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The Federation of Hotel and Restaurant Associations of India (FHRAI) has strongly come out against Oyo’s claim in its DRHP that it does not have any outstanding criminal proceedings against it.
The FHRAI has stated that hoteliers from across the country have reported several cases about Oyo’s arbitrary cancellation or breach of contract.
The association said that Oyo should first clear the dues of distressed hoteliers and resolve existing issues with its hotel partners before filing for an IPO.
The FHRAI cited Chandigarh-based hotelier Vikas Gupta’s FIR (FIR No. 0289, dated September 11, 2020) against Oyo with the Mohali Police. “Oyo has caused immense mental and financial trouble to hotel owners across the country on account of the non-payment of dues. Other than defaulting on payments, Oyo is known for unethical business practices, which remain a major concern for small hoteliers. Many small hoteliers do not have the wherewithal to fight against Oyo single-handedly,” said Gurbaxish Singh Kohli, Vice-President, FHRAI.
IBC proceedings
He added that Insolvency and Bankruptcy Code proceedings against Oyo are still in process and the CCI is investigating the company.
“We have maintained a record of each of our member’s complaints against Oyo, and we will build a stronger case to present it to the SEBI and the FM,” said Kohli.
Based on the complaints filed by FHRAI, Oyo is presently under investigation by the Competition Commission of India (CCI). The CCI has identified a case for investigations into Oyo’s business practices under Section 26(1) of the Competition Act, 2002. “The systemic depredation of the budget segment hotel business and its market as a means to achieve notional billion-dollar valuation is a serious cause of concern for the hospitality ecosystem of our country. Right after the pandemic hit the industry, Oyo resorted to manipulating agreements to coerce hoteliers out of it. Hoteliers from across the country are calling out Oyo for its belligerent business practices,” said Pradeep Shetty, Jt. Hon Secretary, FHRAI.
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