Hotels Body takes Oyo complaint to CCI
Hotel owners have accused Oyo of levying new charges on partners over the past two months on an ad hoc basis.
Apex industry body Federation of Hotels and Restaurant Association of India (FHRAI) has filed a complaint with the Competition Commission of India against the Softbank-backed company. The matter will be heard on August 6.
“The kind of muddling that Oyo has done with the hospitality sector is antagonising. In the race to secure funding from investors, it has tweaked and tugged at every possible avenue at the expense of a hotel’s reputation and future. No hotel or business wishes to turn down opportunities that may translate into revenues, but the environment created by Oyo has left hoteliers with no choice but to cut ties with it,” said Pradeep Shetty, honorary joint secretary at FHRAI.
Hotel owners have accused Oyo of levying new charges on partners over the past two months on an ad hoc basis. They said the commission rates are as high as 30% in some cases.
“Oyo had first said there would be no hidden charges, but rules began to change almost every month. Besides convenience fee and charging us on walk-ins and online payments, from this month, they will charge us extra depending on the ratings guests give us. It has come to a point where we are no longer able to even manage offsetting our internal expenses,” said Harish, owner of Hotel VT Residency in Bengaluru.
Harish said he and his partner have nearly 30 hotels in tie-up with Oyo in Bengaluru and they have asked Oyo to take corrective action. “We plan to organise a bigger show of strength with around 550 hotels from Bengaluru in near future if they do not pay heed to our requests,” he said.
FHRAI said it is advising its members to legally terminate contracts if they so desire and ensure that travellers do not suffer. “We would not like to offer comments as the matter is pending with the CCI,” said an Oyo spokesperson.
Last month, 100 hoteliers from the Kerala Hotel and Restaurant Association staged protests outside Oyo’s office at Edappally in Kochi and announced a two-day strike. Members of the Gurugram Guesthouse Welfare Association are accepting Oyo bookings only if they match their prices since July 1.
In April, the company said it was introducing the OPEN (Oyo Partner Engagement Network) programme to help its 8,700-plus partners reach their business goals. The programme, it said, included six core promises to its asset partners. It also launched an upgraded co-OYO app for the asset owners to monitor the progress and a dedicated a microsite for “stronger interaction and engagement”.
Amitabh Mohapatra, a member of the Gurugram Guesthouse Welfare Association said 100 Oyo partner members of the group tried to resolve various issues like hidden costs, need for agreement in hard copy and minimum price structure, but were not heard by the company. “Nothing changed. Oyo is promoting itself through boards that they put up on the hotels. It is their own marketing stunt, but they want to charge the owners Rs 60,000 for it. They started this recently. Except for the platform fee and the commission, nothing else is mentioned on the contract. There is no transparency in payments,” he said.
The Oyo spokesperson, however, said the company has enabled hundreds of crores of capex advances and investment support to asset owners since OPEN was launched and complaints are being resolved faster.
Mayank Nagrath, owner of three Oyo-listed properties in Delhi’s Karol Bagh and Paharganj said new charges levied on his properties include PLB charges, boost services and branding fees. “None of these is in the contract. They are charging for what they are referring to as branding services. They are defaulting on payments and levying monthly charges on field visits by their ground teams now,” he said.
The spokesperson said every OYO hotel has an individual contract that guides and guarantees the terms of arrangement. “Depending on services and offerings chosen and availed by the hotel owner towards improving visibility and consequently resulting into potential of additional earnings, charges accrued will differ.”
“There is no monetary consideration implied with any penalty. However, owners that do not deliver good-quality services lose out on getting prominence and visibility and if they do not improve over time, despite our support, intervention and assistance, lose out on the opportunity of growing with the OYO hotel chain,” the company said.