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Hotel giant OYO looks to rewrite contracts that fueled its rise

03/30/2020| 6:38:14 PM|

OYO is ending the practice of minimum guarantees and instead is rolling out new contracts to raise fees charged to the hotels.

OYO Hotels and Homes, which built itself into the world’s second-biggest hotel chain by total number of rooms, is phasing out an important tool that fueled its rise.

Now, OYO is ending the practice of awarding those guarantees around the world and instead is rolling out new contracts for its hoteliers without them, Chief Executive Ritesh Agarwal told The Wall Street Journal. The new contracts also raise fees charged to the hotels, according to some hotels and former OYO employees.

OYO said that the restrictions have impacted its revenues, operations and cash flows ‘significantly’. As a result, the company has told its partner hotels that there may be possible disruptions in payment cycles. The company might be forced to delay payment of minimum guarantees and other dues to vendors and hotel partners due to various unforeseen reasons.

An ET report said that OYO’s procurement and supply chain head Ankit Agarwal has written to hotels saying, “In the current unprecedented situation and challenging circumstances there may be possible disruption in our payment cycles and we need your understanding and support to sail through this situation.”

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TAGS: OYO | India
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