Startups across sectors are expected to suffer from the impact of the coronavirus lockdown, and hospitality startups are expected to be particularly hard hit. And hospitality startups in India are already showing the strain.
Budget hotels chain Treebo has launched a paid voluntary resignation scheme (PVRS) for 400 of its employees, ET reports. After a townhall with its co founders, Sidharth Gupta and Rahul Chaudhary, Treebo’s HR department sent an email to its employees which painted a grim picture of the business: it stated that the vast majority of its hotels were on stop-sell, all demand channels had dried up, revenue had nearly disappeared, and cash reserves were running low. As a result, the company said that it was introducing a voluntary retirement scheme.
The voluntary resignation scheme initiated by Treebo allows employees to resign from their role at the company, and get the notice period waived off. Employees also get one month’s salary, subject to a minimum of Rs. 30,000 pre tax in advance along with the 5 days worked till date. Treebo said it has also spoken to its insurance company to be able to extend the insurance cover even after the end of its staff’s employment with the chain. Treebo has put together a group of senior leaders who are working on finding alternate employment opportunities for all those who chose the PVR Scheme.
“This does not mean layoffs. This scheme is aimed at anxious employees who may be worried about the travel and hospitality sector at large and our small startup in the face of COVID-19, and want to apply to other sectors and also need immediate liquidity,” founder Sidharth Gupta said. Those opting for the scheme, will need to revert to HR by April 8, Treebo said. “In case we exceed the budget set aside for this scheme, we will be processing applications on a first come first served basis,” the mail stated. Gupta said he does not want too many people to take it as when revival happens, the company wouldn’t want to start from scratch.
About 100-120 people and those at the lower or middle income levels in the company are likely to opt for the scheme, a person familiar with the matter said. Gupta said he does not see the situation materially changing in the next three months. Treebo’s co founders have taken a 60% pay cut amidst the COVID-19 outbreak while its senior management team has taken a 40% pay cut.
Elsewhere in the industry, other companies aren’t doing so well either. Oyo Rooms, which had recently fired 20 percent of its workforce, has now reneged on its agreement of minimum guarantees to hotels. Under Oyo’s partnership agreements, Oyo guaranteed a minimum monthly payout to hotel owners, and then took a cut of the business they generated. But with hotel bookings drying up across the world, Oyo has suspended the minimum payments it pays out citing a force majeure clause in its agreements, which makes agreements null and void in exceptional events like a natural disaster. Outside the hospitality sector, other industries are also bleeding — food delivery companies Zomato and Swiggy are reportedly seeing 70 percent lower order volumes than usual.