BusinessE-Commerce

OYO facing the heat from hoteliers after travel aggregators

OYO has been doing a great job for what it’s worth. It has managed to do what no other company in this business has done. OYO is a bit different from others, it has to have a tie-up with the hotel first to rent their rooms or houses online. That said, renting a room or hotel online comes with different kind of challenges. OYO and the hotel owner needs to agree on a price and then that price cannot be changed. That is the way OYO works.

OYO has created havoc in China. It has managed to do what no other foreign company has in China. It is a country where Amazon, Uber and even Google have failed to make a mark but OYO has absolutely shattered all the records. It is acquiring three new properties every hour in China. This is happening because their franchise fees are so low that companies such as 7Days Inn and Rujia cannot compete even after being in business for ten years.

There are many hotels which are currently protesting against OYO in China. The condition has worsened for them as OYO is just taking the business in its own hands. This has called for some protests but these protests have reached across the border to the home country as well. OYO has managed to create the same story in India and this has been going on before it entered China.

There was a huge protest in December of last year against travel aggregators such as MakeMyTrip or Goibibo. Federation of Hotel and Restaurant Association of India (FHRAI). FHRAI had also warned OYO of the nationwide protests against these aggregators, OYO did not listen to any of those warnings. Now it is their turn to face the heat. The protests and the strikes happening in the country are valid from their point of view.

Companies like OYO take 25-30% commission from these hotels and then give add-on discounts to the consumers which absolutely kills the marketplace. This is just one of the things that OYO is accused of. Apart from this, the HACI which stands for Hotel Association Confederation of India has accused OYO of misguiding the customers of the hotel features. HACI consists of strong 8000 hoteliers and they are threatening to break the deal they have with OYO.

The hospitality unicorn has come up with an answer though. It has said that the complaints are actually misguided and misplaced. The OYO spokesperson also pointed out that if they go through the revised plans according to FHRAI and HACI then the prices might go up by 40% for the consumers. If that happens, it will hit the entire business irrespective of the platform. That said, the HACI representative has said that OYO is stubborn and the company trying to contact individual hoteliers is absurd. He also mentioned their might, HACI has the support of 47 pan-Indian organizations which might make OYO revisit the negotiation table.

– Unmesh Phule

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