Another Day, Another Protest Against OYO

A group of hoteliers from Patna, Bihar, collected at Indian hotel chain OYO’s head office in the city  on Monday (October 16), protesting that the company has not cleared unpaid dues. The protest which turned violent comes close on the heels of similar outbreaks in Bengaluru and Sikkim in the last one month.

About 50 hoteliers collected outside OYO’s Patna office, accusing the company’s agents of using delaying tactics to avoid paying dues. “They keep bouncers and thugs at the gate and refuse to meet us, a hotel owner claimed in a video shot at the scene.

The hoteliers claimed that a retired DSP (Deputy Superintendent of Police), Naresh Kumar Sharma, who acts as the legal advisor for OYO in Patna keeps threatening them with legal action when they reach out to the company for pending payments.

“After the police reached the scene, OYO’s Patna head, Abhishek Aggarwal, issued a written statement saying that the company would settle the dues in ten days,” Raj Kumar, the head of Guesthouse Welfare Association, Patna, told Inc42 .

OYO has maintained that the company is open to listen to all grievances but will not stand for such acts of pressuring it into unfavourable terms. OYO employees close to the matter said that the protest represents a small portion of the 130 properties that company has ties with in the city. The company has also filed a police complaint against the protestors for vandalism and defamation.

“The allegations against OYO brought to our notice are baseless and motivated…All payments have been made to the hotel owners as per the contractual terms and conditions,” OYO said.

Speaking about the assurance of payment given by OYO’s Patna head, a company official said that reconciliation statements will be issued in 10 days. If it turns out that OYO owes any money to the hotelier, it will then clear the dues in seven days.

The backlash against the Ritesh Agarwal-led company is the latest in a series of protests by hoteliers across the country over wanton charges and unpaid dues. A week back, hoteliers in Gangtok, Sikkim allegedly held four OYO employees hostage on October 10 and 11, over non-payment of dues. In September, Bengaluru-based Bruhat Bangalore Hotels Association contacted the Bengaluru police commissioner to conduct an investigation against OYO.  Before this independent protests by small hotel owners had sparked in multiple Indian cities including Nashik, Pune, Kota, Manali, Jaipur, Ahmedabad, Bhopal, Bareilly, Vizag and Delhi. 

The main issue for all the protests is that OYO has been the non payment of dues, which hoteliers allege has been going on since January 2019. Hoteliers claim that OYO has been cheating them of their promised returns and minimum guaranteed payments by levying a slew of charges, often without informing them. Many of these charges are not specified in the contract between the owner and OYO, hotel owners that Inc42 spoke to, alleged. 

Apart from the non payment of dues another common complaint by protesting hoteliers in different cities was that OYO has ignored all their attempts to communicate with them through written letters, emails and calls.

In response OYO said that “It will not bow down to the unreasonable demands of vested interest groups, a majority of which are owners running competing properties, instigating and intimidating independent hotel owners associated with OYO, and creating false public uproar.”

No Respite For Hoteliers

For hotel owners with unpaid dues in other cities, there has been no resolution despite multiple attempts to reach out to OYO and government authorities about the situation.

In Gurugram, about 164 budget hotels have been left hanging over dues of up to INR 6 Cr, Amitabh Mohapatra, the head of Guesthouse Welfare Association, Gurugram, said. The situation is the same in other cities such as Bengaluru and Sikkim where the Police have registered cases against the company.

This inaction by government agencies has increased despondency among the hoteliers who are now increasingly saying that as they do not have the legal resources and financial capacity to fight OYO in court it is best to opt out. “Any legal recourse, if it comes, will take a minimum of 4 to 5 years. Small hotel owners who usually take properties on lease will not be able to last that long,” Mohapatra said.

The Delhi High Court has recently injuncted or restrained hotel associations in Bareilly, Kota and Visakhapatnam from issuing notices or calling hoteliers seeking boycott of OYO in any manner.

Meanwhile OYO’s rapid expansion has continued overseas. The company raised $1.5 Bn in Series F funding and is now doubling down on its expansion plans and taking aim at the U.S. while also stretching further into Asian markets like Japan and China. 

In recent interviews with the media, OYO founder Agarwal said that his team remains fixated on growth, penetrating new markets while creating a strong brand name in the U.S. By room count, Oyo said it has become the world’s third-largest hotel chain, behind Marriott and Hilton. As of June 2019, the company said it has 23,000 hotels with 850,000 rooms in 800 cities across the globe.