Just a few days ago we covered how Hotel associations across the country are alleging online booking platforms for their competitive pricing strategies that are making restaurant owners earn as good as compared to older times. After action against MakeMyTrip and GoIbibo in November, Federation of Hotel and Restaurant Associations of India (FHRAI) – an all India body of hotel owners and operators had warned OYO of nationwide protests if it did not negotiate with the hotel owners body.
Hotel owners showing their anger against OYO
In a letter to OYO founder and CEO Ritesh Agarwal, the FHRAI had said that apart from breach of contract, most of its members have grievances with OYO, regarding endorsement of and hoarding illegal and unlicensed bed and breakfast apartments, flats in residential/commercial buildings, and such other independent structures as hotels.
“Such positioning/endorsement is not only misleading but also a potential guest safety hazard,” the letter read.
Hotel owners are against the 25%-30% commission charges that aggregators take from them. Another problem for owners is that they cannot discount their rooms, OYO can offer add-on discounts on bookings. Due to this strategy, the brand value of OYO is increasing while reducing the same of their hotels.
The hotel associations have also claimed that after capturing the market by providing deep discounts, OYO is not keeping up with the agreements and trying to make a monopoly which is against the market rules. Several cases have arrived in which OYO is making hotels to change the agreements, else they will not pay them.
“Unfortunately, OYO has been reneging on all its obligations and in fact adopting exploitative and coercive methods against hotels who have protested,” the letter dated December 10, added.
Also Read: Hotel Associations Across The Country Are Boycotting OYO. See Why
OYO’s response
In response, an OYO representative said “We believe that the allegations are misguided and misplaced, and depict cartelization by small groups of people (not necessarily by franchisees and lessors associated with OYO Hotels) with vested interests, which is not in the best interest of the consumers.” The company also believes that the changes demanded by the hotel owners lobby could end up raising the prices for end customers by as much as 40%.
