As per the reports, many hotel owners in the US have raised complaints to a travel intelligence platform Skift that the Oyo-mandated property management system doesn’t work often or it has also implemented poor functionality.
The complaint is raised against Oyo amidst the company is looking to expand aggressively in the US markets.
According to Skift, the problems with the application totter down the ability of properties to set room rates or change and handle reservations, resulting in overbookings and poor customer service.
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How Reducing Rates Influx Of Drug Users And Prostitutes?
The hotels had given all control of revenue management powers to Oyo. This is causing distress to US hotel operators as the company has reduced room rates drastically.
In turn, the rate is reduced in “such an extent that they sometimes triggered an influx of drug users and prostitutes” said Skift report.
What Is Other The Area Of Concern?
The other problems raised by Skift report concerning the evident missed payments from Oyo, a lack of cash flow for property owners, and unresponsiveness in dealing with technical or customer service issues were likewise high on the complaint list.
Is There A Similarity?
The notable point here is that all these troubles are quite similar to Oyo’s fracas with hotel owners in India.
The hotel owners in India also informed Reuters that to their dismay they found that the room rates have gone down, that too at a time when they are facing a slow economy.
They also informed that Oyo charges them around 20 percent franchise fee on room revenues when they join Oyo’s network.
But some Indian hotel operators reported that they often end up giving more than half of their revenues through fees that were hidden earlier.
Some More Incidents
According to reports, last month, a group representing hotel operators in Bengaluru called for a criminal probe into Oyo.
They said that the company was withholding their money claiming that there was an unfair increase in fees.
Another incident where two hoteliers in the southern state of Karnataka filed separate police complaints last month claiming Oyo had fallaciously increased their commissions and accused the company of fraud.
What Does Softbank Say?
According to Reuters reports, the unfavorable circumstances for Oyo in India has limited Oyo to a small share of over 10,000 hotel owners.
Apart from this the other troubles rising in the US comes at a crucial time for the company valued around $10 billion when they hoping for profitability and along with its major investor, Japan’s Softbank.
Recently, Softbank has invested around $1 billion in Oyo, through its Vision Fund.
According to a Reuters report, the company is struggling to raise funding for a second investment fund due to the failed offering of office-rental company WeWork and also struggling with the profitability with their flagship investments like Uber and has not yet turned a profit.
While Oyo had told Reuters that they are in constant contact with its hotel partners.
Oyo said in a statement “We have always disclosed any changes applicable to contracts with asset owners,”.
Why Are Hoteliers Upset With Oyo?
While Hoteliers said that Oyo has introduced fees like – a “platform fee” and a fee for a “visibility boost” – which they find out from their monthly statements.
Reuters has interviews with 22 hotel owners and managers who run hotels under the Oyo brand in 10 Indian cities informed that the discontent has grown at the end of last year.
When several hotel groups have organized protests against them.
According to Amitabh Mohapatra, head of one such group in northern India, more than 300 hotels have quit Oyo’s India network this year.
Another case where Kunal Rajpara, who heads another group in western India, said a few dozen hoteliers from Ahmedabad left Oyo last month.
According to P.C. Rao, president of the Bruhat Bangalore Hotels Association “The situation with Oyo has gone from bad to worse. We want to make sure the business of small hoteliers isn’t hurt.”
What Does Oyo Say About This Situation?
Oyo spokesperson also acknowledged some of the issues raised by the owners.
He said, “We have taken cognizance of the feedback and are addressing asset owner concerns and issues on a war footing,”. (reference)
The Oyo company has suddenly become one of the world’s largest hotel chains with a simple promise of “hassle-free” online booking, transparent pricing and cheerful lodging.
It seems that the promise is in serious danger witnessing the recent events.
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