OYO China, the China branch of Indian hotel tech unicorn OYO, received bad press lately, with reports of mass layoffs and fundraising trouble.
Since the start of June, OYO China has shifted into what it calls its “Strategy 2.0” involving “26 Iron Rules” to demand Chinese hotel owners which would like to be branded as OYO to hand over controlling rights such as pricing on rooms and operating on their own software system, which decides who can see key business data, according to a report of a sub-brand of Chinese business media outlet Caijing.
In return, the report says, OYO China promises hotel owners a baseline revenue, which will be decided based on each hotel’s previous revenue. OYO will mainly take a commission from the portion that’s above the promised revenue.
This tighter control over hotel operations under OYO’s brand is a departure from its previous model, which can be characterized as a loose franchising model. It once allowed franchisees freedom of operation, like forgoing the requirement to adopt OYO’s hotel operations software.
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