Trouble for OYO as Delhi’s budget hotel hub consider severing ties

Updated: February 14, 2019 7:12:03 AM

According to some recent media reports, over 200 hotels have ended their agreements with OYO over mismanagement of contracts, arbitrary charges and other disputes and others want to exit contracts but are stuck for various reasons.

OYO, OYO rooms, OYO enters Philippines, Abhinav Sinha, oyo rooms in chinaAccording to some recent media reports, over 200 hotels have ended their agreements with OYO over mismanagement of contracts, arbitrary charges and other disputes and others want to exit contracts but are stuck for various reasons.

by Asmita Dey

Budget hotels in New Delhi’s Paharganj area, which had partnered with online aggregator OYO, may soon end their agreements with the company.

Speaking to FE, Pradeep Shetty, honorary secretary and chairman for legal matters at Hotel & Restaurant Association, Western India (HRAWI) and board member of the Federation of Hotel & Restaurant Associations of India (FHRAI), said: “Hotels are ending their arrangement as well as agreement with OYO across the country.” He, however, did not provide the exact number of hotels that would be severing ties with OYO.

Gurbaxish Singh Kohli, HRAWI president and FHRAI vice-president, said more hotels are breaking their pacts with OYO as the terms initially agreed upon have been breached. He added that budget and smaller hotels across India, which notified OYO but didn’t receive a satisfactory response to a request for a review of their contracts within a stipulated time, are refusing to accept further rooms booked through OYO.

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In response, OYO said the claims were ‘absolutely incorrect’. “Barring some isolated cases (as in Rajasthan) on account of breach of contract over repeated offences that could endanger guest safety and security, and reminders on following certain operating norms, all of which are identified and evaluated as per the standard process in any franchisee-franchiser agreement, we have not taken any such measures. Outside of that, we have not seen a churn or any dissatisfaction at either end,” the firm said in an e-mail.

“Unfortunately, some vested interest groups resort to unsubstantiated claims. As a testament to the tenacity and resolve of our young, innovative hospitality company, we have seen less than 1% assets leave or be asked to leave annually, which is almost 2X better than what you would see for a competing player in the same segment,” OYO said. “We are happy to share with you that over 90% of our asset owners are extremely happy franchising with OYO and have seen over 50% growth in their occupancy in their first few months of joining us. Like any valued relationship, we discuss and resolve any concerns as required,” the firm added.

According to some recent media reports, over 200 hotels have ended their agreements with OYO over mismanagement of contracts, arbitrary charges and other disputes and others want to exit contracts but are stuck for various reasons.

Kohli said the association had written to OYO after the hotels approached the body and also sent the firm a point-based document, highlighting the issues and seeking immediate rectification. “But there has been no move from their end to resolve the issue. OYO has sent letters to some hotels mentioning that they cannot bar their business through the aggregator,” Kohli claimed.

Reacting to the charge, OYO said: “We have been engaging with the FHRAI and its respected executives on the potential of a larger discussion by inviting all hotel chains which lease or franchise in the country. Having said that, we have not and will not acknowledge, recognise or engage with any state/city/segment association that can be formed overnight by people with vested interests.”

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