After a rapid rise into the hotel room booking business, Indian startup unicorn OYO has finally established itself as a major player. However, it seems like a significant number of partnered Indian hotels are moving out of their partnership with Oyo with the reason being put forward as the company’s blinding fee increase for partners.
These complaints have started to surface at a crucial time as the Softbank backed $10 billion worth startup is slowly progressing towards profitability. Currently, OYO is partnered with over 10,000 hotels in India making it the largest hotel chain in the world.
While OYO has bought a smile to Indian middle class travelers by providing them with lower room rates, they have caused displeasure to the hotel owners. OYO charges 20% of the room revenue with its partnered hotels, however, some hotel owners claim that the startup ends up taking half or even more of their revenue through previously unmentioned fees.
Lat month, a Bengaluru based hotel operating group filed a complain against the startup stating that the company is not releasing their money on grounds of undisclosed fee increase.
Two other OYO partners from Karnataka filed separate fraud complaints against the CEO Ritesh Agarwal for the unrevealed increased commission.
Karnataka Government has put a stay order on one of these cases and police is proceeding with with no further investigation on it. In the second one which was filed in Chikkamagaluru, police said that they are investigating the complaint.
Agarwal has denied all such allegations and said;
On an annual basis, Oyo is able to retain 99% of its asset owners. If, for instance, people were unhappy, our retention rate would have been lower.
Softbank, which holds 45% stakes in the startup was unavailable for any comments.
OYO has further stated that they are in constant communication with their partners and has also stressed on the fact that they always reveal their changes to all stakeholders. Meanwhile, this news comes fresh on the heels of Oyo raising massive funding led by its founder. The move is expected to provide tighter control to the leadership and as such, hotel partners may want to gear up for some more changes in the near future.