Oyo Rooms
Oyo RoomsPhoto credits: Reuters

In a major blow to soft-bank backed hospitality chain Oyo, more than 500 hotels across 100 cities have reportedly terminated their contract over multiple disputes. The tussle between the private hotels and Ritesh Aggarwal led Oyo Rooms seem to have reached a tipping point as the hotels have accused Oyo of contract breaches, arbitrary commission rate changes, stoppage of minimum guarantee amounts and threatening legal notices among other things.

Pradeep Shetty, honorary secretary, Federation of Hotel and Restaurant Associations of India (FHRAI) said, "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. We are estimating around 500-700 hotels having exited Oyo since April." The deadlock between the two parties has reached to a level that the FHRAI has complained to the Competition Commission of India (CCI) for ill practices to monopolize the business. The matter is under investigation at the CCI. As per a report in the Economic Times, Oyo Rooms have refuted the claims said the numbers cited by FHRAI are "incorrect" and "inflated".

Customers facing issues due to conflict

The hoteliers are arguing that even after breaking the ties with Oyo rooms, they are not able to regain control of their online listings. At the Oyo Room's website, the listing has been shown as being sold out on Oyo. Moreover, the customers seem to have sandwiched between the tussle as they are complaining on the social media that hotels are accepting their bookings made on hotel aggregator Oyo's website when they tried checking-in. Shetty also said, "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."

OYO room
OYO RoomsReuters

Sources aware of the development said that most of the hotels ended their partnerships in June and July when the issues between them escalated to another level. Cities, where maximum exits have been registered, include Bengaluru, Chennai, Hyderabad, Kolkata, Noida, Pune, Goa and Gurgaon. Smaller locations such as Karnal, Ludhiana, Guntur, Tirupur, and Jamnagar have also registered major exits.

Oyo refutes claim

However, Oyo Rooms have refuted the claims made by FHRAI and argued that yearly retention was as high as 99 percent in India as well as South Asia. It further said that some of the properties were sacked by the company as they were not good enough. Oyo spokesperson added, "We voluntarily deflate some hotels annually due to quality issues. 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."