Oyo’s business more about hostility than hospitality: FHRAI


The Federation of Hotel & Restaurant Associations of India (FHRAI) has come out in support of Chandigarh based hotelier, Vikas Gupta – the latest victim of Oyo’s scam. Gupta has lodged an FIR against Oyo’s Founder – Ritesh Aggarwal and Sandeep Lodha, CEO of Oyo’s brand Weddingz. in with the Mohali Police. In the FIR, the hotelier has stated that the Oyo’s top management abruptly wriggled out of a business agreement illegally and with criminal intent. FHRAI – India’s Apex Hospitality Association has backed the complaint and further added that close to 100 hoteliers have encountered similar conduct from Oyo as soon as the COVID-19 pandemic hit businesses.

“Disruptions caused by the pandemic have affected businesses everywhere, but Oyo now has resorted to manipulating agreements to coerce hoteliers out of it. It is evident in Vikas Gupta’s case Oyo could not keep its commitment in the agreement. So instead of trying to work a way out, it just tried to use brute force to abandon the hotelier. Not only did Oyo decide to abandon a business going through its worst phase, it further tried to intimidate the hotelier with penalties running into crores. Such is the poor business ethic of this massively funded, so-called “Unicorn” company. As if the pandemic wasn’t doing us enough harm, Oyo has compounded to it. Oyo’s business is more about hostility than Hospitality,” says Gurbaxish Singh Kohli, VP, FHRAI & President, Hotel and Restaurant Association of Western India.

The Chandigarh hotelier stated that everything was running smoothly until the Coronavirus outbreak restrictions were imposed on gathering in marriages and events.

“Fearing losses, Oyo hatched a premeditated conspiracy, and which were against terms of the signed agreement. On 16th March, Oyo sent me a notice to submit NOCs and other documents. In this, they wrongly alleged about previous follow-ups with me to submit the same. With this notice, I was given just 15 days to comply, whereas according to the agreement the notice time to be provided is 60 days. I was told to submit the same documents which were submitted at the time of signing the agreement. Yet as a responsible venue partner, I resubmitted the documents within specified time period. After this, to my utter shock, instead of paying me damages for illegal backing out of the agreement, a new notice levelling criminal conspiracy was sent and I was asked to pay roughly Rs.5 crores in penalties. After terminating the contract abruptly and illegally from their end during the period of lockdown, Oyo forged emails and accepted quite a few bookings from the market for the upcoming season till Dec 2020,” says Vikas Gupta, Owner of Vikas Mineral Foods Private Limited (VMFPL).

Based on the complaints filed by the Federation of Hotel and Restaurant Associations of India (FHRAI) last year, Oyo is under investigation by the Competition Commission of India (CCI). The CCI has identified a case for investigations into Oyo’s business practices under Section 26(1) of the Competition Act, 2002.

“It has come to our notice that Oyo, with the humongous funding and legal backing, goes especially after hotels in the budget segment. The trend indicates that wherever Oyo faces a dilemma in continuing to keep their promise, they just intimidate the business owner with legalities. They will insist on unwarranted auditing of the hotel and will start picking on negative customer reviews just to wriggle out of the contract or coerce the hotel into discontinuing it. Under the garb of generating more business, Oyo has been arm-twisting the small and budget segment hoteliers for quite some time now. We are keeping a record of each of our member’s complaint against Oyo and we will build a stronger case to present it to the PMO,” says Pradeep Shetty, Jt. Hon. Sec. FHRAI & VP, HRAWI.

Over the last six months, under the excuse of COVID-19, Oyo invoked Force Majeure and concomitantly took steps to renegade on all of their duties and obligations under the agreements signed with several hotels.

“In one stroke, Oyo abandoned all its duties, functions and obligations towards the hotels and withdrew the staff placed at hotels. Under the pretext of drop in business of hotels due to the pandemic and the lockdown, they just abandoned hoteliers without a thought. They conveniently disregarded the huge revenues and profits the company earned in the hay days. Such conduct is completely unethical. We pray that hoteliers, who haven’t yet fallen prey to Oyo’s rosy but twisted offers, stay away from it,” concludes Kohli.