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Hotel Lobby Claims Over 200 Hotels End Agreement With OYO

Hotel Lobby Claims Over 200 Hotels End Agreement With OYO

Associations have alleged breach of contracts and arbitrary charges

OYO has refuted the claims

In South India, around 60-70 hotels have ended their agreements

The Federation of Hotel and Restaurant Associations of India (FHRAI), an all India body of hotel owners and operators, has alleged that more than 200 hotels have ended agreements with hospitality chain OYO over mismanagement of contracts, arbitrary charges and other disputes, industry associations said, adding that others want to exit contracts but are stuck for various reasons.

Gurbaxish Singh Kohli, vice president of FHRAI, reportedly said that the protests are more dominant in the south and the west, but hotels in the north are also aligning with the protests now. “Notices have been sent by the company to some as they are trying to scare the hotels, but you cannot force anyone to do business with you. They are showing their might and trying to arm-twist smaller hotels,” he added.

However, OYO spokesperson told Inc42 that there was no such trend and claimed that beyond some isolated cases in Rajasthan which were ended on account of breach of contract over repeated offenses.

The South India Hotel and Restaurant Association (SIHRA) representative claimed that about 60-70 hoteliers have ended agreements with OYO in the region. The associations have also alleged breach of contract, arbitrary revisions of commission rates, stopping minimum guarantee amounts, threatening legal notices, mismanagement of accounting and endorsement of unlicensed bed and breakfast accommodation.

A source close to the development at OYO told Inc42 that the company has internally calculated termination of contracts and has found only 15 such contracts in the last year.

An OYO spokesperson said that it has been engaging with the FHRAI, the apex body, and its respected executives on the potential of a larger discussion by inviting all hotel chains who lease or franchise in the country. However, the company “will not acknowledge, recognise or engage with the state/ city/ segment association that can be formed overnight by people with vested interests.”

The SoftBank-backed hotel chain also said that it has individually reached out to the hotels and is solving the issue amicably, or in some cases, part ways amicably. The company alleged that  “most of the association representatives leading this public uproar are people who operate competing assets and using the garb of the association to veil their competing business agendas (conflicts of interest) and protect their vested interests.”

At the same time, the report cited some members of hotel association claiming that OYO had responded to complaints with threats of defamation suits. An OYO partner said that he is considering ending his agreement with the company, as 60-70% of margins had eroded because of wrong rates and that he’d got threatening emails and messages when he expressed concern.

The Budget Hotel Association of Mumbai has said about 40 hotels have ended contracts with the company in the city. And now the association is collecting documents and agreements from OYO partners, as the hospitality chain controls their Google listings and they want to ensure, that in case of ending the contracts, the hotels can take back their credentials and continue their own businesses.

The cause for conflict of hotels, associations and OYO came to light in December 2018 and since then has continued to cause mayhem in the hospitality industry. However, it is suspicious to notice no names of OYO’s direct competitors such as Treebo Hotels, FabHotels etc have emerged yet.

[The development was reported by ET.]

Author

Bhumika Khatri

Inc42 Staff

Hailing from a business-oriented family, Bhumika has always been crunching numbers in her head. Words are her escape and she looks to find hidden startup stories.

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