO need to change their strategy or they may risk losing the Chinese market, industry analysts said on Tuesday, after Bloomberg reported that SoftBank-backed, India-based hotel company OYO is cutting staff in both China and India.
An employee in OYO China's customer service department confirmed on Tuesday that the company is cutting employees, with the figure being much higher than Bloomberg's report.
"We have cut nearly 2,000 employees in different sectors ranging from accounting to customer service across the country," the employee said. "It seems to me that most of the cut jobs are in the operations sector."
The Bloomberg report said that the company is undergoing a restructuring and has let go of 5 percent of its 12,000 employees in China partly due to non-performance.
Yang Honghao, director of the Industry Research Institute of China Tourism Academy, told the Global Times that the accommodation facilities of these chain hotels are relatively weak, and the management and service levels aren't high, either.
However, the employee denied that the job cuts have to do with the company's business performance, as some has speculated.
"This is a strategic issue, not a performance issue," he said, adding that the company is also hiring at the moment.
Bloomberg reported on Friday that OYO is firing thousands of employees in China and India, a growing sign of trouble at one of the largest start-ups in SoftBank Group Corp's portfolio.
According to Yang, these hotel chains must pay attention to internal issues and develop steadily, to provide the value and commitment that they claim to offer to franchisees.
"If these companies only think about expanding new markets instead of maintaining the old ones, they will find that it could be difficult to keep their market share," Yang said.