Indian hospitality chain OYO with its unicorn tag and marquee investors is now facing the brunt of budget and mid-market hotels across the country, which are claiming that their businesses are suffering due to deep discounting, high commissions and arbitrary contract changes being sought by OYO.
According to a media report, the Hotel and Restaurant Association of Gujarat along with associations in Mumbai, Delhi, Mysore, Bengaluru, Kolkata and Hyderabad are banding together and considering legal action against OYO. The Gujarat association has already served an ultimatum to Go-MakeMyTrip(GoIbibo, MakeMyTrip and RedBus).
They have decided to boycott certain online booking portals, citing biased and unilateral business decisions taken by them.
These associations say that individually, they can’t compete with the might of the heavily funded OYO, but as a collaboration of cities, they can form a nationwide lobby to protest against online hospitality chains including OYO and MakeMyTrip.
Gurbaxish Singh Kohli, President, Hotel and Restaurant Association of Western India and Vice President, FHRAI told Inc42, “The HRAWI had sensed this monopolistic and arm-twisting tactic, germinating last year by these aggregator conglomerates. Foresight-fully having contemplated a counter move, last year HRAWI had already made an exclusive arrangement with YATRA, specifically for its members, where many hotels individually have signed and got immunity. Some hotels in Mumbai too have already delisted the online portals because of the unfair and uneven commission-based business model.”
The hotel associations have claimed that after disrupting the market by providing deep discounts, OYO is not keeping up with the agreements. In some cases, they are reportedly telling the hotels to change the agreements, else they will not pay them and are asking for the new clause. The association emphasised that OYO has a big legal team and it is tough for individual hotel owners to litigate and get the money.
An OYO spokesperson said, “We have always stood for fairness, whether it is to offer quality living spaces at affordable prices to our customers or the operational capabilities to help asset owners scale to newer heights by leasing or franchising their asset with Oyo. It will be business as usual for us in Mumbai and guest experience will continue to be a priority for us and our asset owners.”
The Hotel and Restaurant Association of Gujarat, which represents 400 properties, said hotels in Ahmedabad will not accept any discounting from December 1 and that commissions won’t exceed 18%.
In an ultimatum to Go-MMT, the Gujarat association has said, “Cancellation policy, early check-in and late check-out policy will be strictly of the hotel. Go-MMT will not have any condition and rigidness on the same. If they come directly to individual hotels, we request you not to entertain them… In case we do not unite together now we will be nowhere in some time.”
[The development was reported by ET.]