Oyo, a SoftBank-backed startup that claims to offer affordable stays, is back in the news and this time is for using shady practices to grow its presence. A media report has claimed that the hospitality startup offers rooms from unavailable hotels and thousands of the rooms are from unlicensed hotels and guesthouses. This is notably not the first time when Oyo has gained headlines for not-so-great reasons. In last October, a Reuters report had highlighted an increasing number of Indian hotel operators who complained about the significant hike in fee by the startup.
A fresh report by The New York Times notes various questionable tactics of Oyo to expand its business in India. The Gurugram-based startup, which was founded in 2013 by Ritesh Agarwal, then a 19-year-old student, has listed thousands of hotel rooms from unlicensed hotels and guesthouses, the American daily said citing Oyo executives including Agarwal. It is also claimed to sometimes give free lodging to the police and other officials to resist legal hindrances to some extent.
Agarwal while acknowledging the listing of hotels that are no longer on board in an interview with The New York Times said that the startup left those listings up and marked them as “sold out” to persuade the hotels to make a comeback.
In addition to listing the rooms from unlicensed hotels and guesthouses, Oyo is found to have imposed additional fees on its hotel partners and declined to pay the full amount claimed by the hotel owners. It is also reported that some hotel operators have sought to file criminal complaints against the firm for withholding payments due to customer service issues.
Further, the newspaper quoted various former Oyo employees specifying ethical issues and pressure on the workforce to add new rooms without considering necessities such as electricity and water heaters. Some workers also reportedly alleged that executives have asked employees to resign over troubling incidents.
An Oyo spokesperson in a statement to Gadgets 360 claimed that the startup conducts regular external audits to support employees.
“We are committed to growing Oyo the right way -- by meeting the needs of property owners and of the guests we serve together. We work hard every day to ensure that our values are upheld by thousands of committed employees around the world, and we are subject to regular external audits to ensure proper compliance and adherence to our Code of Conduct,” the spokesperson said.
On the payment-related complaints raised by hotel owners, the spokesperson stated that multiple escalation mechanisms already exist and it continue to provide resolution.
“We are also investing in tech and in building stronger partner support teams to ensure reconciliations happen faster. We expect all hotel owners to partner in delivering superior guest experience. We will also continue to utilise the provisions in our contracts that allow us to incentivise and recognise thousands of owners who consistently deliver a high-quality guest experience,” the spokesperson added.
Valued at $10 billion (roughly Rs. 71,768 crores), Oyo is one of the leading hospitality chains of leased and franchised hotels across the globe. The startup has expanded beyond India over a span of nearly seven years and reached various cities in Brazil, China, Japan, Malaysia, UK, and the US among other markets.