Bengaluru Hoteliers Call Oyo Rooms As ‘Biggest Online Fraud’; Demand Criminal Probe?

Photo: Reuters/Adnan Abidi/Files
Photo: Reuters/Adnan Abidi/Files

Rebellion against Oyo Rooms is spreading fast and spreading deep.

After Shimla, hoteliers in Bengaluru has now declared war against Oyo Rooms, as they have described them as ‘Biggest Online Fraud’.

It seems that the way Oyo Rooms is charging commissions, and allocating incentives has been described as the biggest roadblock.

Why Oyo Rooms is silent on this?

Oyo Rooms Is Biggest Online Fraud?

Two hoteliers from Bengaluru have filed criminal cases against Oyo Rooms, describing them as biggest online fraud.

In the charges  , they had named Oyo Rooms founder, and one of the youngest billionaires from India: Ritesh Agarwal, and accused the company of ‘deceitfully increasing commissions’.

While one complaint was filed in Bengaluru, the other complaint was filed in Chikkamagaluru district.

Ritesh Agarwal was able to dodge this attack, and get a stay order from Karnataka High Court, which stopped police from investigating the case.

In their defence, Oyo Rooms said, “On an annual basis, Oyo is able to retain 99 percent of its asset owners. If, for instance, people were unhappy, our retention rate would have been lower,”

Recently, Oyo Rooms raised a war chest of $1.5 billion, for conquering US and European markets. This new round of funding, in part supported by Ritesh Agarwal himself, soared Oyo Rooms’ valuation to $10 billion.

Why Hotel Owners Are Against Oyo Rooms

In this recent case in Karnataka, where criminal charges were filed against Oyo Rooms, the case was regarding increased commissions for Oyo Rooms, and sudden charges imposed which drastically impacts the hotel owners’ income.

In general, 20% commission is charged by Oyo Rooms, but in some cases, all of a sudden, Oyo extracts 50% or more commission.

Besides, Oyo Rooms also suddenly imposes “platform fee” and a fee for a “visibility boost”, which is only reflected in the monthly statements of the hotels.

Recently, hoteliers in Shimla rebelled against Oyo Rooms, as they described their operations as illegal and without a permit. Besides, Shimla hoteliers also accused Oyo Rooms of giving deep discounts, which is negatively impacting their business.

Earlier, budget hotel owners in Mumbai and Jaipur had complained against Oyo Rooms for the same reason of increased charges.

Few weeks back, around 300 hotels from a prominent network of hotel owners in North India quit Oyo Rooms, and another dozen or so from Ahmedabad did the same.

Around 10,000 hotel owners are part of Oyo Rooms right now, and although a small fraction have revolted against them, the trend is increasing.

We will keep you updated, as more details come in. 

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