Budget Hotels Form Pan-India Association to Boycott OYO

The ongoing protest from budget hotel owners against OYO has taken a new turn as the Budget Hotel Association of Mumbai has now formed a PAN India Alliance, in order to boycott OYO.

The news comes after a threat given by the FHRAI (Federation of Hotel and Restaurant Association of India) to carry out nationwide protest. Even hotel owners have planned to issue legal notices against OYO over some serious issues like deep discounting, high commissions, as well as frequent changes in arbitrary contract.

The new association known as HACI (Hotel Association Confederations of India) is reportedly planning a citywide protest. It is expected to receive support from 47 small associations with 8,000 members hoteliers.

According to the joint convenor of HACI, Ashraf Ali, around 50-60 hotels in the Jaipur are expected to join the drive, if the issue is not settled by OYO by 15th of January.

Mr. Ali has also made an allegation that OYO is trying to approach the individual hoteliers, which is even unlawful. He also revealed that the main reasons behind the recent commotion are holding up of payments by OYO and hidden charged levied by the Softbank-backed startup.

The association has already filed an online petition to highlight the issue. Apart from OYO, GO-MMT, i.e., the Goibibo and MakeMyTrip group has come under the scanner of FHRAI. Both GO-MMT and OYO are accused of resorting to unethical, exploitative, and divisive business practices, resulting in predatory pricing, by the association.

But, OYO in a press release, has strongly reacted to the boycott threats made by small groups of people, most of whom have no property associated with OYO. The company has indicated that it won’t hesitate to take strict legal action if anyone, under the influence of these vested groups, were to breach their contract.

It also confirmed the complete inaccuracy of claims made by certain individuals and vested interest groups that have falsely alleged that OYO charges 40% franchise fees. According to OYO, it has not charged franchise fees over 25%, and neither does it intend to do so unless it invests in capital expenditure to transform a home or hotel space for better footfalls and occupancy.

Certain individuals and vested groups are threatening and using anti-competitive means to artificially increase prices against market dynamics and charge customers exorbitant prices for budget accommodations while not upgrading customer services to the quality of OYO Hotels.

Commenting on the threat to boycott OYO Hotels, Ayush Mathur, Head of Supply, OYO Hotels & Homes, said, “We have not received any formal communication from any of our asset owners. In fact, over 90% of our hotel owners are extremely satisfied with our existing relationship and have franchised newer properties with us. Most of the boycott claims are being made by small vested interest groups with no property franchised with or leased to OYO Hotels. As franchisors, we continue to engage with our franchisee hotel owners on a one-to-one basis to resolve issues and in case, we don’t reach a mutually acceptable solution, part ways amicably. While we work towards addressing such issues, our primary focus is to ensure that the consumer at all times has access to affordable, reliable and good quality accommodations.”

He also added, “However, some such individuals have also been threatening to ignore the agreements and not accept online bookings, which will be a default of the contractual arrangements and will lead to legal liabilities on these individuals as we cannot and will not let anyone hamper the customer experience. We will take strict legal action, and drag such people to the court.”

Commenting on incorrect claims that OYO charges high commission, Ayush said, “This is absolutely incorrect. We have, on the contrary, invested over thousands of crores in capex, appointed hundreds of GMs to oversee operations and customer experience, and introduced technology-driven innovations in the hospitality sector that has greatly transformed the standard of service delivered by a once unbranded hotel, now part of the OYO chain. On an average, over 75% of hotel owners associated with OYO Hotels have seen an increase of 20-30% in occupancy, a 2.5 x jump in RevPar and a significant jump in profit, for every asset operating as an OYO branded property.”

Regarding the claims of offering deep discounts, Ayush Mathur, Head of Supply, OYO Hotels & Homes, said, “OYO Hotels and Homes is a chain of franchised and leased hotels, homes and living spaces, not an aggregator or an OTA. As per our agreement with our hotel owners, like many of our peers as well other brands operating franchise model, prices are determined by OYO. We have 100% inventory, and determine price using a dynamic pricing mechanism so as to create a level playing field for even an independent hotelier while providing affordable and accessible accommodation options to the customer. Since the room rates are decided by us so the question of discounts doesn’t arise. People continue to misunderstand our business model and make these allegations viewing us an ‘aggregator’”.

Commenting on the FHRAI developments, Ayush added, “We have been engaging with the FHRAI, the apex body that represents all hoteliers and its respected executives, and are open to creating a platform for potential discussions, and invite all other hotel chains in the country who operate leased or franchised assets to participate in the same.”

Picture Credits: OYO