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Backlash from hoteliers mars rapid expansion

Oyo’s troubles in the US have striking similarities with the company’s fracas with hotel owners in India

Published: 31st October 2019 01:33 AM  |   Last Updated: 31st October 2019 08:15 AM   |  A+A-

Express News Service

Oyo Rooms may well be one of the most successful start-ups India has produced recently  with its international foray seeing it expand to new markets as widely spread as China and Mexico. However, the platform has been presented with a few hiccups to deal with with the past few weeks being punctuated by protests from certain groups of hotel partners across the globe.

Sample the previous week, for instance. On October 24, the room aggregator announced that it had strengthened its presence in Japan with expansion into more than 100 hotels spread over 50 cities including Tokyo, Osaka and Kyoto. 

The next day, however, saw reports that its hotel partners in the United States have divulged to a US-based travel intelligence platform called Skift that the Oyo’s mandatory property management system didn’t work often and that the glitches cripple the ability of owners to set room rates or change and handle reservations. The same day also saw the Nikkei Asian Review report that Oyo’s operations in Japan had run into a labour dispute, since the company has not been able to meet its planned ambitious sign-up goals, resulting in the firm 

reneging on some employment contracts. To this, Oyo had responded by calling the figures unsubstantiated. Oyo will also be facing a probe by the Competition Commission of India (CCI) after being accused by the Federation of Hotels and Restaurants Association of India of colluding with online travel platform MakeMyTrip. MakeMyTrip and Goibibo investors’ presentation claims that the companies possess 63 per cent market share in the OTA segment. “The there exists a prima facie case for investigation for alleged violation of the provisions of Section 3(4) of the Act,” the CCI has said.

Oyo, however, responded by stating that an earlier CCI investigation has cleared it of all allegations on market dominance and predatory pricing. As for the remaining issue, “the concern expressed is around whether OYO’s contractual relationship with MMT, as part of an arrangement, may have an adverse effect on competition. OYO stands ready to extend full support to the investigation and as a law-abiding corporate citizen, has full faith in the administrative and the judicial process,” the firm said.

The CCI probe based on hoteliers’ allegations is the latest outcome of a widespread series of protests by its hotel partners in India, with many aggrieved groups claiming that it has unilaterally increased its fees. The protests resulted in some hotel partners turning away pre-booked Oyo customers, with the brand taking a hit on social media platforms.

Industry insiders say that the platform will have to effectively deal with the impact on its brand. “Oyo is growing strongly and such hiccups are usual for large, but young, companies. But, steady news of protests will only erode the brand and Oyo has to deal with that effectively,” said a brand management consultant preferring anonymity.

Oyo expands service in Japan 
On October 24, the room aggregator said that it had strengthened its presence in Japan with expansion into more than 100 hotels spread over 50 cities including Tokyo, Osaka and Kyoto

Oyo faces heat from US hoteliers
Oyo’s hotel partners in the US claim that the glitches in its mandatory property management cripple the ability of owners to set room rates or even change and handle reservations



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