FHRAI files complaint with CCI against Softbank-backed Oyo for leveraging new charges on partner hotels

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Oyo, a Gurugram-based, largest hotel chains platform in India, has come under the radar of Federation of Hotels and Restaurant Association of India (FHRAI) after the apex industry body filed a complaint with the Competition Commission of India against it.

The complaint was registered after hotel owners accused Oyo of levying new charges on partners over the past two months on an ad hoc basis. The owners said that the commission rates are as high as 30 per cent in some cases.

“The kind of muddling that Oyo has done with the hospitality sector is antagonising. In the race to secure funding from investors, it has tweaked and tugged at every possible avenue at the expense of a hotel’s reputation and future. No hotel or business wishes to turn down opportunities that may translate into revenues, but the environment created by Oyo has left hoteliers with no choice but to cut ties with it,” said Pradeep Shetty, honorary joint secretary at FHRAI.

The SoftBank backed hospitality chain Oyo was started by Ritesh Agarwal in 2013. The startup was started from a single hotel to over 8500 hotels at present. It is the fastest growing network of hotels, offline and online.

While, FHRAI said it is advising its members to legally terminate contracts if they so desire and ensure that travellers do not suffer.

On the other hand, Oyo spokesperson, said, “We would not like to offer comments as the matter is pending with the CCI.

The matter will be heard on August 6.

“Oyo had first said there would be no hidden charges, but rules began to change almost every month. Besides convenience fee and charging us on walk-ins and online payments, from this month, they will charge us extra depending on the ratings guests give us. It has come to a point where we are no longer able to even manage offsetting our internal expenses,” said Harish, an owner of Hotel VT Residency in Bengaluru.

“Depending on services and offerings chosen and availed by the hotel owner towards improving visibility and consequently resulting into potential of additional earnings, charges accrued will differ,” the spokesperson added.

“There is no monetary consideration implied with any penalty. However, owners that do not deliver good-quality services lose out on getting prominence and visibility and if they do not improve over time, despite our support, intervention and assistance, lose out on the opportunity of growing with the OYO hotel chain,” the company said.
While, other hospitality startups, which are emerging at a fast pace in India includes  YatraFabhotelsTreeboMakeMyTripClearTrip, etc.

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