Tokyo: SoftBank Group Corp. is dispatching two executives to help Oyo Hotels, one of the largest startups in its portfolio, right its virus-stricken business in Japan, according to people familiar with the matter.
Oyo Japan, a joint venture between the Indian online hotel operator and SoftBank’s domestic telecoms unit, is creating a six-member management oversight committee to deal with the situation, the people said, asking not be identified because the details are not yet public. SoftBank Corp. Executive Vice President Eric Gan and Lucio Di Ciaccio, an investor at SoftBank’s Vision Fund, will join a group of Oyo Japan executives on the committee including new Chief Executive Officer Ryoma Yamamoto.
Oyo has been among the hardest-hit in SoftBank’s global portfolio of sharing economy outfits. It slashed its regional presence in Japan by closing offices in provincial centers at the end of June and is also looking to downsize its Tokyo headquarters. The company also merged its hotel-booking and apartment-rental units in the country under new leadership. The moves extend the company’s effort to retrench internationally as it adapts to a much smaller tourism industry in the wake of the coronavirus outbreak. Spokespeople for SoftBank and Oyo Japan declined to comment.
The creation of the committee was announced at a townhall meeting on Aug. 3, attended by SoftBank Corp. CEO Ken Miyauchi for the first time, the people said. Gan is a SoftBank veteran who has been responsible for setting up joint ventures with portfolio companies in Japan. He led eAccess Ltd., a rival wireless operator, before it got acquired by SoftBank in 2013. Di Ciaccio joined the Vision Fund in 2017 from the Carlyle Group Inc.
Japan has been a market of particular import to the hotel-booking startup, whose founder and Chief Executive Officer Ritesh Agarwal earned SoftBank supremo Masayoshi Son’s favor and benefited from SoftBank’s brand association and promotion. The headcount in its Japanese hotel operations has shrunk to 150 from about 600 in October through furloughs and job re-assignments to SoftBank, according to a document distributed by its labor union and obtained by Bloomberg News.
Oyo has struggled in Japan even with the full endorsement of SoftBank. Son’s ubiquitous brand is on one of the country’s largest wireless carriers, the leading web portal and the Fukuoka SoftBank Hawks, which have won five of the last six baseball championships. Oyo’s push for rapid growth in the country was hampered by technical problems and a public backlash from hotels, leaving it far short of its targets.
Overseas visitors to Japan totaled 2,600 in June, marking a 99.9% decline from a year earlier, according to the country’s tourism agency. Domestic tourism also slowed to a crawl during a state of emergency that spanned April and May. The delay of the Tokyo 2020 Summer Olympics into next year and fears of a second wave of infection are likely to extend the pain for the country’s hospitality industry. – Bloomberg