Oyo Hotels and Homes, which has emerged as one of the world’s largest hotel chains, is facing backlashes from various hotel owners now. It attracts customers with its hassle-free online booking, cheerful lodging, and reasonable pricing. Different hotels operators who had partnered with it, are now blaming the hotel chain for increasing the fee. Notably, Softbank has backed this startup by investing around $1 billion through its Vision Fund. Now, the bank is struggling hard in order to raise funding for a second investment fund.
Oyo managed to woo the travellers, especially the middle-class ones by providing them rooms in extremely low rates compared to other hotels. According to Oyo, it charges hotels around 20 per cent franchise fee on room revenues when hotels join its network, however, the Indian hotel operators who have joined the Oyo network complaints that it takes almost half or more of revenues through fees that were not initially disclosed.
Recently, a group representing hotel operators in Bengaluru asked for a criminal probe into Oyo, stating that the company has withheld money due to unfair fee increases. Also, last month, two separate hotel owners belonging to Karnataka have filed police complaints against Oyo. They have accused the company owner of doing fraud and the company for doing deceitfully increasing commissions.
Notably, founder and CEO of Oyo, Ritesh Agarwal has appealed to the Karnataka High Court for a stay order on one case in Bengaluru. According to the police official, the order has barred them from doing any kind of investigation in the matter. However, the company has denied these allegations and Mr Agarwal denied to comment about the legal complaint. According to the company, it operates with a high level of “integrity, transparency and commitment” with its partners. The owner reportedly said to a news agency, “On an annual basis, Oyo is able to retain 99 per cent of its asset owners. If, for instance, people were unhappy, our retention rate would have been lower.” The company stated, “We have always disclosed any changes applicable to contracts with asset owners.” Softbank, which owns a roughly 45 per cent stake in Oyo, declined to comment.
On the other hand, various hotel groups who are a part of Oyo have organised protests against the company and its alleged fraud.