OYO warns legal action against hotels for boycotting bookings

Over the past year, Indian consumer Internet startups have been facing wrath from the supply side. Several sellers bodies are protesting to safeguard their interest on platforms including Flipkart and Amazon.

Similarly, hoteliers teamed up against OTA - MakeMyTrip and budget hotel brand OYO on the premise of an exorbitant commission, deep discounting as well as frequent changes in contracts.

Taking an aggressive stance, Federation of Hotels and Restaurant Association of India (FHRAI) threatened a nationwide protest against the SoftBank-backed firm.

Moreover, the Budget Hotel Association of Mumbai has formed a pan India alliance called Hotel Association Confederation of India (HACI) also alleged that late payments and hidden charges levied by OYO are the major reason behind the protest.

Responding to association threat, OYO has warned strict legal action for breach of contract against any hotel on its platform that boycotts bookings.

The company has also made it clear that it didn’t receive any formal communication from any of its franchise. Meanwhile, the company is also vouching to resolve the issues of hoteliers on one to one basis.

Refuting the claim of deep discounting, the firm emphasised that OYO determines pricing through the dynamic pricing mechanism. Hence, it creates a level playing field for all partners.

While some hoteliers and their federation alleged that OYO charges 40 per cent franchise fee, the firm vehemently denied it. According to Ayush Mathur, OYO Hotels & Homes Head of Supply, it doesn’t charge more than 25 per cent from the franchise.

The commission goes up only when the firm invests capital in hotel’s renovation and infrastructure.

Besides OYO, Go-MMT (goibibo and MakeMyTrip) group was also under the radar of FHRAI over predatory pricing. Giving a strong reply to the confederation, company’s group chief executive Deep Kalra said that FHRAI can’t dictate MMT’s commercial agreements with its partner hotels.

The development was reported by ET via PTI.