NEW DELHI: More than 500 hotels in 100 cities are said to have snapped ties with SoftBank-backed hospitality chain Oyo since April as the relationship has soured after various disputes. Oyo has denied this and said the numbers cited were “incorrect” and “inflated”.
“Many state and city associations have reported instances of large-scale termination of contracts with Oyo as also protests held by small local hotels against non-payment and other problems faced by them,” said Pradeep Shetty, honorary secretary, Federation of Hotel and Restaurant Associations of India (FHRAI). “We are estimating around 500-700 hotels having exited Oyo since April.”
The hotels have previously accused Oyo of contract breaches, arbitrary commission rate changes, stoppage of minimum guarantee amounts and threatening legal notices among other things. Oyo has denied this. FHRAI has also complained to the Competition Commission of India (CCI) against the company. CCI is currently investigating the matter.
Despite severing ties, hoteliers said they haven’t been able to regain control of their online listings, which show the properties as being sold out on Oyo. On the other hand, customers have been complaining on social media that hotels hadn’t accepted bookings made on Oyo when they tried to check in.
“It has also been reported to us that hotels are not being allowed to exit from Oyo due to holding back of the ‘no-objection’ certificate by the company,” Shetty said. Most of the partnerships ended in June and July when disagreements between hoteliers and the company escalated, sources aware of the matter said.
Cities such as Bengaluru, Chennai, Hyderabad, Kolkata, Noida, Pune, Goa and Gurgaon accounted for most of the exits, said the people cited above. Properties in smaller locations such as Karnal, Ludhiana, Guntur, Tirupur and Jamnagar had also broken away.
Oyo disputed this and said its annual retention rate was as high as 99% in India and the rest of South Asia. It said some properties were kicked off the site because they weren’t good enough. “We voluntarily deflate some hotels annually due to quality issues,” an Oyo spokesperson said. “As we continue to strengthen our focus on customer experience, we are taking strict measures against hotel owners who don’t comply with our quality metrics and compromise customer satisfaction.”
Oyo gives hotels a one-month notice period before terminating contracts if terms are breached, steering customers away from such properties during that time. “During the resolution of the dispute, until the end of the notice period, the property may be put on ‘sold out’ on all distribution channels to ensure that the customer enjoys the high quality, standardised and reliable experience expected at an Oyo asset,” the spokesperson said.
The termination process is completed only once the dispute is settled either through mutual agreement or through arbitration and when the full and final settlement is completed, the person said. Hoteliers said they were yet to get control of online listings despite the termination of agreements.
“Hotels that have ended agreements are still getting reflected as ‘sold out’ and Oyo is not releasing the properties,” said Neeraj Jain, a member of the Hotel and Restaurant Association of Eastern India and Hotel and Restaurant Association of Orissa, who ended his partnerships with Oyo for his three hotels in Orissa and Kolkata about seven months ago.
“Hoteliers are suffering huge losses. The government is also not helping hoteliers who have invested crores of money.” He cited his hotels as an example of this. “Two of the properties have still not been released by Oyo. They are still showing them as sold out on their platform with a room rent of Rs 490,” he said.
Shankar, owner of Hotel Srinidhi Residency in Bengaluru, said his agreement ended two months ago but the company hasn’t restored online control of inventory. “Our property is still under Oyo. When we requested them to release it, they are pressurising us to sign a new agreement. The company also owes us at least Rs 10 lakh,” he said.
Anup Thakur, president of the Manali Hoteliers Association, said about 25 hotels have ended agreements with the company in the resort location over the past month. “Weare asking hoteliers to send notices to the company to get back their listings,” he said. “In Himachal Pradesh, the government fixes the room tariffs. But Oyo manipulates and fluctuates room tariffs on its own which is the biggest issue. The government is also losing revenue because of this and not just the hoteliers.”
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