The OYO Controversy: Small Hotel Owners Protest Against OYO in Key Indian Cities

When OYO first entered the hotel franchise business in 2015, it appeared to be an attractive proposition for budget hotels. Struggling with lack of visibility and a lack of guidance on how to upgrade their properties, small hotel owners relied on word-of-mouth referrals and an unorganised system of touts, tour operators, and agents. However, things have taken a turn for the worse. Protests have erupted across India, with small hotel owners in mid-tier towns like Nashik, Pune, Manali, Jaipur, Ahmedabad, Bengaluru, and Delhi complaining about declining margins and profits under the OYO platform.

Protests and Grievances

The issue first surfaced in January of this year when the Nashik Residential and Hotels Association (NRAH) reported unpaid dues, which continued to accumulate. Six months later, the NRAH claims that OYO still owes hotel owners a sum of INR 2 Cr. This highlights the ongoing frustration and financial strain faced by independent hotel owners. Small hotel owners in these cities are increasingly voicing their concerns, accusing OYO of failing to fulfill its promises and of levying hidden charges.

OYO’s Defenses and Promises

OYO has stated that its platform helps hoteliers achieve higher returns, offering easy financing and transformation services to improve customer experience. However, for many hotel owners, the core issue is the excessive penalties and deductions applied by OYO, often without clear specification in the contracts. Many claim that OYO has been deducting payments under the pretext of unspecified charges, leaving them in the red at the end of the month.

The Minimum Guarantee Fee Controversy

A central point of contention is OYO’s “Minimum Guarantee Fee” promise. This model is designed to provide hotel owners with a fixed amount each month in exchange for allowing some rooms to be allocated to OYO users, regardless of the actual bookings or occupancy rates. This promise was meant to attract many hoteliers to the platform. However, many now argue that this model is unethical and unfulfilled. Since January, many hotel owners have reported that OYO has not paid the minimum guaranteed fee.

Hidden and Surprise Charges

Hotel owners accuse OYO of using a myriad of hidden and surprise charges such as promotional fees, convenience fees, walk-in fees, audit fees, and forced check-ins. These additional costs are often not transparently explained, leading to confusion and dissatisfaction among hotel owners. The lack of clear communication about these charges has added to the animosity and protests.

The situation in Nashik serves as a microcosm of the larger issue. The ongoing protests reflect a broader concern among independent hotel owners who are seeking clarity, fair treatment, and guaranteed returns promised by OYO. As the debates continue, the future of OYO in the Indian hotel market remains uncertain.