Since December of 2018, several hotels across the country have voiced concerns and in some cases stopped conducting business with the erring Online Travel Aggregators (OTAs) and Oyo. In a latest development, the Hotel Owners’ Association (HOA) of Mysuru has decided that, 400 of its hotel members will block their inventory to GoIbibo and MakeMyTrip (Go-MMT) unless the OTAs agree to the terms put forth by the Association. The Association had recently convened a meeting of its members in the city to regulate terms of operation with the OTAs and hotel aggregators, to put an end to exorbitant commissioning and deep discounting tactics. Last month, hotels in Sikkim under the Sikkim Hotels & Restaurants Association (SHRA) terminated their contracts with Go-MMT after the OTAs did not meet the terms outlined by the Association.
Sooryah P, President, Association of Indian Hotels and Serviced Apartments, Bangalore said, “The OTAs and Oyo are destroying the very fabric of hospitality under the guise of disruption. They are literally bullying hoteliers, flexing their muscles with seemingly unlimited funds, access to technology and consumer data. Hotels took their bait of increased revenues and rates which today has given them a free hand at employing predatory pricing policies. The indiscriminate discounts offered to customers, outlandish commissions and Performance Linked Bonuses (PLBs) demanded from hotels, hijacking their online and offline brand and business resources, misrepresenting the actual rate received from guests, pitting one hotel against another and other below the belt tactics have left many hoteliers desolate.”
Hotels have alleged that the OTAs as well as Oyo have no regard for a hotel’s operations, outgoing costs and sustenance. The OHA has stated that the OTAs do not factor in the high operating costs, labour issues, Government compliances, and escalations among other regulatory and policy concerns while imposing low cost tariffs on a hotel. This has put many hotels in a tight spot with little to gain and more to lose from the arrangement.
Narayan Gowda , President, HOA, Mysuru said, “In our recent meeting, hotels in Mysuru have made three major demands that include reducing the commission to 15 per cent for Pay at Hotel (PAH) bookings and 18 per cent for prepaid bookings, discontinuation of PLB or any such similar scheme which effectively translates to increased commissions and discounting, if any shall only be offered by the hotels and not OTAs. Failing to meet these demands, post the 15th of Feb, hotels will block the inventory to those OTAs.”
The Federation of Hotel & Restaurant Associations of India (FHRAI) has supported the decision made by HOA and has reminded Go-MMT and Oyo of the forewarned consequence of not amicably resolving the dispute.
Gurbaxish Singh Kohli, Vice President, FHRAI & President, Hotel and Restaurant Association of Western India (HRAWI) said, “We are in solidarity with HOA and we don’t see any reason why any hotel should continue conducting business with these OTAs and Oyo. They are monopolizing, they resort to arm twisting, they misuse customer database of hotels and have neither care nor concern for a hotel’s well-being. Finally, the hotels have seen through the divisive practices of these OTAs to grow at the expense of the local hotels.”
In response to the issue, a statement by Oyo spokesperson stated, “As a respectable hospitality brand that focuses on corporate governance, asset owner success and elevated customer experience, we continue to resolve any issues with asset owners on a one to one basis as appropriate. We are happy to share with you that over 90 per cent of our asset owners are extremely happy franchising with OYO and have seen over 50 per cent growth in their occupancy in their first few months of joining us. Like any valued relationship, we discuss and resolve any concerns as required. Unfortunately, some vested interest groups resort to unsubstantiated claims. As a testament to the tenacity and resolve of our young, innovative hospitality company, we have seen less than one per cent assets leave or be asked to leave annually, which is almost 2X better than what you would see for a competing player in the same segment. Despite certain attempts by vested interest groups to discredit our years of hard work with malicious and inaccurate claims, our 8700+ asset owners in India continue to stand by us as we remain committed to delivering benefits to the customer and asset owner.”
