OYO Asks Tourism Ministry To Cancel Membership Of FHRAI Executive Committee

The ongoing tussle between IPO-bound traveltech major OYO and the industry body Federation of Hotel & Restaurant Associations of India (FHRAI) refuses to die. In a fresh development, the hotel major has asked the Ministry of Tourism to cancel FHRAI executive committee’s membership, calling it ‘illegally run’.

The traveltech major has written a letter to the ministry with this request.

In a press note shared on Monday (February 27), OYO alleged that the FHRAI’s actions are “detrimental to small hotel owners.” The traveltech unicorn added that the executive committee was working for self-interest “rather than the interest of the small hotel owners.”

OYO’s representation pointed out the constant tussle and that “their continued malafide friction with organised players like OYO, discourages SMEs and entrepreneurs from progressing and moving ahead with times and technology.”

The development comes weeks after the National Company Law Tribunal (NCLT) issued an order directing the Ministry of Corporate Affairs (MCA) to look into FHRAI and ensure that it complies with the provisions of the Companies Act. OYO had also written to NCLT back then to ask for an expedited investigation.

In a letter written to NCLT in January 2023, OYO alleged that FHRAI was ‘creating hurdles and bottlenecks for new players in the market’. According to the traveltech unicorn, new players including OYO itself are ‘posing a stiff challenge to the self-serving agenda of certain members of the FHRAI with a vested interest.’

NCLT, in its order, also noted that personal agenda had come to loom large over the affairs at FHRAI, which resulted in increased litigation.

“Personal interest has come to loom over the functioning of FHRAI. Certain members of various regions of FHRAI are breeding litigation for personal reasons and we strongly disapprove of it,” the tribunal observed in its order in January.

OYO’s move against FHRAI follows after the latter has repeatedly approached the Securities and Exchange Board of India (SEBI) over the past few months, urging the market regulator to stop OYO’s INR 8,430 Cr IPO. 

Most recently, the industry body approached SEBI after the Competition Commission of India (CCI) imposed a penalty of INR 168.88 Cr on OYO over unfair business practices. However, the NCLT has since stayed the said penalty.

However, it seems that OYO is going full steam ahead with its IPO. Last week, Inc42 exclusively reported that the traveltech major has undertaken a major reshuffle of its top management team.

In the September quarter, OYO recorded losses of INR 333 Cr during Q2 FY23, down nearly 20% from INR 414 Cr in Q1 FY23, though the traveltech is expecting to become EBITDA positive in FY23.