In September of 2018, OYO raised USD 1 billion to fuel its global expansion. The following month, it announced its entry into the market of Indonesia, the UK and UAE. On January 9, it launches OYO Homes - a home management business model that offers a 'hassle-free solution' to homeowners. It intends to focus on locked and unused homes across top holiday destinations.
The plan starts with 40 homes in the city, but in the next six months, the figure will balloon to around 200 homes in total.
Manu Midha, head - Middle East, OYO Hotels & Homes, said: "At OYO, we are focused on solving the problem of lack of quality and supply-demand imbalance in the hospitality sector. India's top holiday destinations have a sizeable number of homes that are locked and unutilised. Homeowners are unable to put these assets to personal or commercial use due to lack of time and-or expertise in homestay-management."
Since its soft launch in October 2018, OYO's short stay holiday homes has welcomed around 100,000 guests from 75 countries across 16 properties in the UAE. Furthermore, the group also plans to add more than 12,000 rooms within 150 hotels across the region.
Midha added: "We saw this as an untapped opportunity where our business has existing synergies — we have people resources all across the UAE, strong capabilities when it comes to property onboarding, transformation and upgradations, including redesign to suit the needs of young global travellers, hospitality-operations, revenue management, and distribution network — both online and offline, through both OYO's own and partner channels.
Boycott threaten
The Budget Hotel Association of Mumbai has reportedly said that it is planning a city-wide boycott of hospitality unicorn OYO, which has been facing severe criticism from hotel owner associations over its policies.
The Mumbai-based lobby has also formed a pan-India association called the Hotel Association Confederation of India (HACI) with a claimed strength of 8,000 hoteliers in a bid to broker better business terms with OYO, a report said.
The protest by the hoteliers’ group follows a similar call to arms in December 2018 by the Federation of Hotel and Restaurant Associations of India (FHRAI) — an all India body of hotel owners and operators. After initiating action against online travel aggregators MakeMyTrip and GoIbibo in November, the FHRAI had warned OYO of nationwide protests if it did not negotiate with the hotel owners’ body.
“Our new proposed organisation, HACI, has the support of 47 pan-India associations which have about 8,000 hoteliers as members. OYO has become more stubborn and our concerns still exist. They are trying to contact individual hoteliers, which is not useful,” Ashraf Ali, joint convenor, HACI, reportedly said.
Hotel owners’ complaints
Hotel owners have for long been protesting the 25%-30% commission that aggregators take from them. Another pain point for the owners has been that while they cannot discount their rooms, OYO can offer add-on discounts on bookings — a strategy they claim leads to market cannibalisation and reduces the brand value of their hotels.
Apart from an alleged breach of contract, most of the FHRAI members have grievances with OYO regarding endorsement and hoarding of illegal and unlicensed bed-and-breakfast apartments, flats in residential/commercial buildings, and other such independent structures as hotels.
However, OYO has said that the hotel owners who have complained to the FHRAI represented a small part of the total number of hotels in the country; OYO added that the changes demanded by the hotel owners lobby could end up raising the prices for end customers by as much as 40%.
“Having said that, we believe that the allegations are misguided and misplaced, and depict cartelization by small groups of people (not necessarily by franchisees and lessors associated with OYO Hotels) with vested interests, which is not in the best interest of the consumers,” an OYO spokesperson had told Inc42 in December. OYO also said that its franchise fee has never exceeded 25%.
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