FHRAI Warns Oyo of Nationwide Protest Citing Large-Scale Breach of Contracts
In a letter dated Dec 10, 2018, FHRAI has pointed out to the aggregator that it is endorsing illegal and unlicensed Bed & Breakfast apartments, flats in residential and commercial buildings, rooms in sprawl areas and such other independent structures as Hotels.
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FOLLOWING THE notice issued to Online Travel Aggregators (OTAs) – MakeMyTrip and GoIbibo, the Federation of Hotel & Restaurant Associations of India (FHRAI), has warned of action against room aggregator Oyo for large-scale breach of contracts, jeopardising the safety of consumers and violation of laws.
“Such positioning of hotels is tantamount to misleading the guests. When a guest books in a hotel they expect to stay in a hotel and not in an apartment or a residential premise. This not only harms the reputation of hotels in India but also constitutes potential safety hazard for the guest,” said Gurbaxish Singh Kohli, Vice President – FHRAI & President – Hotel and Restaurant Association of Western India (HRAWI).
In a letter dated Dec 10, 2018, FHRAI has pointed out to the aggregator that it is endorsing illegal and unlicensed Bed & Breakfast apartments, flats in residential and commercial buildings, rooms in sprawl areas and such other independent structures as Hotels.“It is a matter of fact that Oyo rooms entered into contracts with a number of Hotels for the sake of loading inventory or for an exhibition of numbers. Unfortunately, it is reported that you have been reneging on all your obligations and in fact adopting exploitative and coercive methods against Hotels who have protested. Unfair and arbitrary revisions of commission rates, threatening legal notices, levying of convenience charges, obtaining Hotel client database and approaching them directly, unfair levy of Audit denial charges, stopping of Minimum Guarantee amounts or abysmal drop of room rates in such cases, issues with Oyo money, lack of transparency and internal resolution mechanism to deal with all issues of Hotels, inconsistent and variable rates of commissions across the board and unfair levy of Room Deviation Charges, among others are some of the problem areas that are required to be addressed. Although these pertain to breach of contracts between parties, the sheer number of such grievances from Hotels is a matter of concern,” quotes the letter.
Keeping in mind the interests of all stakeholders involved, the FHRAI has called Oyo for a dialogue before the issue plunges into a nationwide protest.
Pradeep Shetty, Jt. Hon Secretary, FHRAI said, “The hospitality industry’s fundamental tenet is a seamless experience for guests. Any internal dispute between the stakeholders of the industry will affect the customer. The current rift between hotels and aggregators is moving in this direction, and it is the Federation’s intention to avoid this eventuality. So we have decided to open up a bilateral talk with Oyo and hope that we arrive at a win-win situation for all.”
A statement issued by FHRAI read Hotel players are alleging that OYO Rooms had initially approached them offering a strategic partnership by sharing room inventories. However with time, as the room aggregator became stronger with deeper pockets, it started twisting the arm that they had once extended for partnering.
Speaking about this, S K Jaiswal, Vice President, FHRAI said, “A number of FHRAI’s members, especially the budget and mid-market hotels, have blamed Oyo for distorting the market dynamics of the hotel industry. They have alleged that predatory pricing, deep discounting, exorbitant commissions and constant tweaking of contracts have become common practice while dealing with the room aggregator.”
“We wish to further express our desire to explore possibilities of amicably resolving the issues. However at the same time, knowing well that our members are being pushed to the edge, we are obliged to safeguard their interest and will declare a nationwide protest against the room aggregator if things don’t look up soon,” concluded Kohli.