Hotel owners threaten legal action against Oyo & Go-MMT over discount and exorbitant commission

Budget and mid-market hotel owners across the nation are planning to take legal action against Oyo over deep discounting, high commissions and frequent changes in arbitrary contract by the hotel chain.

The Budget Hotel Association of Mumbai, a grouping of 250 properties along with similar alliances in Delhi, Mysore, Bengaluru, Kolkata, and Hyderabad are planning to form a strong lobby against the SoftBank-funded company.

According to the group, Oyo's deep discount practice directly affects their income besides it changes its terms and condition failing to which small hotel owners are being threatened to withhold payments, reports ET.

Further, they explained that Oyo can offer a room at half or even one-third of the price charged by a budget hotel only because it is sitting on a pile of reserve capital. A small hotel owner can't match this hefty discount so left with no choice. Of the 250 properties, more than 80 hotels are listed on Oyo.

On an average Oyo charges commission in the range of 25-30 per cent and rest amount goes to salary, and other maintenance, thus profit can't be expected in the revenue sharing model, claimed a hotel owner listed on Oyo.

Separately, the Hotel and Restaurant Association of Gujarat had sent notice to Go-MMT (goibibo and MakeMyTrip) in this regard saying that hotels in Ahmedabad will not accept any discounting from December 1 and that commissions won’t exceed 18 per cent.

Over 300 hotels from the city have threatened to join the boycott.

Of late, a number of restaurants in Kerala have planned to not accept orders from foodtech platforms such as Zomato, Swiggy, Uber Eats, and Foodpanda from December 1 over the existing arrangement and service charges issue.