Our Bureau

Five days after it issued a warning to online travel aggregators MakeMyTrip and Goibibo, the Federation of Hotel and Restaurant Associations of India (FHRAI) has now warned action against budget hotel chain Oyo, accusing it of endorsing illegal and unlicensed bed & breakfast apartments, flats in residential and commercial buildings, and rooms in chawls and other independent structures as hotels.

“Such positioning of hotels is tantamount to misleading the guests. When guests book a hotel, they expect to stay in one, not in an apartment or a residential premise. This not only harms the reputation of hotels in India, but also constitutes a potential safety hazard for the guests,” says Gurbaxish Singh Kohli, Vice President, FHRAI and President, Hotel and Restaurant Association of Western India (HRAWI).

Contracts with hotels

In a letter to Oyo dated December 10, FHRAI said: “It is a matter of fact that Oyo Rooms entered into contracts with number of hotels for the sake of loading inventory or for exhibition of numbers. Unfortunately, it is reported that you have been reneging on all your obligations, and in fact, adopting exploitative and coercive methods against hotels that have protested.”

Hotel players allege that Oyo Rooms had initially approached them offering a strategic partnership by sharing inventories. However, with time, as the room aggregator became stronger with deeper pockets, it started twisting their arm.

“A number of FHRAI members, especially the budget and mid-market hotels, have blamed Oyo for distorting the market dynamics. They have alleged that predatory pricing, deep discounting, exorbitant commissions and constant tweaking of contracts have become a common practice while dealing with the room aggregator,” said SK Jaiswal, Vice President, FHRAI.

‘In talks with owners’

“We are aware of the recommendations made by certain bodies, and are actively engaging with the asset owners, franchisees and lessors associated with Oyo Hotels, on a one-to-one basis to address the same,” said an Oyo spokesperson.

The allegations depict cartelisation 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 spokesperson added.

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