Dues, death and an investigation — all that went wrong with OYO hotels in the last 6 months

• OYO founder Ritesh Agarwal was recently booked in a cheating case by a hotel owner in Bengaluru.
• But there have been multiple such incidents across the country.
• In the US too, OYO has been facing similar issues.

OYO Hotels & Homes, the Indian unicorn that has gone global seems to be going through a bad time. Founded by Ritesh Agarwal, OYO is on its way to hit its ambitious target of being the world’s largest hotel chain. It helps that they are already South Asia’s largest hotel chain by the number of rooms.

OYO also recently launched OYO Partner Engagement Network (OPEN) through which it set up four regional Partner Advisory Councils which “provides a platform to discuss and determine micro and macro issues driving the future of hospitality in India”.

Yet the past few months have been turbulent. From multiple FIRs to an uprising from hotel owners, OYO is now dealing with multiple cases.

Cheating case against Agarwal and others

Recently, a Bengaluru hotelier filed a cheating case against Agarwal and six others claiming that the OYO hasn’t paid him his dues. According to the complaint, the hotelier has claimed that OYO was supposed to pay him ₹7 lakh a month for room bookings but failed to do so since May 2019.

"Our lawyers are looking into the matter and will be taking strong legal action as these claims are incorrect and defamatory in nature. OYO Hotels & Homes will initiate appropriate criminal proceedings against the Bengaluru owner who is sensationalising a civil dispute to attract attention. On studying a similar matter where an FIR was wrongfully filed in September, the honourable Karnataka High Court recently stayed the adverse actions via an injunction in Bengaluru. We, therefore, have strong reasons to repose our faith in the justice system," said a statement from OYO.

OYO also claims to have an annual retention as high as 99.5% across the chain in India & South Asia.

Incidents at OYO Hotels

Recently, a national level shooter was found dead in an OYO hotel reportedly due to electrocution. On the other hand, an employee in a Gurugram-based OYO hotel was also accused of raping a guest. In both cases, OYO has said that it is working with the authorities and helping with the investigation.

Hotel owners’ rising rage

Hotel partners have been raising their concerns about OYO for quite some time now, with some even calling it the ‘biggest online fraud’. Multiple protests have also been organised by hoteliers against OYO across the country. Most of the protests have been about clearance of dues. Another point raised by hotel owners has been that while OYO charges 20% franchise fee on room revenues, it ultimately takes more money through different sources that aren’t disclosed initially.

Trouble in America too

OYO, after having had a great run in China, also expanded to the US. It has even taken over a Hooters hotel in Las Vegas and rebranded it to be an OYO hotel. US-based media outlet Skift has reported that several hotel owners complained that OYO’s partner management system didn’t work properly along with non payment of dues.

CCI investigation

MakeMyTrip and Oyo’s commercial agreement is being investigated by the Competition Commission of India. The alleged dominance that they would enjoy is now under scanner. And prima facie, MakeMyTrip is identified as ‘dominant’ in the online travel market while OYO holds the same position in the hotels market. The joint effect of their partnership could alter the way the market operates.

“OYO has been prima facie found to be a significant player in the ‘market for franchising services for budget hotels in India,” said the report.

See Also:
MakeMyTrip and Oyo are in trouble with the CCI, opening up a gray area for business partnerships in India