OYO disrupted the budget hotels market and now, the latter is teaming up to go legal against Oyo. They are forming a national body and planning to go legal against Oyo.
“Oyo has disrupted the entire market drastically,” said Budget Hotel Association of Mumbai president Ashraf Ali. “Rooms that we used to sell for Rs 2,000-2,500 are now being sold for Rs 800-900. Because of funding they are able to sell rooms at much lower rates. The minimum guarantee fee is also not coming, so we are not left with a choice.” (source)
Whose brand is it anyways?
The budget hotels let Oyo (and similar aggregators) take over the entire space (for easy money), let them run it as part of ‘OYO’ brand and in the process, they neither own the customer nor the brand.
“The customer recognises Oyo and not your hotel. You are just a service provider. Oyo charges about 25-30% as commission and the remaining funds need to be utilised for staff salaries, electricity etc. and your profit will be almost zero,” read a notice issued by the association. “Beware of Oyo as giving your hotel to Oyo will lead to a total loss of goodwill.” (via: ET)
As per the budget hotel association, Oyo has not honoured contracts and is demanding changes in terms that have already been agreed, threatening to withhold payment if hotels desist.