May 26, 2020 | 4:29 PM IST
Hotel oyo

Indian hotels fall off Softbank-backed start-up Oyo

Even as Gurgaon-based start-up Oyo Hotels and Homes was moving towards profitability, a huge number of Indian hotel operating partners are complaining about being blindsided by fee hikes.
The decision of hotel owners has come at a crucial time when Softbank-backed OYO’s market value is marked at $10 billion. Softbank invested nearly $1 billion in Oyo through its Vision Fund and is currently working to bring up funding for a second investment. Softbank holds a stake of 45 per cent in Oyo.
Adding to the woes of Oyo, a group of hotel operators in Bengaluru has sought criminal probe into Oyo on grounds that the company was keeping back money because of unfair fee hikes. In another incident, two hoteliers in Karnataka have also filed separate police complaints claiming Oyo wrongfully increased commissions and alleging the founder-CEO Ritesh Agarwal of a fraud.

Oyo charges hotels a roughly 20 per cent franchise charge on room revenues when hotels join its network. But some Indian hotel operators have claimed that it often charges half or more of revenues through fees that were not initially revealed.
Meanwhile, Agarwal has denied the allegations and said that it operates with a high level of ‘integrity, transparency and commitment’.

It may be noted that Oyo Hotels and Homes picked up really fast and became one of the world’s largest hotel chains with the promise of ‘hassle-free’ online booking, transparent pricing and cheerful lodging.

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