Oyo, the leading Indian startup in the hospitality sector, is now facing accusations from hotel associations of backing out of promises and reducing profits from owners of hotels listed on its platform.
The company started as an aggregator in 2013 before pivoting to a franchise model in 2016, in which the hotel isn’t owned by Oyo but operations, management and standards are controlled by it. The expenses of refurbishment of a hotel to match Oyo’s standards are borne by the owner, after which a revenue sharing model is operated.
The Federation of Hotels and Restaurant Association of India (FHRAI) alleges that the company has been levying charges without prior intimation and certain members have claimed in media reports that ‘arm-twisting tactics’ have been employed to ‘cheat’ hotel owners. The body has approached the Competition Commission of India to register a complaint in this regard.